NORTH FORK BANCORPORATION INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

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

For the period ended: June 30, 2004

NORTH FORK BANCORPORATION, INC.

(Exact name of Company as specified in its charter)


DELAWARE		36-3154608

(State or other Jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


275 BROADHOLLOW ROAD, MELVILLE, NEW YORK		11747

(Address of principal executive offices)		(Zip Code)

(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.


CLASS OF COMMON STOCK		NUMBER OF SHARES OUTSTANDING — 8/5/04

$.01 Par Value		172,633,608

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited)


	June 30,			December 31,			June 30,
(in thousands, except per share amounts)	2004			2003			2003
Assets:
Cash & Due from Banks	$	528,772		$	510,354		$	406,694
Money Market Investments		16,140			21,037			63,799
Due from Brokers		—			—			464,351
Securities Held-for-Sale		—			—			613,628
Securities:
Available-for-Sale ($2,290,348 ,$1,911,586 and $2,882,841 pledged at June 30, 2004, December 31, 2003 and June 30, 2003, respectively)		8,762,663			7,136,275			8,108,198
Held-to-Maturity ($33,710, $52,808 and $82,445 pledged at June 30, 2004, December 31, 2003 and June 30, 2003, respectively)		152,201			190,285			221,378

Total Securities		8,914,864			7,326,560			8,329,576

Loans:
Held-for-Sale		2,902			4,074			21,862
Held-for-Investment, Net of Unearned Income & Deferred Costs		15,385,568			12,341,199			11,875,571

Total Loans		15,388,470			12,345,273			11,897,433
Less: Allowance for Loan Losses		138,008			122,733			117,753

Net Loans		15,250,462			12,222,540			11,779,680
Goodwill		1,003,668			410,494			410,495
Identifiable Intangibles		49,447			12,765			14,548
Premises & Equipment		220,379			150,875			143,374
Accrued Income Receivable		107,495			88,722			101,972
Other Assets		380,632			226,027			211,017

Total Assets	$	26,471,859		$	20,969,374		$	22,539,134

Liabilities and Stockholders’ Equity:
Deposits:
Demand	$	5,259,052		$	4,080,134		$	3,746,741
Savings		4,494,251			3,770,683			3,665,580
NOW & Money Market		6,321,943			4,519,476			3,960,731
Time		2,300,540			1,784,408			1,922,407
Certificates of Deposit, $100,000 & Over		1,460,671			961,414			1,176,835

Total Deposits		19,836,457			15,116,115			14,472,294

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,288,935			2,171,154			3,291,500
Federal Home Loan Bank Advances		850,000			1,050,000			1,850,000
Subordinated Debt		462,808			476,499			493,790
Junior Subordinated Debt		261,358			266,977			281,021
Accrued Expenses & Other Liabilities		460,714			410,140			578,428

Total Liabilities		24,160,272			19,490,885			20,967,033

Stockholders’ Equity:
Preferred Stock, par value $1.00; authorized 10,000,000 shares, unissued	$	—		$	—		$	—
Common stock, par value $0.01; authorized 500,000,000 shares; issued 193,108,367 shares at June 30, 2004		1,931			1,746			1,746
Additional Paid in Capital		1,121,040			378,793			373,851
Retained Earnings		1,930,379			1,816,458			1,705,789
Accumulated Other Comprehensive (Loss)/Income		(61,784	)		(2,044	)		42,019
Deferred Compensation		(84,294	)		(91,789	)		(65,795	)
Treasury Stock at cost; 21,037,978 shares at June 30, 2004		(595,685	)		(624,675	)		(485,509	)

Total Stockholders’ Equity		2,311,587			1,478,489			1,572,101

Total Liabilities and Stockholders’ Equity	$	26,471,859		$	20,969,374		$	22,539,134

See accompanying notes to the consolidated financial statements

Consolidated Statements of Income (unaudited)


	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in thousands, except per share amounts)	2004			2003		2004		2003
Interest Income:
Loans	$	213,002		$	195,826	$	407,202	$	392,747
Mortgage-Backed Securities		72,031			70,355		131,168		152,583
Other Securities		11,296			12,232		20,895		25,836
State & Municipal Obligations		6,578			3,990		11,102		7,779
Money Market Investments		467			95		670		269

Total Interest Income		303,374			282,498		571,037		579,214

Interest Expense:
Savings, NOW & Money Market Deposits		19,108			14,476		34,119		29,236
Time Deposits		7,412			9,419		14,055		19,472
Certificates of Deposit, $100,000 & Over		4,899			4,801		8,992		9,904
Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		19,035			27,640		35,316		56,298
Federal Home Loan Bank Advances		12,273			16,719		24,595		35,676
Subordinated Debt		4,599			7,120		9,144		14,345
Junior Subordinated Debt		1,953			2,451		3,892		4,961

Total Interest Expense		69,279			82,626		130,113		169,892

Net Interest Income		234,095			199,872		440,924		409,322
Provision for Loan Losses		6,500			6,500		13,000		12,750

Net Interest Income after Provision for Loan Losses		227,595			193,372		427,924		396,572

Non-Interest Income:
Customer Related Fees & Service Charges		23,417			20,460		45,188		40,626
Investment Management, Commissions & Trust Fees		4,099			3,892		8,023		7,016
Mortgage Banking Income		1,318			3,199		2,478		6,017
Check Cashing Fees		1,159			1,265		2,348		2,261
Other Income		5,658			3,964		11,455		8,510
Securities (Losses)/Gains, net		(475	)		3,699		7,413		6,296
Gain on Sale of Facilities, net		—			10,980		—		10,980

Total Non-Interest Income		35,176			47,459		76,905		81,706

Non-Interest Expense:
Employee Compensation & Benefits		55,224			49,075		106,301		96,415
Occupancy & Equipment, net		20,074			16,389		37,699		31,910
Other Expenses		21,181			16,894		39,127		33,711
Amortization of Identifiable Intangibles		1,889			892		2,670		1,784
Debt Restructuring Costs		—			11,955		—		11,955

Total Non-Interest Expense		98,368			95,205		185,797		175,775

Income Before Income Taxes		164,403			145,626		319,032		302,503
Provision for Income Taxes		55,404			49,513		107,514		102,851

Net Income	$	108,999		$	96,113	$	211,518	$	199,652

Earnings Per Share — Basic	$	0.69		$	0.63	$	1.38	$	1.30
Earnings Per Share — Diluted		0.68			0.62		1.36		1.29

See accompanying notes to the consolidated financial statements

Consolidated Statements of Cash Flows (unaudited)

For the Six Months Ended June 30,


(in thousands)	2004			2003
Cash Flows from Operating Activities:
Net Income	$	211,518		$	199,652
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Loan Losses		13,000			12,750
Depreciation		8,792			7,350
Amortization of Deferred Compensation		6,962			4,966
Amortization of Identifiable Intangible		2,670			1,784
Amortization of Premiums		18,851			52,544
Accretion of Discounts and Net Deferred Loan Fees		(15,576	)		(15,640	)
Securities Gains, net		(7,413	)		(6,296	)
Gains on Sales of Loans Held-for-Sale		(592	)		(3,188	)
Originations of Loans Held-for-Sale		(58,166	)		(209,532	)
Proceeds from Sales of Loans Held-for-Sale		57,586			203,909
Purchases of Trading Assets		(13,911	)		(24,895	)
Sales of Trading Assets		14,015			25,362
Gain on the Sale of Facilities		—			(10,980	)
Debt Restructuring Costs		—			11,955
Other, Net		(15,480	)		51,248

Net Cash Provided by Operating Activities		222,256			300,989

Cash Flows from Investing Activities:
Purchases of Securities Held-to-Maturity		—			(29,348	)
Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity		37,736			115,035
Purchases of Securities Available-for-Sale		(2,882,982	)		(4,415,437	)
Proceeds from Sales of Securities Available-for-Sale		917,045			1,231,757
Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale		1,742,003			3,624,486
Net Change in Loans Held-for-Investment		(929,825	)		(520,338	)
Transfers to Other Real Estate, Net of Sales		502			—
Purchases of Premises and Equipment, net		(29,164	)		(20,042	)
Purchase Acquisition, net of cash acquired		246,209			—

Net Cash Used in Investing Activities		(898,476	)		(13,887	)

Cash Flows from Financing Activities:
Net Increase in Customer Deposit Liabilities		1,549,940			1,279,764
Net Decrease in Borrowings		(771,282	)		(271,455	)
Purchases of Treasury Stock		—			(91,952	)
Exercise of Options and Common Stock Sold for Cash		2,815			5,786
Cash Dividends Paid		(91,732	)		(85,111	)

Net Cash Provided by Financing Activities		689,741			837,032

Net Increase in Cash and Cash Equivalents		13,521			1,124,134
Cash and Cash Equivalents at Beginning of the Period		531,391			424,338

Cash and Cash Equivalents at End of the Period	$	544,912		$	1,548,472

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)


			Additional						Accumulated
	Common		Paid in			Retained			Other Comprehensive			Deferred			Treasury
(dollars in thousands, except per share amounts)	Stock		Capital			Earnings			Income/(Loss)			Compensation			Stock			Total
Balance, December 31, 2002	$	1,746	$	377,311		$	1,590,594		$	17,991		($	70,562	)	($	403,027	)	$	1,514,053
Net Income		—		—			199,652			—			—			—			199,652
Cash Dividends ($.54 per share)		—		—			(84,457	)		—			—			—			(84,457	)
Issuance of Stock (84,813 shares)		—		545			—			—			—			2,285			2,830
Restricted Stock Activity, net		—		162			—			—			4,767			62			4,991
Employee Stock Option Activity, net		—		(4,167	)		—			—			—			7,123			2,956
Purchases of Treasury Stock (2,796,000 shares)		—		—			—			—			—			(91,952	)		(91,952	)
Accumulated Other Comprehensive Income, net of tax		—		—			—			24,028			—			—			24,028

Balance, June 30, 2003	$	1,746	$	373,851		$	1,705,789		$	42,019		($	65,795	)	($	485,509	)	$	1,572,101

Balance, December 31, 2003	$	1,746	$	378,793		$	1,816,458		($	2,044	)	($	91,789	)	($	624,675	)	$	1,478,489
Net Income		—		—			211,518			—			—			—			211,518
Cash Dividends ($.60 per share)		—		—			(97,597	)		—			—			—			(97,597	)
Issuance of Stock - TCNJ (18,527,589 shares)		185		714,609			—			—			—			—			714,794
Fair Value of Options - TCNJ		—		33,364			—			—			—			—			33,364
Issuance of Stock (70,386 shares)		—		822			—			—			—			1,993			2,815
Restricted Stock Activity, net		—		148			—			—			7,495			(908	)		6,735
Employee Stock Option Activity, net		—		(6,696	)		—			—			—			27,905			21,209
Accumulated Other Comprehensive (Loss), net of tax		—		—			—			(59,740	)		—			—			(59,740	)

Balance, June 30, 2004	$	1,931	$	1,121,040		$	1,930,379		($	61,784	)	($	84,294	)	($	595,685	)	$	2,311,587

See accompanying notes to the consolidated financial statements

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2004			2003			2004			2003
Net Income	$	108,999		$	96,113		$	211,518		$	199,652

Other Comprehensive (Loss)/Income
Unrealized (Losses)/Gains On Securities:
Change in Unrealized (Losses)/Gains During the Period		(170,600	)		12,658			(103,501	)		30,550
Less: Reclassification Adjustment for Losses/(Gains) Included in Net Income		475			(3,699	)		(7,413	)		(6,296	)

Change in Unrealized (Losses)/Gains During the Period		(170,125	)		8,959			(110,914	)		24,254
Related Tax Effect on Unrealized (Losses)/Gains During the Period		73,154			(3,852	)		47,692			(10,429	)

Net Change in Unrealized (Losses)/Gains During the Period		(96,971	)		5,107			(63,222	)		13,825

Unrealized Gains/(Losses) On Derivative Instruments:
Change in Unrealized Gains/(Losses) Arising During the Period		3,462			(4,241	)		998			(7,225	)
Add: Reclassification Adjustment for Expenses/Losses Included in Net Income		2,383			14,761			5,108			25,125

Change in Unrealized Gains/(Losses) During the Period		5,845			10,520			6,106			17,900
Related Tax Effect on Unrealized Gains/(Losses) During the Period		(2,513	)		(4,524	)		(2,624	)		(7,697	)

Net Change in Unrealized Gains/(Losses) During the Period		3,332			5,996			3,482			10,203

Net Other Comprehensive (Loss)/Income	$	(93,639	)	$	11,103		$	(59,740	)	$	24,028

Comprehensive Income	$	15,360		$	107,216		$	151,778		$	223,680

See accompanying notes to the consolidated financial statements

North Fork Bancorporation, Inc.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

June 30, 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 and Pending Business Combination

We are a $26 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 commercial bank. North Fork Bank operates 258 retail banking branches in the New York Metropolitan area, including 73 branches 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.

On May 14, 2004, North Fork completed its acquisition of The Trust Company of New Jersey (“TCNJ”) for approximately $744 million in stock. Accordingly, the consolidated results of operations contained herein reflect the activity of TCNJ subsequent to the acquisition date. The assets acquired and liabilities assumed from TCNJ were recorded at the date of acquisition on the consolidated balance sheet at fair value. (See “Note 2 — Business Combinations -” for additional information.)

In February 2004, we entered into a definitive agreement to acquire GreenPoint Financial Corp. (“GreenPoint”) in an all stock transaction valued at approximately $6.3 billion. We have received all necessary banking regulatory approvals. Special meetings of GreenPoint and North Fork Shareholders to approve the merger will be held on August 30, 2004 and August 31, 2004, respectively. We anticipate closing the transaction on or about September 30, 2004. Additional information regarding the terms of the merger and its pro forma impact on our financial statements can be found in amendment No. 2 to the registration statement filed on Form S-4 with the Securities and Exchange Commission.

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 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 adopted FASB Interpretation No. 46, “Consolidation of Variable Interest Entities (revised December 2003), (“FIN 46R”)”. In accordance with the provisions of FIN 46R, we deconsolidated our 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 Capital Securities to 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, stockholders’ equity and regulatory capital.

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 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 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 contained in our 2003 Annual Report filed 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. Our most critical accounting policy is the allowance for loan losses (See “Critical Accounting Estimates” below).

Results of operations for the three and six months ended June 30, 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.

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. (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 criticized or reviewed for impairment, including but not limited to, smaller balance homogeneous loans that we have identified as residential and consumer. 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 primarily awarded prior to December 31 and contain a nominal vesting period; therefore, we would have expensed these options under the fair value method at year end. Since the pro forma effect on net income of expensing stock options during the three months and six months ended June 30, 2004 and 2003 is nominal, we have not disclose such pro forma compensation expense and its related effect on net income and earnings per share herein.

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 services. The products offered by this segment are directed toward existing bank customers and non-customers. Management segregates the budgeting and reporting of this segment from its commercial bank, utilizing separate plans and measurements to evaluate performance. The following table provides selected financial information for the Private Asset Group for the periods indicated:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2004		2003		2004		2003
Revenue	$	4,204	$	3,989	$	8,240	$	7,212
Net Income		868		689		1,633		1,120
Total Assets		12,909		5,588		12,909		5,588

The Private Asset Group’s total revenues, net income and total assets comprise approximately 1.4%, .07% and .03%, respectively of the consolidated totals for all periods presented.

NOTE 2 -BUSINESS COMBINATIONS

The Trust Company of New Jersey

On May 14, 2004, we completed the merger and simultaneously integrated the systems of TCNJ. TCNJ was the fourth largest commercial bank headquartered in New Jersey and operated primarily in the Northern New Jersey market. In addition to enhancing our market penetration, the merger presented an opportunity to bring new and prospective customers and banking products together with ours and to increase combined revenues and earnings. At the date of the merger, TCNJ had $4.1 billion in total assets, $1.4 billion in securities, $2.1 billion in net loans, $3.2 billion in deposits and $.7 billion in borrowings. We issued 18.5 million shares (a one for one exchange ratio) of common stock

and reserved for issuance 1.8 million common shares for TCNJ’s outstanding employee stock options with a value of $715 million and $29 million, net of tax, respectively. The value of common stock and employee stock options was determined based on the North Fork’s average closing price of $38.58 (Based on North Fork’s closing price from December 12, 2003 to December 18, 2003). The excess of cost over fair value of net assets acquired was $593 million. We applied the provisions of SFAS No. 141 “Business Combinations” and No. 142 “Goodwill and Other Intangible Assets” as required for the recognition of goodwill and intangible assets.

The following table presents data with respect to the fair values of assets acquired and liabilities assumed in the TCNJ merger:


	As of
(in thousands)	May 14, 2004
Cash And Due From Banks	$	156,209
Money Market Investments		90,000
Securities		1,413,893
Loans		2,097,267
Add: Unearned Income & Deferred Costs		15,329
Less: Allowance for Loan Losses		(10,251	)

Net Loans		2,102,345
Goodwill		593,173
Core Deposit Intangible		39,352
Premises & Equipment		49,132
Other Assets		216,510

Total	$	4,660,614

Deposits	$	3,170,402
Federal Funds Purchased & Collateralized Borrowings		689,063
Other Liabilities		57,024

Total Liabilities		3,916,489
Common Stock Issued and Fair Value of Stock Options, Net of Tax		744,125

Total	$	4,660,614

A Core Deposit Intangible Asset (“CDI”) of $39.4 million recognized in connection with the merger is being amortized over an estimated useful life of eight years on an accelerated basis. We retained the services of an independent valuation firm in determining the CDI. TCNJ’s results of operations are included in the Consolidated Statements of Income subsequent to May 14, 2004. Operating results for TCNJ were not significant to the consolidated operating results and consequently, pro forma operating results for TCNJ have not been presented herein. As of June 30, 2004, accrued merger related costs of $20.6 million remain in “Accrued Expenses & Other Liabilities” in the Consolidated Balance Sheet and consist primarily of unpaid employment benefits, long term lease arrangements for vacated facilities and costs associated with the cancellation of certain data and item processing contracts. It is estimated that none of the goodwill associated with the TCNJ merger will be deductible for income tax purposes.

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 approximately $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 93 retail bank branches. GreenPoint Mortgage Corp. is a national mortgage company that 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. operates 29 offices located throughout the United States.

Pursuant to the agreement, GreenPoint will merge with and into North Fork Bancorporation, Inc. All necessary banking regulatory approvals have been received and the special meetings of GreenPoint and North Fork Shareholders to approve the merger will be held on August 30, 2004 and August 31, 2004, respectively. The transaction is expected to close on or about September 30, 2004. Upon completion of the merger GreenPoint Bank will continue to operate as a separate subsidiary until its core banking systems can be converted to North Fork Bank’s platform. We expect this conversion to occur during the first quarter of 2005 at which time GreenPoint Bank will be merged with and into North Fork Bank. As of June 30, 2004, GreenPoint reported $26.0 billion in total assets, $16.9 billion in loans and $13.1 billion in customer deposits.

NOTE 3 — SECURITIES PORTFOLIO

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


	June 30, 2004				December 31, 2003				June 30, 2003
Available-for-Sale	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
CMO Agency Issuances	$	3,318,464	$	3,241,617	$	3,129,005	$	3,110,430	$	1,777,946	$	1,785,034
CMO Private Issuances		1,693,712		1,665,125		1,278,205		1,276,049		4,040,778		4,084,745
Agency Pass-Through Certificates		2,172,586		2,165,407		1,240,897		1,246,994		768,625		784,770
State & Municipal Obligations		592,798		594,466		700,307		707,015		550,117		558,169
Equity Securities (1)		187,725		189,681		185,757		194,345		322,650		331,234
U.S. Treasury Securities		103,971		103,625		55,750		55,765		35,982		35,999
U.S. Government Agencies’ Obligations		159,098		161,631		2,310		2,325		1,435		1,420
Other Debt Securities		635,293		641,111		534,114		543,352		516,286		526,827

	$	8,863,647	$	8,762,663	$	7,126,345	$	7,136,275	$	8,013,819	$	8,108,198

(1) Amortized cost and fair value includes $80.5 million, $68.2 million and $151.8 million in Federal Home Loan Bank stock at June 30, 2004, December 31, 2003 and June 30, 2003, respectively.


	June 30, 2004				December 31, 2003				June 30, 2003
Held-to-Maturity	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
Agency Pass-Through Certificates	$	65,244	$	66,142	$	81,759	$	83,989	$	98,064	$	101,252
State & Municipal Obligations		48,956		51,005		54,732		57,848		59,275		63,636
CMO Private Issuances		26,927		26,561		38,389		38,129		53,826		54,918
Other Debt Securities		11,074		10,966		15,405		15,346		10,213		10,213

	$	152,201	$	154,674	$	190,285	$	195,312	$	221,378	$	230,019

Securities grew $600 million or 7% to $8.9 billion for the quarter ended June 30, 2004, compared to $8.3 billion at June 30, 2003. The growth achieved during the period was due to $1.4 billion in securities acquired from TCNJ, of which approximately $500 million were subsequently sold during the quarter. 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. These sales are reflected in the Consolidated Balance Sheet in “Due from Brokers” and “Securities Held-for-Sale” at June 30, 2003. (See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Interest Income Section” for additional Information)

At June 30, 2004, securities carried at $4.5 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 $2.3 billion, while securities pledged under agreements pursuant to which the secured parties may not sell or repledge approximated $2.2 billion at June 30, 2004.

NOTE 4 — LOANS

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


	June 30,		% of			December 31,		% of			June 30,		% of
(dollars in thousands)	2004		Total			2003		Total			2003		Total
Multi-Family Mortgages	$	3,824,615		25	%	$	3,634,533		29	%	$	3,792,647		32	%
Commercial Mortgages		3,536,517		23			2,814,103		23			2,359,316		20
Residential Mortgages		3,329,949		22			2,403,306		20			2,413,125		20
Commercial		2,529,253		16			2,145,798		17			2,000,623		17
Consumer		1,751,240		11			1,095,529		9			1,068,616		9
Construction & Land		453,922		3			283,243		2			290,433		2

Total	$	15,425,496		100	%	$	12,376,512		100	%	$	11,924,760		100	%

Less:
Unearned Income & Deferred Costs		37,026					31,239					27,327

Loans, Net	$	15,388,470				$	12,345,273				$	11,897,433

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 $2.9 million, $4.1 million and $21.9 million at June 30, 2004, December 31, 2003 and June 30, 2003, respectively.

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:


	June 30,			December 31,			June 30,
(in thousands)	2004			2003			2003
Loans Ninety Days Past Due and Still Accruing	$	5,438		$	2,268		$	2,629
Non-Accrual Loans		10,366			11,072			10,166

Non-Performing Loans		15,804			13,340			12,795
Other Real Estate		435			313			295

Non-Performing Assets	$	16,239		$	13,653		$	13,090

Allowance for Loan Losses to Non-Performing Loans		873	%		920	%		920	%
Allowance for Loan Losses to Total Loans, net		.90			.99			.99
Non-Performing Loans to Total Loans, net		.10			.11			.11
Non-Performing Assets to Total Assets		.06			.07			.06

At June 30, 2004, the increase in non-performing loans was primarily due to the TCNJ acquisition. 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:


	June 30,		December 31,		June 30,
(in thousands)	2004		2003		2003
Commercial	$	7,256	$	5,632	$	6,425
Residential Mortgages		4,004		4,808		3,175
Commercial Mortgages		2,623		557		1,472
Consumer		1,872		2,343		1,723
Construction and Land		49		—		—
Multi-Family Mortgages		—		—		—

Total Non-Performing Loans	$	15,804	$	13,340	$	12,795

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 three months ended June 30, 2004 and 2003, respectively and $.6 million for the six months ended June 30, 2004 and 2003, respectively. The amount of interest income included in net income on non-accrual loans during the most recent quarter was not significant.

As of June 30, 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.

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:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2004		2003		2004		2003
Balance at Beginning of Period	$	124,364	$	115,087	$	122,733	$	114,995
Loans Charged-off:
Consumer		3,443		3,448		8,490		7,595
Commercial		2,736		1,941		5,166		5,979
Commercial Mortgages		—		1		—		2
Residential Mortgages		—		50		6		75
Multi-Family Mortgages		—		13		—		13
Construction and Land		—		—		—		—

Total Charge-Offs		6,179		5,453		13,662		13,664
Recoveries of Loans Charged-Off:
Consumer		1,847		1,386		3,443		2,878
Commercial		1,222		206		1,740		578
Commercial Mortgages		3		—		503		—
Residential Mortgages		—		18		—		207
Multi-Family Mortgages		—		9		—		9
Construction and Land		—		—		—		—

Total Recoveries		3,072		1,619		5,686		3,672


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2004			2003			2004			2003
Net Loans Charged-Off		3,107			3,834			7,976			9,992
Provision for Loan Losses		6,500			6,500			13,000			12,750
TCNJ Purchase Acquisition		10,251			—			10,251			—

Balance at End of Period	$	138,008		$	117,753		$	138,008		$	117,753

Annualized Net Charge-Offs to Average Loans, net		0.09	%		0.13	%		0.14	%		0.17	%

NOTE 6 — FEDERAL HOME LOAN BANK ADVANCES AND REPURCHASE AGREEMENTS

The maturity or repricing frequency of Federal Home Loan Bank (“FHLB”) Advances and Repurchase Agreements (“Repo’s”) at June 30, 2004 is as follows:


(dollars in thousands)	FHLB		Average			Repurchase		Average					Average
Maturity	Advances		Rate (1)			Agreements		Rate (1)			Total (2)		Rate (1)
2004	$	—		—		$	240,405		2.43	%	$	240,405		2.43	%
2005		400,000		5.83	%		350,000		4.70			750,000		5.31
2006		300,000		3.86			675,000		2.38			975,000		2.84
2007		150,000		5.80			100,000		2.59			250,000		4.52
2008		—		—			400,000		5.59			400,000		5.59
Thereafter		—		—			425,000		4.24			425,000		4.24

Total	$	850,000		5.13	%	$	2,190,405		3.71	%	$	3,040,405		4.11	%

(1) Includes the effects of TCNJ purchase accounting adjustments and interest rate swaps.

(2) Excludes $33.5 million in purchase accounting discounts.

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 “Note 9 — Derivative Financial Instruments.”

NOTE 7 — SUBORDINATED DEBT

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


	June 30,			December 31,			June 30,
(in thousands)	2004			2003			2003
5.875% Subordinated Notes due August 15, 2012	$	349,274		$	349,229		$	349,184
5.0% Subordinated Notes due August 15, 2012		150,000			150,000			150,000

Total Subordinated Debt		499,274			499,229			499,184
Fair Value Hedge Adjustment		(36,466	)		(22,730	)		(5,394	)

Carrying Amount	$	462,808		$	476,499		$	493,790

The $350 million aggregate principal amount of 5.875% subordinated notes and $150 million aggregate principal amount of 5% Fixed Rate/Floating Rate Subordinated Notes both 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 Note 9 — “Derivative Financial Instruments” for additional information).

NOTE 8 — JUNIOR SUBORDINATED DEBT

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


	June 30,		December 31,		June 30,
(in thousands)	2004		2003		2003
8.70% Junior Subordinated Debt - North Fork Capital Trust I, due December 15, 2026	$	102,821	$	102,815	$	102,809
8.00% Junior Subordinated Debt - North Fork Capital Trust II, due December 15, 2027		102,791		102,785		102,779
8.17% Junior Subordinated Debt - Reliance Capital Trust I, due May 1, 2028		46,547		46,547		46,547

Total Junior Subordinated Debt- Capital Trusts		252,159		252,147		252,135
Fair Value Hedge Adjustment		9,199		14,830		28,886

Carrying Amount	$	261,358	$	266,977	$	281,021

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 limited 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 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 Note 9 - “Derivative Financial Instruments” for additional information.)

The Capital Securities currently qualify as Tier I capital for regulatory purposes. 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. As of June 30, 2004, we would still exceed the well capitalized threshold under the regulatory framework for prompt corrective action assuming the exclusion of Capital Securities from Tier 1 Capital.

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 period presented.

The following table details the interest rate swaps and the associated hedged liabilities outstanding as of June 30, 2004:


Maturity		Notional		Swap Fixed			Swap Variable
(dollars in thousands)	Hedged Liability	Amounts		Interest Rates			Interest Rates
Pay Fixed Swaps
2005	Repurchase Agreements	$	100,000		4.24%-4.26	%		1.17	%
2008	Repurchase Agreements		75,000		6.14			1.18

		$	175,000

Pay Floating Swaps
2007	5.00% Subordinated Debt	$	150,000		5.00	%		1.25	%
2012	5.875% Subordinated Debt		350,000		5.875			1.25
2026	8.70% Junior Subordinated Debt		100,000		8.70			1.52
2027	8.00% Junior Subordinated Debt		100,000		8.00			1.52
2028	8.17% Junior Subordinated Debt		45,000		8.17			1.18

		$	745,000

At June 30, 2004, $175 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 $7.4 million, which is recorded as a component of other liabilities (the net of tax balance of $4.2 million is reflected in stockholders’ equity as a component of accumulated other comprehensive loss). The use of pay fixed swaps outstanding increased interest expense by $2.4 million and $8.2 million in the second quarters of 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003, these swaps increased interest expense by $5.1 million and $18.5 million, respectively. The decline in swap related interest expense is primarily due to the maturity of $850 million of these interest rate swaps in 2003. In June 2003, an additional $300 million in pay fixed swaps, designated as cash flow hedges maturing in 2004 were cancelled and the underlying borrowings repaid. The cancellation of these swaps resulted in a $6.6 million charge in the second quarter of 2003. Based upon the current interest rate environment, approximately $1.8 million of the after tax loss is expected to be reclassified from accumulated other comprehensive loss during the next twelve months. (See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Interest Income Section” for additional Information)

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 June 30, 2004, the negative fair value adjustment of $36.5 million (unrealized loss) on the swap agreements hedging $500 million of subordinated notes is reflected as a component of other liabilities. The carrying amount of the $500 million in subordinated notes was decreased by an identical amount. These swaps reduced interest expense by $2.7 million and $ .1 million in the second quarters of 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003, these swaps reduced interest expense by $5.3 million and $.1 million, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income on these transactions for any period 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 June 30, 2004, the positive fair value adjustment on the swap agreements hedging $200 million of Junior Subordinated Debt was an unrealized gain totaling $12.5 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 $3.3 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. These swaps reduced interest expense by $3.4 million and $2.9 million in the second quarters of 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003; these swaps reduced interest expense by $6.7 million and $5.6 million, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income from these transactions for any period 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 sheet.

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 June 30, 2004:


(in thousands)
Commitments to Extend Credit	$	2,416,567
Standby letters of credit (1)		251,687
Commercial letters of credit		21,539

(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 June 30, 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 following table sets forth the components of net periodic benefit costs are as follows:


	Three Months Ended												Six Months Ended
	June 30,												June 30,
	2004			2003			2004			2003			2004			2003			2004			2003
							Post-Retirement												Post-Retirement
(in thousands)	Pension Benefits						Benefits						Pension Benefits						Benefits
Components of Net Periodic Benefit Cost:
Service Cost	$	1,222		$	875		$	183		$	144		$	2,175		$	1,750		$	366		$	288
Interest Cost		1,605			1,386			374			312			2,995			2,772			701			624
Expected Return on Plan Assets		(2,734	)		(1,701	)		—			—			(4,549	)		(3,402	)		—			—
Amortization of Prior Service Cost		(66	)		(66	)		(20	)		(20	)		(132	)		(132	)		(40	)		(40	)
Amortization of Transition Asset/(Liability)		(107	)		(107	)		73			73			(214	)		(214	)		146			146
Recognized Actuarial Loss		258			212			81			59			516			424			162			118

Net Periodic Benefit Cost	$	178		$	599		$	691		$	568		$	791		$	1,198		$	1,335		$	1,136

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, effective 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, stockholders’ equity or regulatory capital.

In July 2003, the Board of Governors of the Federal Reserve System 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 (As of June 30, 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 “Note 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 not significant.

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 the completed and pending acquisitions;

• costs or difficulties related to the integration of the business of GreenPoint Financial Corp. (“GreenPoint”) may be greater than expected;

• expected cost savings and revenue enhancements from the completed and 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.

Financial Summary

Overview

Selected financial highlights for the three and six months ended June 30, 2004 and 2003 are set forth in the table below. The periods ended June 30, 2004 include the operating results of TCNJ from May 14, 2004. The succeeding discussion and analysis describes the changes in components of operating results.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except ratios & per share amounts)	2004			2003			2004			2003
Earnings:
Net Income	$	108,999		$	96,113		$	211,518		$	199,652

Per Share:
Earnings Per Share — Basic	$	.69		$	.63		$	1.38		$	1.30
Earnings Per Share — Diluted		.68			.62			1.36			1.29
Cash Dividends		.30			.27			.60			.54
Dividend Payout Ratio		47	%		44	%		46	%		42	%
Book Value	$	13.43		$	10.06		$	13.43		$	10.06
Tangible Book Value	$	7.31		$	7.34		$	7.31		$	7.34
Average Equivalent Shares — Basic		157,989			152,911			153,156			153,417
Average Equivalent Shares — Diluted		160,316			154,451			155,737			154,961
Selected Ratios:
Return on Average Total Assets		1.78	%		1.73	%		1.86	%		1.83	%
Return on Average Tangible Assets (2)		1.86			1.77			1.93			1.88
Return on Average Stockholders’ Equity		22.92			24.42			24.56			25.75
Return on Average Tangible Stockholders’ Equity (2)		38.23			33.63			37.49			35.56
Yield on Interest Earning Assets (1)		5.49			5.60			5.53			5.86
Cost of Funds		1.61			1.97			1.61			2.06
Net Interest Margin (1)		4.26			4.00			4.30			4.18
Efficiency Ratio (3)		35.56			34.84			35.49			33.70

(1) Presented on a tax equivalent basis.

(2) Return on average tangible assets and return on average tangible stockholders’ equity which represent non GAAP measures are computed, on an annualized basis as follows:

- Return on average tangible assets is computed by dividing net income, as reported plus amortization of identifiable intangible assets, net of taxes by average total assets less average goodwill and average identifiable intangible assets. (See detailed schedule on exhibit 99.1)

-Return on average tangible stockholders’ equity is computed by dividing net income, as reported plus amortization of identifiable intangible assets, net of taxes by average total stockholders’ equity less average goodwill and average identifiable intangible assets. (See detailed schedule on exhibit 99.1)

(3) The efficiency ratio is used by the financial services industry to measure an organization’s operating efficiency. The efficiency is defined as the ratio of non-interest expense net of debt restructuring costs, amortization of identifiable intangibles, other real estate related expenses and other non-recurring charges, to the total of net interest income on a tax equivalent basis and other non-interest income, of securities gains, facilities gains and other non-recurring items.

Highlights for the second quarter ended June 30, 2004 include:

• A 13% increase in net income and a 10% increase in diluted earnings per share when compared to the comparable prior year period.

• Annualized demand deposit and total deposit growth (excluding TCNJ) of 37% and 18%, respectively.

• Annualized loan growth (excluding TCNJ) of 20%.

• A net interest margin of 4.26% as compared to 4.00% in the comparable prior year period.

• Successfully closed and integrated TCNJ.

• Hired an experienced team of commercial bankers for the New Jersey market and established an asset based lending/structured finance business through the addition of a seasoned management team.

• Received all regulatory approvals for GreenPoint acquisition. Special shareholder meeting dates to approve the transaction have been established.

• Declaration of a regular quarterly cash dividend of $.30 per common share.

Net Income

Net income for the second quarter was $109.0 million or diluted earnings per share of $.68 compared to $96.1 million or $.62 diluted earnings per share in the second quarter of 2003. Returns on average equity and assets during the second quarter of 2004 were 22.9% and 1.8%, respectively, compared to 24.4% and 1.7% a year ago.

Net income for the six months ended June 30, 2004 was $211.5 million, or diluted earnings per share of $1.36 as compared to $199.7 million or diluted earnings per share of $1.29 for the same period of 2003. Return on average stockholders’ equity and average total assets were 24.6% and 1.9%, respectively, during the six months ended June 30, 2004, as compared to 25.8% and 1.8%, respectively, for the comparable prior year period.

Net Interest Income

Net interest income is the difference between interest income earned on assets, such as loans and securities and interest expense incurred on liabilities, such as deposits and borrowings. Net interest income constituted 87% of total revenue (defined as net interest income plus non-interest income) for the current period. Net interest income is affected by the level and composition of assets, liabilities and equity, as well as the general level of interest rates and changes in interest rates.

Net interest margin is determined by dividing tax equivalent net interest income by average interest-earning assets. The interest rate spread is the difference between the average equivalent yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The net interest margin is generally greater than the interest rate spread due to the additional income earned on those assets funded by non-interest-bearing liabilities, primarily demand deposits, and stockholders’ equity.

The following table presents an analysis of net interest income (on a tax equivalent basis) by each major category of interest earning assets and interest-bearing liabilities for the three months ended June 30,:


	2004								2003
	Average					Average			Average					Average
(dollars in thousands )	Balance		Interest			Rate			Balance		Interest			Rate
Interest Earning Assets:
Securities (1)	$	8,625,227	$	96,907			4.52	%	$	8,935,413	$	92,382			4.15	%
Loans (2)		13,934,465		213,416			6.16			11,696,983		196,220			6.73
Money Market Investments		219,728		481			.88			37,132		143			1.54

Total Interest Earning Assets		22,779,420		310,804			5.49	%		20,669,528		288,745			5.60	%

Non Interest Earning Assets:
Cash and Due from Banks		715,814								415,732
Other Assets (1)		1,121,796								1,231,544

Total Assets	$	24,617,030							$	22,316,804

Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits	$	10,067,881	$	19,108			.76	%	$	7,250,200	$	14,476			.80	%
Time Deposits		3,323,884		12,311			1.49			3,023,237		14,220			1.89

Total Savings and Time Deposits		13,391,765		31,419			.94			10,273,437		28,696			1.12

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,179,640		19,035			3.51			4,312,648		27,640			2.57
Federal Home Loan Bank Advances		1,002,748		12,273			4.92			1,447,802		16,719			4.63
Subordinated Debt (4)		488,413		4,599			3.79			499,174		7,120			5.72
Junior Subordinated Debt (4)		273,945		1,953			2.87			276,676		2,451			3.55

Total Borrowings		3,944,746		37,860			3.86			6,536,300		53,930			3.31

Total Interest Bearing Liabilities		17,336,511		69,279			1.61			16,809,737		82,626			1.97

Interest Rate Spread							3.88	%							3.63	%
Non-Interest Bearing Liabilities:
Demand Deposits	$	4,825,135							$	3,550,810
Other Liabilities		542,624								377,551

Total Liabilities		22,704,270								20,738,098

Stockholders’ Equity		1,912,760								1,578,706

Total Liabilities and Stockholders’ Equity	$	24,617,030							$	22,316,804

Net Interest Income and Net Interest Margin (3)				241,525			4.26	%				206,119			4.00	%
Less: Tax Equivalent Adjustment				(7,430	)							(6,247	)

Net Interest Income			$	234,095							$	199,872

(1) Unrealized gains/(losses) on available-for-sale securities are included in other assets.

(2) For purposes of these computations, non-accrual loans are included in average loans.

(3) Interest income on a tax equivalent basis includes the additional amount of income that would have been earned if investments in tax exempt money market investments and securities, state and municipal obligations, non-taxable loans, public equity and debt securities, and U.S. Treasuries had been made in securities and loans subject to Federal, State, and Local income taxes yielding the same after-tax income. The tax equivalent amount for $1.00 of those aforementioned categories was $1.77, $1.67, $1.55, $1.17, and $1.10 for the three months ended June 30, 2004; and $1.77, $1.65, $1.55, $1.23, and $1.15 for the three months ended June 30, 2003.

(4) For purposes of these computations, the fair value adjustments from hedging activities are included in the average balance of the related hedged item and the impact of the hedge is included in interest expense.


	2004								2003
	Average					Average			Average					Average
(dollars in thousands )	Balance		Interest			Rate			Balance		Interest			Rate
Interest Earning Assets:
Securities (1)	$	7,913,102	$	175,870			4.47	%	$	8,761,537	$	197,631			4.55	%
Loans (2)		13,204,601		408,030			6.21			11,548,068		393,489			6.87
Money Market Investments		150,614		722			.96			47,659		397			1.68

Total Interest Earning Assets		21,268,317		584,622			5.53	%		20,357,264		591,517			5.86	%

Non Interest Earning Assets:
Cash and Due from Banks		624,608								415,797
Other Assets (1)		936,263								1,214,918

Total Assets	$	22,829,188							$	21,987,979

Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits	$	9,291,543	$	34,119			.74	%	$	7,036,196	$	29,236			.84	%
Time Deposits		3,059,124		23,047			1.52			3,074,038		29,376			1.93

Total Savings and Time Deposits		12,350,667		57,166			.93			10,110,234		58,612			1.17

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,077,547		35,316			3.42			4,241,147		56,298			2.68
Federal Home Loan Bank Advances		1,026,374		24,595			4.82			1,498,619		35,676			4.80
Subordinated Debt (4)		482,527		9,144			3.81			499,163		14,345			5.80
Junior Subordinated Debt (4)		270,501		3,892			2.89			276,668		4,961			3.62

Total Borrowings		3,856,949		72,947			3.80			6,515,597		111,280			3.44

Total Interest Bearing Liabilities		16,207,616		130,113			1.61			16,625,831		169,892			2.06

Interest Rate Spread							3.92	%							3.80	%
Non-Interest Bearing Liabilities
Demand Deposits	$	4,451,326							$	3,416,613
Other Liabilities		438,293								381,780
Total Liabilities		21,097,235								20,424,224

Stockholders’ Equity		1,731,953								1,563,755

Total Liabilities and Stockholders’ Equity	$	22,829,188							$	21,987,979

Net Interest Income and Net Interest Margin (3)				454,509			4.30	%				421,625			4.18	%
Less: Tax Equivalent Adjustment				(13,585	)							(12,303	)

Net Interest Income			$	440,924							$	409,322

(1) Unrealized gains/(losses) on available-for-sale securities are included in other assets.

(2) For purposes of these computations, non-accrual loans are included in average loans.

(3) Interest income on a tax equivalent basis includes the additional amount of income that would have been earned if investments in tax exempt money market investments and securities, state and municipal obligations, non-taxable loans, public equity and debt securities, and U.S. Treasuries had been made in securities and loans subject to Federal, State, and Local income taxes yielding the same after-tax income. The tax equivalent amount for $1.00 of those aforementioned categories was $1.77, $1.67, $1.55, $1.17, and $1.13 for the six months ended June 30, 2004; and $1.77, $1.65, $1.55, $1.23, and $1.10 for the six months ended June 30, 2003.

The following table highlights the relative impact on tax equivalent net interest income brought about by changes in average interest earning assets and interest bearing liabilities as well as changes in average rates on such assets and liabilities. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes to volume or rate. For presentation purposes, changes which are not solely due to changes in volume or rate have been allocated to these categories based on the respective percentage changes in average volume and average rates as they compare to each other.


	Three Months Ended June 30,									Six Months Ended June 30,
	2004 vs. 2003
	Change In
	Average			Average			Net Interest			Average			Average			Net Interest
(in thousands)	Volume			Rate			Income			Volume			Rate			Income
Interest Income from Earning Assets:
Securities	($	2,267	)	$	6,792		$	4,525		($	17,611	)	($	4,150	)	($	21,761	)
Loans		34,866			(17,670	)		17,196			54,009			(39,468	)		14,541
Money Market Investments		423			(85	)		338			555			(230	)		325

Total Interest Income		33,022			(10,963	)		22,059			36,953			(43,848	)		(6,895	)

Interest Expense on Liabilities:
Savings, NOW & Money Market Deposits	$	5,341		($	709	)	$	4,632		$	8,642		($	3,759	)	$	4,883
Time Deposits		1,276			(3,185	)		(1,909	)		(163	)		(6,166	)		(6,329	)
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase		(16,132	)		7,526			(8,606	)		(33,386	)		12,404			(20,982	)
Federal Home Loan Bank Advances		(4,040	)		(405	)		(4,446	)		(9,833	)		(1,248	)		(11,081	)
Subordinated Debt		(151	)		(2,370	)		(2,521	)		(461	)		(4,740	)		(5,201	)
Junior Subordinated Debt		(24	)		(474	)		(498	)		(107	)		(962	)		(1,069	)

Total Interest Expense		(13,730	)		383			(13,347	)		(35,308	)		(4,471	)		(39,779	)

Net Change in Net Interest Income	$	46,752		($	11,346	)	$	35,406		$	72,261		($	39,377	)	$	32,884

The following table summarizes the net interest margin components over the last several quarters. Factors contributing to the net interest margin are outlined in the succeeding discussion and analysis.


	2004									2003
	2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr
Interest Earning Assets:
Securities		4.52	%		4.40	%		4.29	%		3.84	%		4.15	%
Loans		6.16			6.27			6.47			6.62			6.73
Money Market Investments		.88			1.19			.93			1.34			1.54

Total Interest Earning Assets		5.49	%		5.57	%		5.64	%		5.56	%		5.60	%

Interest Bearing Liabilities:
Total Savings and Time Deposits		.94	%		.92	%		.95	%		1.01	%		1.12	%
Total Borrowings		3.86			3.74			3.72			3.30			3.31

Total Interest Bearing Liabilities		1.61	%		1.62	%		1.66	%		1.67	%		1.97	%

Interest Rate Spread		3.88	%		3.95	%		3.98	%		3.89	%		3.63	%
Net Interest Margin		4.26			4.33			4.39			4.23			4.00

During the current quarter, net interest income increased $34.2 million from the second quarter of 2003 and the net interest margin improved 26 basis points from 4.00% to 4.26%. During the six months ended June 30, 2004, net interest income also increased $31.6 million from the prior year period and the net interest margin increased 12 basis points from 4.18% to 4.30%. These improvements during the current quarter were primarily due to: (a) significant growth (excluding TCNJ) in higher yielding assets, principally loans funded with core deposits, especially demand deposits; (b) the mid-quarter acquisition of TCNJ; (c) a reduction in higher cost wholesale funding due to our deposit growth and our successful capital management strategy in June 2003; and (d) an increase in securities yields due to a slow down in prepayment activity.

Our consolidated net interest income and results of operations reflect TCNJ subsequent to May 14, 2004. TCNJ had $4.1 billion in total assets, $1.4 billion in securities, $2.2 billion in net loans, $3.2 billion in deposits, and $.7 billion in borrowings which were recorded on our consolidated balance sheet at fair value (See “Condensed Notes to the Consolidated Financial Statements - Note 2 -Business Combinations” for additional information).

As previously reported, in June of 2003, we repositioned our balance sheet in order to improve our net interest margin and strengthen our interest rate profile. The repositioning included reducing our securities portfolio, decreasing our short-term borrowings, restructuring longer term borrowings and related swaps and converting certain fixed rate borrowings to variable rates.

Interest income in the second quarter of 2004 increased $20.9 million to $303.4 million compared to $282.5 million in 2003. During this same period, the yield on average interest earning assets declined 11 basis points from 5.60% to 5.49%.

Loans averaged $13.9 billion in the current quarter representing a $2.2 billion increase or 19% when compared to 2003, while yields declined 57 basis points to 6.16%. During the six months ended June 30, 2004, loans averaged $13.2 billion or an increase of $1.7 billion from 2003 while yields declined 66 basis points to 6.21%. This yield compression partially offset the positive effects of higher average loan balances. Factors contributing to the overall decline in yields include new originations and refinancing activity occurring at lower market rates. While we have experienced loan growth in all categories, it has been concentrated in higher yielding commercial loans and commercial mortgages which also contributed to core commercial deposit growth. As of June 30, 2004, the loans-to-deposits ratio was 78%, demonstrating that sufficient liquidity exists to fund further loan growth with deposits. Loan growth, excluding the completed and pending acquisitions, for the remainder of 2004 will approximate prior year’s experience.

Securities averaged $8.6 billion in the second quarter of 2004 representing a $310 million or 3.5% decrease when compared to 2003, while yields increased 37 basis points to 4.52%. During the six months ended June 30, 2004, securities averaged $7.9 billion or a decrease of $848 million from 2003 while yields declined 8 basis points to 4.47%. Average securities declined, despite the acquisition of TCNJ, as a direct result of our June 2003 balance sheet repositioning strategy. Portfolio yields and interest income were positively impacted during the current quarter by an increase in interest rates which resulted in reduced prepayment activity as compared to the first quarter of 2003. Yields and income were negatively impacted during 2003 by increased prepayment activity, which shortened our security portfolio’s anticipated lives and accelerated premium amortization. Net premium amortization affected security yields by 31 basis points during the current quarter when compared to 140 basis points in the comparable quarter of 2003. As market interest rates continue to rise in the future, prepayment activity should continue to decline, extending the anticipated lives of mortgage backed securities and reducing related premium amortization. These factors continue to have a positive effect on securities portfolio yields.

Average interest bearing liabilities increased $527 million to $17.3 billion, while overall funding costs declined 36 basis points to 1.61%. During the six months ended June 30, 2004, average interest bearing liabilities decreased $418 million to $16.2 billion, while overall funding costs declined 45 basis points to 1.61%. The negative effects of lower interest earning asset yields were offset by an increase in higher yielding loan balances and a decrease in our cost of funds, a direct result of the replacement of short-term borrowings with lower costing core deposits.

Average demand deposits grew $1.3 billion or 36% to $4.8 billion during the second quarter of 2004 and positively impacted our net interest margin. Total demand deposits contributed 75 basis points to our net interest margin this quarter compared to 45 basis points in the same period of 2003. At period end, demand deposits represented 27% of total deposits. Average Savings, NOW and Money Market deposits increased $2.8 billion or 39% to $10.1 billion, while the corresponding cost of funds declined 4 basis points to .76%. Core deposits (defined as Demand, Savings, NOW and Money Market deposits) have traditionally provided us with a low cost funding source, which benefits our net interest margin and income. The benefits of growing core deposits have been moderated by the sustained low interest rate environment. However, these deposits enhance the value of our franchise and should mitigate the potential effects rising interest rates may have on our net interest income and the margin. Average time deposits increased $301 million, while their related cost decreased 40 basis points from the prior year quarter. We believe that certain time deposit customers are only attracted by rate and not customer service. We do not actively compete in our market for these time deposits since their average cost is significantly higher than our average core deposit costs.

Average total borrowings declined $2.6 billion to $3.9 billion in the second quarter 2004 compared to 2003, while the related cost of funds increased 55 basis points to 3.86%. Average borrowings represented 23% of total interest bearing liabilities as compared to 39% during the second quarter of 2003. During the six months ended June 30, 2004, average total borrowings declined $2.7 billion from the prior year period to $3.9 billion, while overall funding costs increased 36 basis points to 3.80%. The decline in average borrowings is a direct result of our June 2003 balance sheet repositioning strategy and the growth in core deposits. The cost of funds increased due to the repayment of short term borrowings related with our repositioning. At June 30, 2004, collateralized borrowings (repurchase agreements and FHLB advances) maturing or repricing in less than one year totaled $.8 billion and had a weighted average cost of 2.45%. Collateralized borrowings with a weighted average maturity of 3.2 years totaled $2.2 billion and had a weighted average cost of 4.74%. In prior years, certain collateralized borrowings were extended and their costs fixed through the use of interest rate swaps, which increased interest expense by approximately $2.4 million and $8.2 million for the second quarters of 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003, these swaps increased interest expense by $5.1 million and $18.5 million, 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. (See “Condensed Notes to the Consolidated Financial Statements — Note 9 — Derivative Financial Instruments” for additional information).

During the latter part of 2003, we used interest rate swaps to convert $500 million of Subordinated Debt from fixed to floating indexed to three-month LIBOR. For the three and six months ended June 30, 2004, these swaps decreased interest expense by approximately $2.7 million and $5.3 million, respectively. For the three and six months ended June 30, 2003, these swaps decreased interest expense by approximately $.1 million. Interest rate swaps were also used to convert $245 million in Junior Subordinated Debt from fixed to floating indexed to three-month LIBOR. For the three and six months ended June 30, 2004, these swaps decreased interest expense by approximately $3.4 million and $6.7 million, respectively. For the three and six months ended June 30, 2003, these swaps decreased interest expense by approximately $2.9 million and $5.6 million, respectively (See “Condensed Notes to the Consolidated Financial Statements — Note 9 — Derivative Financial Instruments” for additional information).

Provision and Allowance for Loan Losses

The provision for loan losses totaled $6.5 million for the second quarter of 2004, unchanged when compared to the same period in 2003. As of June 30, 2004, the ratio of the allowance for loan losses to non-performing loans was 873% and the allowance for loans losses to total loans was .90%. Net charge-offs, as an annualized percentage of average loans, was 9 basis points in the second quarter of 2004. TCNJ’s allowance for loan loss totaled $10.3 million at May 14, 2004. The provision and allowance for loan losses are consistent with the overall growth in the loan portfolio and our provisioning policy. (See “ Condensed Notes to the Consolidated Financial Statements Note-1 - - Summary of Significant Accounting Policies — Critical Accounting Estimates” for additional information).

Non-Interest Income

Non-Interest income decreased $12.3 million or 26% to $35.2 million in the second quarter of 2004 compared to $47.5 million in 2003. In the second quarter of 2003, we recognized an $11.0 million net gain on the sale of three facilities and $3.7 million in securities gains. Customer related fees and service charges grew $3.0 million or 14% to $23.4 million resulting from continued growth in core deposits (primarily demand deposits), expansion of both our retail and commercial customer base, the acquisition of TCNJ and a broadened use of fee based services. Growth in other income was partially offset by a $1.9 million decline in mortgage banking income reflecting decreased origination, refinancing and sales activity from record highs during 2003. Securities losses recognized during the second quarter of 2004 were $.5 million as compared to securities gains of $3.7 million in prior year period. Gains recognized during 2003 were derived primarily from the sale of certain corporate debt and equity securities.

Non-Interest Expense

Non-interest expense increased $3.2 million or 3.3% to $98.4 million in the second quarter of 2004 compared to $95.2 million for the second quarter of 2003. During June 2003, we recognized $12.0 million in debt restructuring costs from the cancellation of $300 million of variable rate term borrowings and their underlying pay fixed swaps and $200 million of fixed rate term borrowings. Contributing to the increase in non-interest expense was an additional $6.1 million in employee compensation and benefits, $3.7 million in occupancy and equipment costs and $4.3 million in other operating expenses. Employee compensation and benefits rose 13% due to the acquisition of TCNJ, the hiring of additional employees to support new business initiatives, including de novo branches, annual merit increases, increased health insurance and pension costs and growth in incentive based compensation linked to deposit and fee income generation. Total incentive based compensation represented approximately 25% of total employee compensation and benefits during the period. Increases in occupancy and equipment costs are due to the increase in the number of branches from the TCNJ merger, the opening of new branches, investments in existing facilities, technology upgrades, the implementation of new business initiatives and support systems. We have made, and will continue to make, significant capital investments in technology and delivery channels to provide our customers with a wide array of easy to use and competitively priced products and services. For the six months ended June 30, 2004, we have invested approximately $17.0 million in facilities and $12.2 million in technology and equipment. Other operating expenses increased due to the acquisition of TCNJ and, to a lesser extent, other customer related programs and expenses. The increase in amortization of identifiable intangibles is due to the core deposit intangible associated with the TCNJ acquisition.

The efficiency ratio, representing the ratio of non-interest expense excluding amortization of identifiable intangible assets to net interest income on a tax equivalent basis and non-interest income, excluding securities gains, was 35.6% and 35.5% for the three and six months ended June 30, 2004, respectively. This ratio will be impacted in the near term due to the hiring of several key lenders and the timing between closing the GreenPoint transaction and merging GreenPoint Bank with North Fork Bank.

Income Taxes

Our effective tax rate for both the three and six months ended June 30, 2004 was 33.7%, as compared to 34% for the three and six months ended June 30, 2003. We anticipate that the effective tax rate for the full year of 2004 will approximate the current quarter’s level.

Financial Condition

Loan Portfolio

At June 30, 2004, loans were $15.4 billion, an increase of $2.7 billion, including $2.1 billion of loans from TCNJ. Our organic quarterly loan growth (excluding TCNJ) was $638 million, an annualized growth rate of 20%. Commercial loan growth, excluding TCNJ was $244 million in the quarter, an annualized loan growth of 19%. On a linked quarter basis, we have experienced organic loan growth in all loan categories. The following table presents our organic loan growth excluding TCNJ for the second quarter of 2004 and the loans acquired from TCNJ (at fair value).


	Actual		NFB		TCNJ		NFB
(in thousands)	June 30, 2004		Quarterly Growth		May 14, 2004		March 31, 2004
Multi-Family Mortgages	$	3,824,615	$	166,362	$	183	$	3,658,070
Commercial Mortgages		3,536,517		85,458		614,625		2,836,434
Residential Mortgages		3,329,949		144,098		679,535		2,506,316
Commercial		2,529,253		158,684		122,284		2,248,285
Consumer		1,751,240		49,096		588,162		1,113,982
Construction & Land		453,922		34,741		92,478		326,703

Total	$	15,425,496	$	638,439	$	2,097,267	$	12,689,790

Loans grew $3.5 billion or 30% to $15.4 billion for the quarter ended June 30, 2004, compared to $11.9 billion at June 30, 2003. The growth achieved during the period has resulted from continued strong loan demand despite slow paced growth in the local economy and the recent acquisition of TCNJ. The commercial and commercial mortgage portfolios, which increased $1.7 billion or 39%, have benefited from our expanded presence in the New York City market, our small business lending initiatives, robust equipment and lease financing activity and the acquisition of TCNJ. We focus on these higher yielding and interest rate sensitive loans that also generate core deposit relationships. Although we have experienced multi-family loan growth, these positive developments continue to be tempered by our decision not to compete with the more liberal underwriting terms and rate structures offered by certain competitors. Residential loans increased as we portfolio more adjustable rate mortgages which have become more attractive to borrowers in a rising interest rate environment. However, this growth has been tempered as the majority of fixed rate originations during 2003 and first quarter 2004 were sold into the secondary market, generating additional mortgage banking income. Consumer loans have benefited from the expansion of the geographic footprint of our automobile financing activities. Loan growth, excluding the completed and pending acquisitions, for the remainder of 2004 will approximate prior year’s experience. (See “Condensed Notes to the Consolidated Financial Statements — Note — 4 -Loans” for additional information)

Presently, We extend loans almost exclusively within the New York Metropolitan area, and do not participate in nationally syndicated loan arrangements. Mortgage loans are secured by real estate 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 these portfolios are dependent on both regional and general economic stability, which affect property values, and our borrowers’ financial well being and creditworthiness.

The risk inherent in the mortgage portfolio is managed by prudent underwriting standards and diversification in loan collateral type and location. Multi-family mortgages, collateralized by various types of apartment complexes located in the New York Metropolitan area, are largely dependent on sufficient rental income to cover operating expenses. They may be affected by rent control or rent stabilization regulations, which could impact future cash flows of the property. Most multi-family mortgages do not fully amortize; therefore, the principal outstanding is not significantly reduced prior to contractual maturity. Residential mortgages represent first liens on owner occupied 1 — 4 family residences located primarily in our market area. Commercial mortgages are secured by professional office buildings, retail stores, shopping centers and industrial developments.

Real estate underwriting standards include various limits on loan-to-value ratios based on property types, real estate location, property condition, quality of the organization managing the property, and the borrower’s creditworthiness. They also include the viability of the project including occupancy rates, tenants and lease terms. Additionally, underwriting standards require appraisals, periodic property inspections and ongoing monitoring of operating results.

Commercial loans are made to small and medium sized businesses and loans collateralized by security interests in lease finance receivables. The commercial mortgage and commercial loan portfolios contain no foreign loans to developing countries (“LDC”). Consumer loans consist primarily of new and used automobile loans originated through a network of automobile dealers. The credit risk in auto lending is dependent on the borrower’s creditworthiness and collateral values. The average consumer loan is generally between $15 — $25 thousand and has a contractual life of approximately 60 months. The consumer loan portfolio does not contain higher risk credit card or sub prime loans. Land loans are used to finance the acquisition of vacant land for future

residential and commercial development. Construction loans finance the building and rehabilitation of residential and multi-family projects, and to a lesser extent, commercial developments. The construction and land development portfolios do not contain any high-risk equity participation loans (“AD&C” loans).

We are selective in originating loans, emphasizing conservative lending practices and fostering customer deposit relationships. Our success in attracting new customers while leveraging our existing customer base, coupled with over-consolidation within our market area and the current interest rate environment have contributed to sustained loan demand.

We periodically monitor our underwriting standards to ensure that the quality of the loan portfolio and commitment pipeline is not jeopardized by unrealistic loan to value ratios or debt service levels. To date, there has been no deterioration in the performance or risk characteristics of our real estate loan portfolio.

In order to expand our commercial banking penetration in New Jersey and leverage our TCNJ acquisition, we hired an experienced team of approximately 30 senior lenders and support personnel to lead our New Jersey business initiatives. We believe this team, coupled with our wide array of commercial lending and retail products, will accelerate our growth in the New Jersey market. Additionally, we announced the formation of North Fork Business Capital Corp., an asset based structured finance division serving middle market businesses on a nationwide basis, led by approximately 25 seasoned lenders and support personnel. These two experienced teams of commercial bankers should assist in the generation of quality assets and commercial deposits. Substantially, all these new employees joined us effective July 1, 2004.

Securities Portfolio

Securities grew $600 million or 7% to $8.9 billion for the quarter ended June 30, 2004, compared to $8.3 billion at June 30, 2003. The growth achieved during the period was due to $1.4 billion in securities acquired from TCNJ, of which approximately $500 million were subsequently sold during the quarter. At June 30, 2004, Mortgage Backed Securities (“MBS”) represented 80% of total securities, providing continuous sources of cash flow that are affected by changes in interest rates. MBS’s represent pass-through certificates guaranteed by GNMA, FHLMC or FNMA and collateralized mortgage-backed obligations (“CMO’s”) backed by government agency pass-through certificates or whole loans. CMO’s, by virtue of the underlying collateral or structure, are AAA rated and conservative current pay sequentials or PAC structures. (See “Condensed Notes to the Consolidated Financial Statements — Note — 3 -Securities” for additional information)

Our strategy for managing the current MBS portfolio is to maintain a short weighted average life and duration. This short average life provides us with cash flows to proactively manage as market conditions change. Cash flows may be reinvested in securities at current market rates, utilized to pay off short term borrowings, and/or fund loan growth. The weighted average life and duration of the MBS portfolio was 4.3 and 3.6 years, respectively at June 30, 2004.

The yield and fair value of securities, specifically the MBS portfolio, are impacted by changes in market interest rates and related prepayment activity. Given our current portfolio composition, related prepayment activity should decrease in a rising interest rate environment, extending the portfolio’s weighted average life. Accordingly, net premiums on the portfolio would be amortized into income over a longer period of time, generating increased MBS portfolio yields and net interest income. Conversely, the opposite would occur in a declining interest rate environment. At June 30, 2004, net premiums total $35 million and represented approximately .5% of the outstanding balance of MBS’s.

Municipal securities represent a combination of short term debentures issued by local municipalities (purchased as part of a strategy to expand relationships with these governmental entities) and highly rated obligations of New York State and related authorities. Equity securities held in the available-for-sale portfolio include Federal Home Loan Bank common stock, and common and preferred stock of certain publicly traded companies. Other securities held in the available-for-sale portfolio include capital securities (trust preferred securities) of certain financial institutions and corporate bonds.

When purchasing securities, we consider the overall interest-rate risk profile as well as the adequacy of expected returns relative to risks assumed, including prepayments. In managing the securities portfolio, we may sell available-for-sale securities as a result of changes in interest rates and spreads, actual or anticipated prepayments, credit risk associated with a particular security, and/or following the completion of a business combination.

Deposits

Total deposits increased $5.4 billion or 37% to $19.8 billion at June 30, 2004, compared to June 30, 2003, due to the acquisition of TCNJ, which contributed $3.2 billion and our continued efforts on growing core deposits (demand, savings, NOW and money market deposits). (See “Condensed Notes to the Consolidated Financial Statements — Note — 2 — Business Combinations” for additional information)

The following table presents our organic deposit growth excluding TCNJ for the second quarter of 2004 and the deposits acquired from TCNJ (at fair value).


			NFB
	Actual		Quarterly			TCNJ		NFB
(in thousands)	June 30, 2004		Growth			May 14, 2004		March 31, 2004
Demand	$	5,259,052	$	386,763		$	638,763	$	4,233,526
Savings		4,494,251		96,375			551,039		3,846,837
NOW & Money Market		6,321,943		515,059			680,001		5,126,883
Time		2,300,540		(96,452	)		653,313		1,743,679
Certificates of Deposit, $100,000 & Over		1,460,671		(179,178	)		647,286		992,563

Total Deposits	$	19,836,457	$	722,567		$	3,170,402	$	15,943,488

We do not actively compete for higher costing time deposits as we believe that customers seeking these products are only attracted by rate and not customer service. Core deposits, net of TCNJ core deposits of $1.9 billion, increased $2.8 billion or 25% at June 30, 2004, compared to the same period in 2003. The primary factors contributing to core deposit growth include: (i) the continued expansion of our retail branch network, (ii) the ongoing branch upgrade program providing for greater marketplace identity, accessibility and convenience, (iii) commercial loan growth and (iv) incentive based compensation linked to deposit growth.

Over the past several years, our goal has been to expand in Manhattan where growth has outpaced all other regions. These deposits comprised 21% of total deposits and accounted for 25% of deposit growth over the 12 month period ended June 30, 2004. We believe that this over-consolidated, yet fragmented market provides opportunities to grow our commercial banking business. The following table presents the composition of total deposits, while more specifically highlighting Manhattan and New Jersey (TCNJ acquisition) for the periods ended:


	June 30,		December 31,		June 30,
(in thousands)	2004		2003		2003
Manhattan (28 branches)
Demand	$	1,289,993	$	1,027,017	$	811,565
Interest Bearing		2,831,846		2,267,543		1,950,365

Total	$	4,121,839	$	3,294,560	$	2,761,930

New Jersey (73 branches)
Demand	$	610,145		—		—
Interest Bearing		2,271,585		—		—

Total	$	2,881,730		—		—

All Other Locations (157 branches)
Demand	$	3,358,914	$	3,053,117	$	2,935,176
Interest Bearing		9,473,974		8,768,438		8,775,188

Total	$	12,832,888	$	11,821,555	$	11,710,364

Total (258 branches)
Demand	$	5,259,052	$	4,080,134	$	3,746,741
Interest Bearing		14,577,405		11,035,981		10,725,553

Total	$	19,836,457	$	15,116,115	$	14,472,294

Commercial demand deposit balances aggregated $3.5 billion or 66% of total demand deposits as compared to $2.4 billion or 64% of total demand deposits at June 30, 2003. Once again, these advances were fueled by our expanded branch network, especially the Manhattan locations, and our strong commercial loan growth and the TCNJ acquisition. Our expansion strategy coupled with the continued maturity of existing branches and our commercial loan growth should result in continued deposit growth during 2004.

Asset/Liability Management

The net interest margin is directly affected by changes in the level of interest rates, the shape of the yield curve, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of assets and liabilities, and the credit quality of the loan portfolio. Our asset/liability objectives are to maintain a strong, stable net interest margin, to utilize our capital effectively without taking undue risks, and to maintain adequate liquidity.

This risk assessment program includes a coordinated approach to the management of liquidity, capital, and interest rate risk. This process is governed by policies and limits established by senior management, which are reviewed at least annually by the Board of Directors. The Asset/Liability Committee of the Board of Directors (“ALCO”) provides guidance for asset/liability

activities. ALCO periodically evaluates the impact of changes in market interest rates on interest earning assets and interest bearing liabilities, net interest margin, capital and liquidity, and evaluates management’s strategic plan. The balance sheet structure is primarily short-term with most assets and liabilities repricing or maturing in less than five years. We monitor the sensitivity of net interest income by utilizing a dynamic simulation model complemented by a traditional gap analysis.

The simulation model measures the volatility of net interest income to changes in market interest rates. Simulation modeling involves a degree of estimation based on certain assumptions that we believe to be reasonable. Factors considered include contractual maturities, prepayments, repricing characteristics, deposit retention and the relative sensitivity of assets and liabilities to changes in market interest rates and cash flows from derivative instruments.

The Board has established certain policy limits for the potential volatility of net interest income as projected by the simulation model. Volatility is measured from a base case where rates are assumed to be flat and is expressed as the percentage change, from the base case, in net interest income over a twelve-month period. As of June 30, 2004, we were operating within policy limits.

The simulation model is kept static with respect to the composition of the balance sheet and, therefore does not reflect our ability to proactively manage in changing market conditions as demonstrated by our June 2003 balance sheet restructuring (See “Management’s Discussion and Analysis — Net Interest Income” for further details). We may choose to extend or shorten the maturities of our funding sources. We may also choose to redirect cash flows into assets with shorter or longer durations or repay borrowings. As part of our overall interest rate risk management strategy, we periodically use derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. This interest rate risk management strategy can involve modifying the repricing characteristics of certain assets and liabilities utilizing interest rate swaps, caps and floors. We did not enter into or maintain interest rate caps/floors and collars as part of our risk management strategy during the periods presented. (See “Condensed Notes to the Consolidated Financial Statements — Note 9 — Derivative Financial Instruments” for additional information).

The assumptions used are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly from those presented due to the timing, magnitude and frequency of interest rate changes, changes in market conditions and interest rate differentials (spreads) between maturity/ repricing categories, prepayments, and any actions we may take to counter such changes. The specific assumptions utilized in the simulation model include:

• The balance sheet composition remains static.

• Parallel yield curve shifts for market rates (i.e. treasuries, LIBOR, swaps, etc.) with an assumed floor of 50 basis points.

• Maintenance of our current asset and liability spreads to market interest rates.

• Savings and money market deposit rates experience a 40% impact of market interest rate movements after 3 months and have a floor of 15 and 25 basis points, respectively.

• NOW deposit rates experience a 15% impact of market interest rate movements immediately and have a floor of 10 basis points.

The following table reflects the estimated change in projected net interest income for the next twelve months assuming a gradual increase or decrease in interest rates over a twelve-month period:


(dollars in millions)	Changes in Net Interest Income
Change in Interest Rates	$ Change			% Change
+ 200 Basis Points	$	(6.6	)		(0.62	)%
+ 100 Basis Points	$	(3.3	)		(0.31	)%
- 100 Basis Points	$	(3.6	)		(0.34	)%
Board Policy Limit		N/A			(10.00	)%

Our philosophy for interest rate risk management is to limit the variability of net interest income in future periods under various interest rate scenarios. Another measure we monitor is based on market risk. Market risk is the risk of loss from adverse changes in market prices primarily driven by changes in interest rates. We calculate the value of assets and liabilities using net present value analysis with upward and downward changes (“shocks”) of 200 basis points to market interest rates. The net changes in the calculated values of the assets and liabilities are tax affected and reflected as an impact to the market value of equity.

The following table reflects the estimated change in the market value of equity assuming an immediate increase or decrease in interest rates.


(dollars in millions)	Market Value of Equity
Change in Interest Rates	$ Change			% Change
+ 200 Basis Points	$	(321.0	)		(4.78	)%
Flat Interest Rates		—			—
- 200 Basis Points	$	(129.0	)		(1.92	)%
Board Policy Limit		N/A			(40	)%

The market value of equity changes exhibits a lack of symmetry (i.e. market values decline in both rising and declining rate scenarios) due to the current low interest rate environment as our short term liability rates do not benefit from the full impact of rate decreases. Therefore, these liabilities do not experience the same price decline as our assets.

Liquidity Risk Management

The objective of liquidity risk management is to meet our financial obligations and capitalize on new business opportunities. These obligations include the payment of deposits on demand or at their contractual maturity, the repayment of borrowings as they mature and the ability to fund new and existing loans and investments as opportunities arise.

Our primary funding source is dividends from North Fork Bank. There are various federal and state banking laws and guidelines limiting the extent to which a bank subsidiary can finance or otherwise supply funds to its holding company. At June 30, 2004, dividends for North Fork Bank were limited under such guidelines to $665 million. From a regulatory standpoint, North Fork Bank, with its current balance sheet structure, had the ability to dividend approximately $120 million, while still meeting the criteria for designation as a well-capitalized institution under existing regulatory capital guidelines. Additional sources of liquidity for the Company include borrowings, the sale of available-for-sale securities, and funds available through the capital markets.

Customer deposits are the primary source of liquidity for our banking subsidiaries. Other sources of liquidity at the bank level include loan and security principal repayments and maturities, lines-of-credit with certain financial institutions, the ability to borrow under repurchase agreements, Federal Home Loan Bank (“FHLB”) advances utilizing unpledged mortgage backed securities and certain mortgage loans, the sale of available-for-sale securities and the securitization or sale of loans.

Our banking subsidiaries currently have the ability to borrow an additional $7.7 billion on a secured basis, utilizing mortgage related loans and securities as collateral. At June 30, 2004, our banking subsidiaries had $1.6 billion in advances and repurchase agreements outstanding with the FHLB.

We also maintain arrangements with correspondent banks to provide short-term credit for regulatory liquidity requirements. These available lines of credit aggregated $2.0 billion at June 30, 2004.

We continually monitor our liquidity position as well as the liquidity positions of our bank subsidiaries and believe that sufficient liquidity exists to meet all of our operating requirements.

Capital

We are subject to the risk based capital guidelines administered by bank regulatory agencies. The guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Under these guidelines, assets and certain off-balance sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk weighted assets and certain off-balance sheet items. The guidelines require all banks and bank holding companies to maintain a minimum ratio of total risk based capital to total risk weighted assets (“Total Risk Adjusted Capital”) of 8%, including Tier 1 capital to total risk weighted assets (“Tier 1 Capital”) of 4% and a Tier 1 capital to average total assets (“Leverage Ratio”) of at least 4%. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators, that, if undertaken, could have a direct material effect on us.

The regulatory agencies have amended the risk-based capital guidelines to provide for interest rate risk consideration when determining a banking institution’s capital adequacy. The amendments require institutions to effectively measure and monitor their interest rate risk and to maintain capital adequate for that risk.

As of June 30, 2004, the most recent notification from the various regulators categorized the Company and our subsidiary banks as well capitalized under the regulatory framework for prompt corrective action. Under the capital adequacy guidelines, a well capitalized institution must maintain a Total Risk Adjusted Capital Ratio of at least 10%, a Tier 1 Capital Ratio of at least 6%, a Leverage Ratio of at least 5%, and not be subject to any written order, agreement or directive. Since such notification, there are no conditions or events that management believes would change this classification.

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 June 30, 2004, we would still exceed the well capitalized threshold under the regulatory framework for prompt corrective action assuming the exclusion of Capital Securities from Tier 1 Capital.

The following table sets forth our risk-based capital amounts and ratios as of:


	June 30, 2004					June 30, 2003
(dollars in thousands )	Amount		Ratio			Amount		Ratio
Tier 1 Capital	$	1,561,021		9.86	%	$	1,349,440		10.89	%
Regulatory Requirement		633,005		4.00	%		495,622		4.00	%

Excess	$	928,016		5.86	%	$	853,818		6.89	%

Total Risk Adjusted Capital	$	2,199,075		13.90	%	$	1,964,643		15.86	%
Regulatory Requirement		1,266,009		8.00	%		991,244		8.00	%

Excess	$	933,066		5.90	%	$	973,399		7.86	%

Risk Weighted Assets	$	15,825,114				$	12,390,553

Our Leverage Ratio at June 30, 2004 and 2003 was 6.63% and 6.17%, respectively. North Fork Bank’s Tier 1, Total Risk Based and Leverage Ratios were 9.87%, 10.75%, and 6.64%, respectively, at June 30, 2004. Superior Savings of New England’s Tier 1, Total Risk Based and Leverage Ratios were 18.32%, 18.98% and 7.58%, respectively, at June 30, 2004.

On June 22, 2004, the Board of Directors declared its regular quarterly cash dividend of $.30 per common share. The dividend will be payable on August 16, 2004 to shareholders of record at the close of business on July 30, 2004.

There are various federal and state banking laws and guidelines limiting the extent to which a bank subsidiary can finance or otherwise supply funds to its holding company.

Federal Reserve Board policy provides that, as a matter of prudent banking, a bank holding company generally should not maintain a rate of cash dividends unless its net income available to common stockholders is sufficient to fund the dividends, and the prospective rate of earnings retention appears to be consistent with the holding company’s capital needs, asset quality and overall financial condition. In addition, among other things, dividends from a New York-chartered bank, such as North Fork Bank, are limited to the bank’s net profits for the current year plus its prior two years’ retained net profits.

Under federal law, a depository institution is prohibited from paying a dividend if the depository institution would thereafter be “undercapitalized” as determined by the federal bank regulatory agencies. The relevant federal regulatory agencies and the state regulatory agency, the Banking Department, also have the authority to prohibit a bank or bank holding company from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound practice in conducting its business.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act passed in 2002 imposes significant new responsibilities on publicly held companies, particularly in the area of corporate governance. We have responded to the various requirements of the Act and the implementing regulations issued by the Securities and Exchange Commission and The New York Stock Exchange. We have taken those steps to reinforce our corporate governance structure and financial reporting procedures that are mandated under the Act and will continue to observe full compliance in upcoming periods. We have always emphasized best practices in corporate governance as the most effective way of assuring stockholders that their investment is properly managed and their interests remain paramount.

Future Legislation

From time to time legislation is introduced in Congress and state legislatures with respect to the regulation of financial institutions. Such legislation may change our operating environment and the operating environment of our subsidiaries in substantial and unpredictable ways. We cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations, would have on our financial condition or results of operations or on our shareholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is contained throughout Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is incorporated by reference herein.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, including this report.

(b) Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is commonly subject to various pending and threatened legal actions relating to the conduct of its normal business activities. In the opinion of management, the ultimate aggregate liability, if any, arising out of any such pending or threatened legal actions will not be material to the consolidated financial position or results of operations of the Company.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

The following table provides common stock repurchases made by us or on our behalf during the period:

Total Number of

Average

Shares Purchased

Maximum Number of

Total Number of

Price

as Part of Publicly

Shares that May Yet Be

Shares

Paid Per

Announced

Purchased Under the

Period

Purchased (1)

Share

Program

Program (2)

April 1, 2004 - April 30, 2004

—

n/a

—

2,829,100 Shares

May 1, 2004 - May 31, 2004

—

n/a

—

2,829,100 Shares

June 1, 2004 - June 30, 2004

—

n/a

—

2,829,100 Shares

(1) We did not repurchase shares of our common stock during the second quarter of 2004, pursuant to the repurchase program (the “Program”) that we publicly announced in June 2003.

(2) In June 2003, our board of directors approved the repurchase of up to 8 million shares of our common stock, which represented 5% of the shares outstanding at such time. Unless terminated earlier by resolutions of our board of directors, the Program will expire when we have repurchased all shares authorized for repurchase under the program.

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

At the Annual Meeting of Stockholders held on April 27, 2004, the stockholders voted on:

1) The election of 3 directors for a term of three years expiring in 2007.


Name of Director	Shares Voted For		Shares Withheld
James F. Reeve		130,482,720		2,728,207
George H. Rowsom		130,445,245		2,765,762
Dr. Kurt R. Schmeller		129,883,388		3,327,619

2) Shareholders ratified the selection of KPMG, LLP as the company’s independent auditor for the fiscal year ending December 31, 2004 by 130,141,937 votes for and 1,850,212 votes withheld.

Item 6. Exhibits and Reports on Form 8-K

(a) The following exhibits are submitted herewith:


Exhibit Number		Description of Exhibit
(11)		Statement Re: Computation of Net Income Per Common and Common Equivalent Share

(31.1)		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(31.2)		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32.1)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(32.2)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(99.1)		Supplemental Performance Measurements

(b) Reports on Form 8-K

We filed the following Current Reports on Form 8-K during the period from April 1, 2004 to the date of the filing of this Report:

• On July 16, 2004, we filed a Current Report announcing our operating results for the quarter ended June 2004.

• On June 29, 2004, we filed a Current Report amending the current report on Form 8-K filed on May 27, 2004, to include pro forma financial statement information in connection with The Trust Company of New Jersey.

• On May 27, 2004, we filed a Current Report announcing that we would file the required financial statements with respect to the acquisition of The Trust Company of New Jersey.

• On May 17, 2004, we filed a Current Report announcing that we completed the acquisition of The Trust Company of New Jersey.

• On May 4, 2004, we filed a Current Report on Form 8-K, dated May 4, 2004 announcing that The Trust Company of New Jersey filed its quarterly report on Form 10-Q for the quarter ended March 31, 2004.

• On April 23, 2004, we filed a Current Report on Form 8-K, dated April 23, 2004 announcing that The Trust Company of New Jersey declared a dividend of $.18 cents per share, payable May 12, 2004 to TCNJ shareholders as of April 30, 2004.

• On April 15, 2004, we filed a Current Report on Form 8-K, dated April 15, 2004 announcing our operating results for the first quarter ended March 31, 2004.

• On April 2, 2004, we filed a Current Report on Form 8-K, dated April 2, 2004 announcing that we received regulatory approval from the New York State Banking Department to acquire The Trust Company of New Jersey.


(in thousands)	2004		2003
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest Expense	$	127,007	$	174,266

Income Taxes	$	73,400	$	112,160

During the Period the Company Purchased Various Securities which Settled in the Subsequent Period	$	86,769	$	188,063

During the Period the Company Sold Various Securities which Settled in the Subsequent Period	$	29,913	$	464,351

Non-cash activity related to the TCNJ acquisition not reflected above for the period ended June 30, 2004 follows (1):
Fair Value of Assets Acquired	$	4,028,089
Goodwill & Identifiable Intangible Assets		632,525
Common Stock Issued and Fair Value of Options, net of taxes		744,125

Liabilities Assumed	$	3,916,489


Date: August 9, 2004		North Fork Bancorporation, Inc.

		/s/ Daniel M. Healy

		Daniel M. Healy
		Executive Vice President and
		Chief Financial Officer

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	Page
PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Financial Statements
Consolidated Balance Sheets		4
Consolidated Statements of Income		5
Consolidated Statements of Cash Flows		6-7
Consolidated Statements of Changes in Stockholders’ Equity		8
Consolidated Statements of Comprehensive Income		9
Condensed Notes to the Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		36
Item 4. Controls and Procedures		36
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		37
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		37
Item 4. Submission of Matters to a Vote of Security Holders		37
Item 6. Exhibits and Reports on Form 8-K		37-38
STATEMENT RE: COMPUTATION OF NET INCOME
CERTIFICATION
CERTIFICATION
CERTIFICATION
CERTIFICATION
SUPPLEMENTAL PERFORMANCE MEASUREMENTS

(1)		Includes the effects of TCNJ purchase accounting adjustments and interest rate swaps.

(2)		Excludes $33.5 million in purchase accounting discounts.

•		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 the completed and pending acquisitions;

•		costs or difficulties related to the integration of the business of GreenPoint Financial Corp. (“GreenPoint”) may be greater than expected;

•		expected cost savings and revenue enhancements from the completed and 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.

•		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.

•		A 13% increase in net income and a 10% increase in diluted earnings per share when compared to the comparable prior year period.

•		Annualized demand deposit and total deposit growth (excluding TCNJ) of 37% and 18%, respectively.

•		Annualized loan growth (excluding TCNJ) of 20%.

•		A net interest margin of 4.26% as compared to 4.00% in the comparable prior year period.

•		Successfully closed and integrated TCNJ.

•		Hired an experienced team of commercial bankers for the New Jersey market and established an asset based lending/structured finance business through the addition of a seasoned management team.

•		Received all regulatory approvals for GreenPoint acquisition. Special shareholder meeting dates to approve the transaction have been established.

•		Declaration of a regular quarterly cash dividend of $.30 per common share.

•		The balance sheet composition remains static.

•		Parallel yield curve shifts for market rates (i.e. treasuries, LIBOR, swaps, etc.) with an assumed floor of 50 basis points.

•		Maintenance of our current asset and liability spreads to market interest rates.

•		Savings and money market deposit rates experience a 40% impact of market interest rate movements after 3 months and have a floor of 15 and 25 basis points, respectively.

•		NOW deposit rates experience a 15% impact of market interest rate movements immediately and have a floor of 10 basis points.

(1)		We did not repurchase shares of our common stock during the second quarter of 2004, pursuant to the repurchase program (the “Program”) that we publicly announced in June 2003.

(2)		In June 2003, our board of directors approved the repurchase of up to 8 million shares of our common stock, which represented 5% of the shares outstanding at such time. Unless terminated earlier by resolutions of our board of directors, the Program will expire when we have repurchased all shares authorized for repurchase under the program.