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: September 30, 2004

NORTH FORK BANCORPORATION, INC.

(Exact name of Company as specified in its charter)


DELAWARE		36-3154608

(State or other Jurisdiction of		(I.R.S. Employer
incorporation or organization)		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 –11/1/04

$.01 Par Value		313,763,637

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited)


	September 30,			December 31,			September 30,
(in thousands, except per share amounts)	2004			2003			2003
Assets:
Cash & Due from Banks	$	456,458		$	510,354		$	421,845
Money Market Investments		768,580			21,037			259,487
Securities:
Available-for-Sale ($2,149,333 ,$1,911,586 and $1,932,951 pledged at September 30, 2004, December 31, 2003 and September 30, 2003, respectively)		8,648,172			7,136,275			6,817,408
Held-to-Maturity ($27,652, $52,808 and $66,381 pledged at September 30, 2004, December 31, 2003 and September 30, 2003, respectively)		149,103			190,285			210,808

Total Securities		8,797,275			7,326,560			7,028,216

Loans:
Held-for-Sale		2,388			4,074			12,201
Held-for-Investment, Net of Unearned Income & Deferred Costs		15,871,222			12,341,199			12,009,276

Total Loans		15,873,610			12,345,273			12,021,477
Less: Allowance for Loan Losses		138,797			122,733			119,907

Net Loans		15,734,813			12,222,540			11,901,570
Goodwill		1,003,927			410,494			410,494
Identifiable Intangibles		46,452			12,765			13,657
Premises & Equipment		227,280			150,875			144,457
Accrued Income Receivable		111,061			88,722			89,568
Other Assets		356,962			226,027			207,037

Total Assets	$	27,502,808		$	20,969,374		$	20,476,331

Liabilities and Stockholders’ Equity:
Deposits:
Demand	$	5,574,161		$	4,080,134		$	3,943,506
Savings		4,592,746			3,770,683			3,759,923
NOW & Money Market		6,466,290			4,519,476			4,273,197
Time		2,144,693			1,784,408			1,841,826
Certificates of Deposit, $100,000 & Over		1,370,314			961,414			998,786

Total Deposits		20,148,204			15,116,115			14,817,238

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,889,734			2,171,154			1,904,000
Federal Home Loan Bank Advances		850,000			1,050,000			1,050,000
Subordinated Debt		478,835			476,499			481,282
Junior Subordinated Debt		267,360			266,977			272,917
Accrued Expenses & Other Liabilities		405,876			410,140			511,936

Total Liabilities	$	25,040,009		$	19,490,885		$	19,037,373

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 September 30, 2004		1,931			1,746			1,746
Additional Paid in Capital		1,116,841			378,793			372,458
Retained Earnings		1,992,873			1,816,458			1,759,876
Accumulated Other Comprehensive Income/(Loss)		4,806			(2,044	)		22,026
Deferred Compensation		(84,073	)		(91,789	)		(63,290	)
Treasury Stock at cost; 20,113,581 Shares at September 30, 2004		(569,579	)		(624,675	)		(653,858	)

Total Stockholders’ Equity		2,462,799			1,478,489			1,438,958

Total Liabilities and Stockholders’ Equity	$	27,502,808		$	20,969,374		$	20,476,331

See accompanying notes to the consolidated financial statements

Consolidated Statements of Income (unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share amounts)	2004		2003		2004		2003
Interest Income:
Loans	$	238,656	$	198,932	$	645,858	$	591,679
Mortgage-Backed Securities		79,087		49,695		210,255		202,278
Other Securities		12,175		11,195		33,070		37,031
State & Municipal Obligations		5,225		4,057		16,327		11,836
Money Market Investments		2,186		89		2,856		358

Total Interest Income		337,329		263,968		908,366		843,182

Interest Expense:
Savings, NOW & Money Market Deposits		22,921		14,435		57,040		43,671
Time Deposits		7,907		8,642		21,962		28,114
Certificates of Deposit, $100,000 & Over		5,898		4,400		14,890		14,304
Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		22,173		17,368		57,489		73,666
Federal Home Loan Bank Advances		11,707		12,981		36,302		48,657
Subordinated Debt		5,031		4,636		14,175		18,981
Junior Subordinated Debt		2,217		2,006		6,109		6,967

Total Interest Expense		77,854		64,468		207,967		234,360

Net Interest Income		259,475		199,500		700,399		608,822
Provision for Loan Losses		6,500		6,500		19,500		19,250

Net Interest Income after Provision for Loan Losses		252,975		193,000		680,899		589,572

Non-Interest Income:
Customer Related Fees & Service Charges		25,392		20,736		70,580		61,362
Investment Management, Commissions & Trust Fees		4,306		3,207		12,329		10,223
Mortgage Banking Income		1,278		2,769		3,757		8,786
Check Cashing Fees		1,174		1,191		3,522		3,452
Other Income		5,630		5,746		17,084		14,256
Securities Gains, net		4,292		381		11,704		6,677
Gain on Sale of Facilities, net		—		—		—		10,980

Total Non-Interest Income		42,072		34,030		118,976		115,736

Non-Interest Expense:
Employee Compensation & Benefits		64,912		48,396		171,214		144,811
Occupancy & Equipment, net		22,222		17,116		59,921		49,026
Other Expenses		24,334		18,350		63,461		52,061
Amortization of Identifiable Intangibles		2,995		891		5,665		2,675
Debt Restructuring Costs		—		—		—		11,955

Total Non-Interest Expense		114,463		84,753		300,261		260,528

Income Before Income Taxes		180,584		142,277		499,614		444,780
Provision for Income Taxes		60,856		47,947		168,370		150,798

Net Income	$	119,728	$	94,330	$	331,244	$	293,982

Earnings Per Share – Basic	$	.71	$	.63	$	2.09	$	1.94
Earnings Per Share – Diluted		.70		.63		2.06		1.92

See accompanying notes to the consolidated financial statements

Consolidated Statements of Cash Flows (unaudited)


For the Nine Months Ended September 30,	2004			2003
(in thousands)
Cash Flows from Operating Activities:
Net Income	$	331,244		$	293,982
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Provision for Loan Losses		19,500			19,250
Depreciation		13,855			11,288
Amortization of Deferred Compensation		10,583			7,413
Amortization of Identifiable Intangible		5,665			2,675
Amortization of Premiums		25,989			75,752
Accretion of Discounts and Net Deferred Loan Fees		(29,721	)		(20,773	)
Securities Gains, net		(11,704	)		(6,677	)
Gains on Sales of Loans Held-for-Sale		(772	)		(4,549	)
Originations of Loans Held-for-Sale		(84,303	)		(324,846	)
Proceeds from Sales of Loans Held-for-Sale		83,389			310,923
Purchases of Trading Assets		(13,911	)		(24,938	)
Sales of Trading Assets		14,015			27,355
Gain on the Sale of Facilities		—			(10,980	)
Debt Restructuring Costs		—			11,955
Other, Net		545			(1,358	)

Net Cash Provided by Operating Activities		364,374			366,472

Cash Flows from Investing Activities:
Purchases of Securities Held-to-Maturity		(7,758	)		(50,998	)
Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity		48,455			146,819
Purchases of Securities Available-for-Sale		(3,495,804	)		(5,074,853	)
Proceeds from Sales of Securities Available-for-Sale		1,102,263			1,345,058
Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale		2,301,452			5,401,812
Net Change in Loans Held-for-Investment		(1,413,541	)		(635,344	)
Transfers to Other Real Estate, Net of Sales		715			(193	)
Purchases of Premises and Equipment, net		(41,128	)		(25,064	)
Purchase Acquisition, net of cash acquired		246,209			—

Net Cash (Used in)/Provided by Investing Activities		(1,259,137	)		1,107,237

Cash Flows from Financing Activities:
Net Increase in Customer Deposit Liabilities		1,861,687			1,624,708
Net Decrease in Borrowings		(170,483	)		(2,458,955	)
Purchase of Treasury Stock		—			(264,193	)
Exercise of Options and Common Stock Sold for Cash		40,702			8,389
Cash Dividends Paid		(143,496	)		(126,664	)

Net Cash Provided by/(Used in) Financing Activities		1,588,410			(1,216,715	)

Net Increase in Cash and Cash Equivalents		693,647			256,994
Cash and Cash Equivalents at Beginning of the Period		531,391			424,338

Cash and Cash Equivalents at End of the Period	$	1,225,038		$	681,332

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)


									Accumulated
			Additional						Other
	Common		Paid in			Retained			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		—		—			293,982			—			—			—			293,982
Cash Dividends ($.81 per share)		—		—			(124,700	)		—			—			—			(124,700	)
Issuance of Stock (124,383 shares)		—		771			—			—			—			3,400			4,171
Restricted Stock Activity, net		—		162			—			—			7,272			(41	)		7,393
Employee Stock Option Activity, net		—		(5,786	)		—			—			—			10,003			4,217
Purchases of Treasury Stock (7,776,400 shares)		—		—			—			—			—			(264,193	)		(264,193	)
Accumulated Other Comprehensive Income, net of tax		—		—			—			4,035			—			—			4,035

Balance, September 30, 2003	$	1,746	$	372,458		$	1,759,876		$	22,026			($63,290	)		($653,858	)	$	1,438,958

Balance, December 31, 2003	$	1,746	$	378,793		$	1,816,458			($2,044	)		($91,789	)		($624,675	)	$	1,478,489
Net Income		—		—			331,244			—			—			—			331,244
Cash Dividends ($.93 per share)		—		—			(154,829	)		—			—			—			(154,829	)
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 (109,777 shares)		—		1,241			—			—			—			3,108			4,349
Restricted Stock Activity, net		—		1,186			—			—			7,716			999			9,901
Employee Stock Option Activity, net		—		(12,352	)		—			—			—			50,989			38,637
Accumulated Other Comprehensive Income, net of tax		—		—			—			6,850			—			—			6,850

Balance, September 30, 2004	$	1,931	$	1,116,841		$	1,992,873		$	4,806			($84,073	)		($569,579	)	$	2,462,799

See accompanying notes to the consolidated financial statements

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2004			2003			2004			2003
Net Income	$	119,728		$	94,330		$	331,244		$	293,982

Other Comprehensive Income/(Loss)
Unrealized Gains/(Losses) on Securities During the Period:
Change in Unrealized Gains/(Losses) on Securities		121,574			(38,646	)		18,072			(8,096	)
Less: Reclassification Adjustment for (Gains) Included in Net Income		(4,292	)		(381	)		(11,704	)		(6,677	)

Change in Unrealized Gains/(Losses) on Securities		117,282			(39,027	)		6,368			(14,773	)
Less: Related Tax Effect		(50,431	)		16,782			(2,739	)		6,352

Net Change in Unrealized Gains/(Losses) on Securities During the Period		66,851			(22,245	)		3,629			(8,421	)

Unrealized Gains/(Losses) on Derivative Instruments During the Period:
Change in Unrealized Gains/(Losses) on Derivatives		(1,996	)		1,276			(998	)		(5,950	)
Add: Reclassification Adjustment for Expenses/Losses Included in Net Income		1,538			2,675			6,646			27,801

Change in Unrealized Gains/(Losses) on Derivatives		(458	)		3,951			5,648			21,851
Less: Related Tax Effect		195			(1,699	)		(2,427	)		(9,395	)

Net Change in Unrealized Gains/(Losses) on Derivatives During the Period		(263	)		2,252			3,221			12,456

Net Other Comprehensive Income/(Loss)	$	66,588		$	(19,993	)	$	6,850		$	4,035

Comprehensive Income	$	186,316		$	74,337		$	338,094		$	298,017

See accompanying notes to the consolidated financial statements

North Fork Bancorporation, Inc.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
September 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 Recent Business Combination

We are a regional bank holding company incorporated in Delaware 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 260 retail bank branches in the New York Metropolitan area, including 73 branches in New Jersey. North Fork Bank provides banking and financial services to middle market and small businesses, local government units and retail customers in its service area. Our non-bank subsidiaries offer financial services such as asset management, trust, securities brokerage, and related annuity and mutual fund products. We also operate a nationally chartered bank, Superior Savings of New England, N.A., headquartered in Connecticut, which operates from two locations and focuses on gathering deposits throughout the Northeast.

On October 1, 2004, we completed the acquisition of GreenPoint Financial Corp. (“GreenPoint”). GreenPoint was a $27 billion bank holding company that operated two primary businesses, a retail bank (GreenPoint Bank) and a national mortgage company (GreenPoint Mortgage Funding Corp.) GreenPoint Bank, a New York state-chartered bank, operates 90 retail bank branches in the New York Metropolitan area. GreenPoint bank will continue to operate as a separate subsidiary until its core banking systems can be converted and merged with and into North Fork Bank. The conversion will occur on February 19, 2005. GreenPoint Mortgage is a national mortgage company that originates a wide variety of “A” quality residential loans. GreenPoint’s results of operations will be included in North Fork’s results beginning October 1, 2004.

On May 14, 2004, we completed the acquisition and simultaneously integrated the systems of The TrustCompany of New Jersey (“TCNJ”), which had $4.1 billion in assets. (See “Note 2 – Business Combinations” – for additional information about both acquisitions)

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, our wholly-owned statutory business trusts (collectively, the “Trusts”) that were formed to issue Capital Securities (or “Trust Preferred Securities”) were deconsolidated. 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 nine months ended September 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. Our statement of financial position and results of operations for future periods will be significantly impacted by our October 1, 2004 acquisition of GreenPoint. (See “Note 2 – Business Combinations” – for additional information)

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 and 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

Our stock-based compensation plans are accounted for 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 shortly before December 31 and contain a nominal vesting period; therefore, we would have expensed these options under the fair value method during the fourth quarter. Since the pro forma effect on net income of expensing stock options during the three months and nine months ended September 30, 2004 and 2003 is minimal, we have not disclosed 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				Nine Months Ended
	September 30,				September 30,
(In thousands)	2004		2003		2004		2003
Total Revenue	$	4,515	$	3,304	$	12,755	$	10,516
Net Income		780		508		2,413		1,628
Total Assets		13,631		5,794		13,631		5,794

The Private Asset Group’s total revenues, net income and total assets comprise approximately 1.4%, .07% and .05%, respectively of the consolidated totals for all periods presented.

NOTE 2 —BUSINESS COMBINATIONS

The Trust Company of New Jersey (“TCNJ”)

On May 14, 2004, we completed the acquisition of TCNJ and simultaneously integrated their systems. 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 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 approximately $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		1,413,634
Loans, net of Unearned Income & Deferred Costs		2,112,596
Less: Allowance for Loan Losses		(10,251	)

Net Loans		2,102,345
Goodwill		593,432
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 Employee Stock Options, net of tax		744,125

Total	$	4,660,614

A Core Deposit Intangible Asset (“CDI”) of $39.4 million was recorded and 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. 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 September 30, 2004, accrued merger related costs of $14.8 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. The goodwill recorded as a result of the merger is not deductible for income tax purposes.

GreenPoint Financial Corp. (“GreenPoint”)

On October 1, 2004, we completed the acquisition of GreenPoint. GreenPoint was a $27 billion bank holding company that operated two primary businesses, a national mortgage business and a New York retail bank. 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. GreenPoint’s results of operations will be included in our results of operations beginning October 1, 2004. At September 30, 2004, GreenPoint had $27 billion in assets, $6.8 billion in securities, $5.1 billion in loans held-for-sale, $12.8 billion in loans held-for-investment, $12.8 billion in deposits, and $11.4 billion in borrowings. Pursuant to the Agreement and Plan of Merger, dated as of February 15, 2004, each outstanding share of common stock, par value $0.01 per share, of GreenPoint will be converted into the right to receive 1.0514 shares of common stock, par value $0.01 per share, of North Fork. The acquisition will be accounted for using the purchase method of accounting, which requires that the assets and liabilities of GreenPoint be fair-valued as of October 1, 2004. We have applied the provisions of SFAS No. 141 and No. 142 as required for the recognition of goodwill and intangible assets.

The purchase price will be allocated to the assets acquired and liabilities assumed using the fair values at the acquisition date. The computation of the purchase price and the estimated allocation of the purchase price to the net assets of GreenPoint – based on their respective fair values as of October 1, 2004, and the resulting goodwill – are presented in the accompanying table. The estimated allocation of the purchase price is subject to refinement and may be adjusted accordingly.

The following Combined Pro Forma Balance Sheet includes the estimated purchase accounting adjustments associated with the GreenPoint acquisition:

North Fork Bancorporation, Inc.
Combined with GreenPoint Financial Corp.
Pro Forma Combined Condensed Consolidated Balance Sheet
September 30, 2004
(Unaudited)


	Pro Forma
(in thousands)	Combined
Assets:
Cash & Due from Banks	$	1,000,576
Money Market Investments		206,398
Securities		15,593,063
Loans:
Held-For-Sale (1)		5,127,503
Held-for-Investment		28,791,474
Less: Allowance for Loan Losses		216,523

Net Loans Held-for-Investment		28,574,951

Goodwill		5,893,555
Core Deposit Intangibles		187,617
Premises & Equipment		453,432
Other Assets		1,877,788

Total Assets	$	58,914,883

Liabilities and Stockholders’ Equity:
Deposits		33,054,334
Federal Funds Purchased & Collateralized Borrowings		13,951,205
Borrowings		1,514,024
Other Liabilities		1,372,374

Total Liabilities	$	49,891,937

Stockholders’ Equity:
Total Stockholders’ Equity		9,022,946

Total Liabilities and Stockholders’ Equity	$	58,914,883

The following table summarizes the estimated GreenPoint fair value adjustments included on the above Balance Sheet and the impact of amortizing and/or accreting the respective adjustments into income over the next twelve months:


	Estimated
Balance Sheet	Gross			Estimated 2005
Category	Premium/(Discount)			Amortization/(Accretion)
(In thousands)
Securities	$	(59,864	)	$	(23,946	)
Loans Held-for-Sale (1)		65,000			—
Loans Held-For-Investment		86,204			24,630
Building		4,218			141
Time Deposits		(62,496	)		(31,248	)
Collateralized Borrowings		(251,589	)		(76,230	)
Subordinated Debt		(36,850	)		(6,142	)
Capital Securities		(31,413	)		(1,384	)
Senior Notes		4,176			1,129
Core Deposit Intangible		141,165			53,788

Total	$	(141,449	)	$	(59,262	)

Note — (1) Loans Held-for-Sale at October 1, 2004 were recorded at their estimated fair value, which exceeded their historical carrying value by approximately $65 million (or $43 million on an after tax basis). The fair value adjustment reflects the estimated economic gain on the actual sale of these loans in the fourth quarter of 2004. As a result, the estimated consolidated tangible book value per share at October 1, 2004, will increase by approximately $.14 to $9.06 per share (before the recently announced 3-for-2 stock split) from the amount previously disclosed. It also has the effect of reducing diluted earnings per share in the fourth quarter of 2004 by the same amount. The impact of this one-time write-up is limited to the fourth quarter of 2004 with no effect on future operating performance of the mortgage company.

NOTE 3 — SECURITIES PORTFOLIO

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


	September 30, 2004				December 31, 2003				September 30, 2003
Available-for-Sale	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
CMO Agency Issuances	$	3,169,479	$	3,151,438	$	3,129,005	$	3,110,430	$	3,306,849	$	3,331,474
CMO Private Issuances		1,588,229		1,585,019		1,278,205		1,276,049		1,076,995		1,080,098
Agency Pass-Through Certificates		2,046,913		2,066,500		1,240,897		1,246,994		831,500		836,621
State & Municipal Obligations		791,527		797,701		700,307		707,015		686,550		693,511
Equity Securities (1)		187,759		189,656		185,757		194,345		238,129		245,578
U.S. Treasury Securities		54,569		54,422		55,750		55,765		54,713		54,818
U.S. Government Agencies’ Obligations		151,760		155,447		2,310		2,325		7,616		7,583
Other Debt Securities		641,638		647,989		534,114		543,352		559,706		567,725

	$	8,631,874	$	8,648,172	$	7,126,345	$	7,136,275	$	6,762,058	$	6,817,408

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


	September 30, 2004				December 31, 2003				September 30, 2003
Held-to-Maturity	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
Agency Pass-Through Certificates	$	62,254	$	63,512	$	81,759	$	83,989	$	94,711	$	97,746
State & Municipal Obligations		47,173		49,447		54,732		57,848		56,775		60,450
CMO Private Issuances		26,182		26,158		38,389		38,129		43,442		43,493
Other Debt Securities		13,494		13,466		15,405		15,346		15,880		15,966

	$	149,103	$	152,583	$	190,285	$	195,312	$	210,808	$	217,655

At September 30, 2004, securities carried at $4.2 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 $2.1 billion, while securities pledged under agreements pursuant to which the secured parties may not sell or repledge approximated $2.1 billion at September 30, 2004.

NOTE 4 — LOANS

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


	September 30,		% of			December 31,		% of			September 30,		% of
(dollars in thousands)	2004		Total			2003		Total			2003		Total
Multi-Family Mortgages	$	3,945,171		25	%	$	3,634,533		29	%	$	3,684,530		31	%
Commercial Mortgages		3,606,650		23			2,814,103		23			2,519,184		21
Residential Mortgages		3,487,397		22			2,403,306		20			2,355,467		19
Commercial		2,679,759		16			2,145,798		17			2,077,084		17
Consumer		1,686,614		11			1,095,529		9			1,098,193		9
Construction & Land		501,296		3			283,243		2			316,782		3

Total	$	15,906,887		100	%	$	12,376,512		100	%	$	12,051,240		100	%
Unearned Income & Deferred Costs		33,277					31,239					29,763

Loans, Net	$	15,873,610				$	12,345,273				$	12,021,477

The loan portfolio consists primarily of loans secured by real estate located in the New York/New Jersey 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. Residential mortgages include $2.4 million, $4.1 million and $12.2 million of loans designated as held-for-sale at September 30, 2004, December 31, 2003 and September 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:


	September 30,			December 31,			September 30,
(in thousands)	2004			2003			2003
Loans Ninety Days Past Due and Still Accruing	$	5,419		$	2,268		$	2,445
Non-Accrual Loans		11,610			11,072			10,328

Non-Performing Loans		17,029			13,340			12,773
Other Real Estate		222			313			313

Non-Performing Assets	$	17,251		$	13,653		$	13,086

Allowance for Loan Losses to Non-Performing Loans		815	%		920	%		939	%
Allowance for Loan Losses to Total Loans, net		.87			.99			1.00
Non-Performing Loans to Total Loans, net		.11			.11			.11
Non-Performing Assets to Total Assets		.06			.07			.06

Future levels of non-performing assets will be affected by our October 1, 2004 acquisition of GreenPoint, prevailing economic conditions and the impact of those conditions on our customers, prevailing interest rates, unemployment rates, property values and other internal and external factors.

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


	September 30,		December 31,		September 30,
(in thousands)	2004		2003		2003
Commercial	$	10,032	$	5,632	$	5,795
Residential Mortgages		3,783		4,808		3,886
Consumer		2,986		2,343		2,384
Commercial Mortgages		228		557		708
Construction and Land		—		—		—
Multi-Family Mortgages		—		—		—

Total Non-Performing Loans	$	17,029	$	13,340	$	12,773

Interest foregone 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 $.4 million and $.9 million for both the three and nine months ended September 30, 2004 and 2003, respectively.

As of September 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						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2004			2003			2004			2003
Balance at Beginning of Period	$	138,008		$	117,753		$	122,733		$	114,995
Loans Charged-off:
Consumer		6,155			3,260			14,646			10,854
Commercial		3,411			2,988			8,576			8,968
Commercial Mortgages		30			33			30			35
Residential Mortgages		9			—			15			75
Multi-Family Mortgages		—			—			—			13
Construction and Land		—			—			—			—

Total Charge-Offs		9,605			6,281			23,267			19,945
Recoveries of Loans Charged-Off:
Consumer		2,244			1,607			5,688			4,485
Commercial		1,227			258			2,966			836
Commercial Mortgages		286			70			789			70
Residential Mortgages		137			—			137			207
Multi-Family Mortgages		—			—			—			9
Construction and Land		—			—			—			—

Total Recoveries		3,894			1,935			9,580			5,607
Net Loans Charged-Off		5,711			4,346			13,687			14,338
Provision for Loan Losses		6,500			6,500			19,500			19,250
TCNJ Purchase Acquisition		—			—			10,251			—

Balance at End of Period	$	138,797		$	119,907		$	138,797		$	119,907

Annualized Net Charge-Offs to Average Loans, net		0.15	%		0.14	%		0.13	%		0.16	%

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 September 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	$	—		—		$	244,150		2.75	%	$	244,150		2.75	%
2005		400,000		5.83	%		350,000		4.70	%		750,000		5.30	%
2006		300,000		3.86	%		575,000		2.51	%		875,000		2.97	%
2007		—		—			100,000		2.59	%		100,000		2.59	%
2008		50,000		5.62	%		400,000		5.59	%		450,000		5.60	%
Thereafter		100,000		5.90	%		425,000		4.24	%		525,000		4.56	%

Total	$	850,000		5.13	%	$	2,094,150		3.85	%	$	2,944,150		4.22	%

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

(2) Excludes $30.6 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:


	September 30,			December 31,			September 30,
(in thousands)	2004			2003			2003
5.875% Subordinated Notes due August 15, 2012	$	349,296		$	349,229		$	349,207
5.0% Subordinated Notes due August 15, 2012		150,000			150,000			150,000

Total Subordinated Debt		499,296			499,229			499,207
Fair Value Hedge Adjustment		(20,461	)		(22,730	)		(17,925	)

Carrying Amount	$	478,835		$	476,499		$	481,282

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:


	September 30,		December 31,		September 30,
(in thousands)	2004		2003		2003
8.70% Junior Subordinated Debt – North Fork Capital Trust I, due December 15, 2026	$	102,824	$	102,815	$	102,811
8.00% Junior Subordinated Debt – North Fork Capital Trust II, due December 15, 2027		102,795		102,785		102,782
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		252,166		252,147		252,140
Fair Value Hedge Adjustment		15,194		14,830		20,777

Carrying Amount	$	267,360	$	266,977	$	272,917

For purposes of issuing Capital Securities (or “Trust Preferred Securities”) the Company formed Wholly-Owned Statutory Business Trusts (the “Trusts”). The Trusts were initially capitalized with common stock and used 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 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 the deconsolidation of 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 to the Junior Subordinated Debt obligation and the equity investment that existed between the Company and the Trusts that issued the Capital Securities. Additionally, we re-designated the $245 million of interest rate swaps that were hedging the Capital Securities to a corresponding amount of Junior Subordinated Debt.

These swap agreements changed 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 September 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. During the period presented, we only utilized interest rate swaps.

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


Maturity				Swap Fixed			Swap Variable
(dollars in thousands)	Hedged Liability	Notional Amounts		Interest Rates			Interest Rates
Pay Fixed Swaps
2005	Repurchase Agreements	$	100,000		4.24%-4.26	%		1.67%-1.68	%
2008	Repurchase Agreements		75,000		6.14			1.70

		$	175,000

Pay Floating Swaps
2007	5.00% Subordinated Debt	$	150,000		5.00	%		1.71	%
2012	5.875% Subordinated Debt		350,000		5.875			1.71
2026	8.70% Junior Subordinated Debt		100,000		8.70			1.88
2027	8.00% Junior Subordinated Debt		100,000		8.00			1.88
2028	8.17% Junior Subordinated Debt		45,000		8.17			1.69

		$	745,000

At September 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 $7.9 million, which is recorded as a component of other liabilities (the net of tax amount of $4.5 million is reflected in stockholders’ equity as a component of accumulated other comprehensive income). The use of pay fixed swaps increased interest expense by $1.5 million and $2.7 million in the third quarter of 2004 and 2003, respectively. For the nine months ended September 30, 2004 and 2003, these swaps increased interest expense by $6.6 million and $21.2 million, respectively. The decline in swap related interest expense was primarily due to the maturity of $850 million of swaps in 2003 and $100 million in the second quarter of 2004. Based upon the current interest rate environment, approximately $1.7 million of the $4.5 million unrealized after tax loss is expected to be reclassified from accumulated other comprehensive income in the next twelve months. (See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net Interest Income” for additional Information)

In 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. Also in 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 September 30, 2004, the fair value adjustment of the swap hedging $500 million of subordinated notes was an unrealized loss of $20.5 million and 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 $2.2 million and $2.6 million in the third quarter of 2004 and 2003, respectively. For the nine months ended September 30, 2004 and 2003, these swaps reduced interest expense by $7.5 million and $2.7 million, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income on these transactions for each period reported.

Interest rate swaps were also 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 September 30, 2004, the fair value adjustment on the swap agreements hedging $200 million of Junior Subordinated Debt was an unrealized gain totaling $16.8 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 fair value adjustment of the swap hedging $45 million of Junior Subordinated Debt was an unrealized loss totaling $1.6 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 $3.1 million and $3.3 million in the third quarters of 2004 and 2003, respectively. For the nine months ended September 30, 2004 and

2003, interest expense was reduced by $9.8 million and $8.9 million, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income from these transactions for each period reported.

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

Traditional off-balance sheet financial products are extended 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 September 30, 2004:


(in thousands)	Amount
Commitments to Extend Credit	$	2,598,490
Standby letters of credit (1)		240,625
Commercial letters of credit		20,651

(1) Standby letters of credit are considered guarantees and are reflected in other liabilities in the accompanying consolidated balance sheet at their estimated fair value of $1.2 million as of September 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 (income)/costs:


	Three Months Ended												Nine Months Ended
	September 30,												September 30,
	2004			2003			2004			2003			2004			2003			2004			2003
(in thousands)	Pension Benefits						Post-Retirement Benefits						Pension Benefits						Post-Retirement Benefits
Components of Net Periodic Benefit (Income)/Cost:
Service Cost	$	1,531		$	875		$	178		$	144		$	3,706		$	2,625		$	544		$	432
Interest Cost		1,802			1,386			409			312			4,797			4,158			1,110			936
Expected Return on Plan Assets		(3,626	)		(1,701	)		(64	)		—			(8,175	)		(5,103	)		(64	)		—
Amortization of Prior Service Cost		(66	)		(66	)		(20	)		(20	)		(198	)		(198	)		(60	)		(60	)
Amortization of Transition Asset/(Liability)		(107	)		(107	)		73			73			(321	)		(321	)		219			219
Recognized Actuarial Loss		255			212			67			59			771			636			229			177

Net Periodic Benefit (Income)/Cost	$	(211	)	$	599		$	643		$	568		$	580		$	1,797		$	1,978		$	1,704

We expect to make a $22.7 million contribution to the pension plan and a $1.7 million contribution to the post-retirement plan during the fourth quarter of 2004.

NOTE 12 – PROPOSED AND RECENT ACCOUNTING PRONOUNCEMENTS

Consolidation of Variable Interest Entities

As described in Note 1, effective January 1, 2004, we adopted the accounting provisions of FIN 46R and deconsolidated 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 to Junior Subordinated Debt obligations and the related equity investments 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.

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 may be greater than expected;

• expected cost savings and revenue enhancements from the GreenPoint and TCNJ 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 nine months ended September 30, 2004 and 2003 are set forth in the table below. The succeeding discussion and analysis describes the changes in components of operating results.


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands, except ratios & per share amounts)	2004			2003			2004			2003
Earnings:
Net Income	$	119,728		$	94,330		$	331,244		$	293,982

Per Share:
Earnings Per Share – Basic	$	.71		$	.63		$	2.09		$	1.94
Earnings Per Share – Diluted		.70			.63			2.06			1.92
Cash Dividends		.33			.27			.93			.81
Dividend Payout Ratio		48	%		43	%		47	%		42	%
Book Value	$	14.24		$	9.50		$	14.24		$	9.50
Tangible Book Value		8.16			6.70			8.16			6.70
Average Equivalent Shares — Basic		168,108			148,853			158,265			151,879
Average Equivalent Shares — Diluted		170,323			150,510			160,721			153,464
Selected Ratios:
Return on Average Total Assets		1.75	%		1.80	%		1.82	%		1.82	%
Return on Average Tangible Assets (2)		1.85			1.84			1.90			1.87
Return on Average Stockholders’ Equity		19.66			25.50			22.53			25.67
Return on Average Tangible Stockholders’ Equity (2)		35.32			36.11			36.67			35.73
Yield on Interest Earning Assets (1)		5.47			5.56			5.51			5.76
Cost of Funds		1.63			1.67			1.62			1.93
Net Interest Margin (1)		4.23			4.23			4.27			4.20
Efficiency Ratio (3)		37.62			35.38			36.27			34.25

(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 ratio 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, net of securities gains, facilities gains and other non-recurring items.

Highlights for the third quarter ended September 30, 2004 include:

• A 27% increase in net income compared to the prior year, with an 11% increase in diluted earnings per share

• A 30% increase in net interest income in the current quarter compared to the prior year, attributable in part to a strong net interest margin in the current period of 4.23%

• Annualized demand and core deposit growth in the quarter of 24% and 14%, respectively

• Annualized loan growth of 13%

• Increased expenditures in support of new business initiatives

• Board of Directors’ approval of a 10% increase in our quarterly cash dividend to $.33 per share and a three-for-two stock split

• The acquisition of GreenPoint effective October 1, 2004

Net Income

Net income for the third quarter was $119.7 million or diluted earnings per share of $.70 compared to $94.3 million or $.63 diluted earnings per share in the third quarter of 2003. Returns on average tangible equity and average tangible assets during the third quarter of 2004 were 35.3% and 1.9%, respectively, compared to 36.1% and 1.8% a year ago.

Net income for the nine months ended September 30, 2004 was $331.2 million, or diluted earnings per share of $2.06 compared to $294.0 million or diluted earnings per share of $1.92 for the same period of 2003. Returns on average tangible stockholders’ equity and average tangible assets were 36.7% and 1.9%, respectively, during the nine months ended September 30, 2004, as compared to 35.7% and 1.9%, 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 86% of total revenue (defined as net interest income plus non-interest income) for the current quarter. 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 September 30:


	2004								2003
	Average					Average			Average					Average
(dollars in thousands )	Balance		Interest			Rate			Balance		Interest			Rate
Interest Earning Assets:
Securities (1)	$	8,823,732	$	103,113			4.65	%	$	7,317,821	$	70,844			3.84	%
Loans (2)		15,659,594		239,080			6.07			11,947,125		199,344			6.62
Money Market Investments (5)		574,036		2,210			1.53			36,348		123			1.34

Total Interest Earning Assets		25,057,362		344,403			5.47	%		19,301,294		270,311			5.56	%

Non Interest Earning Assets:
Cash and Due from Banks		612,732								425,619
Other Assets (1)		1,515,319								1,117,611

Total Assets	$	27,185,413							$	20,844,524

Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits	$	11,017,089	$	22,921			.83	%	$	7,880,067	$	14,435			.73	%
Time Deposits		3,685,260		13,805			1.49			2,945,503		13,042			1.76

Total Savings and Time Deposits		14,702,349		36,726			.99			10,825,570		27,477			1.01

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,684,757		22,173			3.29			2,448,722		17,368			2.81
Federal Home Loan Bank Advances		850,000		11,707			5.48			1,227,717		12,981			4.19
Subordinated Debt (4)		462,820		5,031			4.32			493,801		4,636			3.72
Junior Subordinated Debt (4)		261,361		2,217			3.37			281,024		2,006			2.83

Total Borrowings		4,258,938		41,128			3.84			4,451,264		36,991			3.30

Total Interest Bearing Liabilities	$	18,961,287		77,854			1.63		$	15,276,834		64,468			1.67

Interest Rate Spread							3.84	%							3.89	%
Non-Interest Bearing Liabilities:
Demand Deposits	$	5,444,217							$	3,775,735
Other Liabilities		357,793								324,586

Total Liabilities		24,763,297								19,377,155
Stockholders’ Equity		2,422,116								1,467,369

Total Liabilities and Stockholders’ Equity	$	27,185,413							$	20,844,524

Net Interest Income and Net Interest Margin (3)				266,549			4.23	%				205,843			4.23	%
Less: Tax Equivalent Adjustment (3)				(7,074	)							(6,343	)

Net Interest Income			$	259,475							$	199,500

(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 September 30, 2004; and $1.77, $1.67, $1.55, $1.25, and $1.06 for the three months ended September 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.

(5) During the third quarter 2004, average money market investments included $560 million in Federal Funds Sold to GreenPoint at an average yield of 1.53%.


	2004								2003
	Average					Average			Average					Average
(dollars in thousands )	Balance		Interest			Rate			Balance		Interest			Rate
Interest Earning Assets:
Securities (1)	$	8,218,882	$	278,983			4.53	%	$	8,274,485	$	268,477			4.34	%
Loans (2)		14,028,748		647,110			6.16			11,682,451		592,833			6.78
Money Market Investments (5)		292,804		2,932			1.34			43,973		519			1.58

Total Interest Earning Assets		22,540,434		929,025			5.51	%		20,000,909		861,829			5.76	%

Non Interest Earning Assets:
Cash and Due from Banks		620,626								418,980
Other Assets (1)		1,130,841								1,182,289

Total Assets	$	24,291,901							$	21,602,178

Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits	$	9,870,924		57,040			.77	%	$	7,320,577	$	43,671			.80	%
Time Deposits		3,269,359		36,852			1.51			3,030,722		42,418			1.87

Total Savings and Time Deposits		13,140,283		93,892			.95			10,351,299		86,089			1.11

Federal Funds Purchased & Securities Sold Under Agreements to Repurchase		2,281,418		57,489			3.37			3,637,107		73,666			2.71
Federal Home Loan Bank Advances		967,153		36,302			5.01			1,407,326		48,657			4.62
Subordinated Debt (4)		475,817		14,175			3.98			497,336		18,981			5.10
Junior Subordinated Debt (4)		267,386		6,109			3.05			278,152		6,967			3.35

Total Borrowings		3,991,774		114,075			3.82			5,819,921		148,271			3.41

Total Interest Bearing Liabilities	$	17,132,057		207,967			1.62		$	16,171,220		234,360			1.94

Interest Rate Spread							3.89	%							3.82	%
Non-Interest Bearing Liabilities:
Demand Deposits	$	4,784,597							$	3,536,737
Other Liabilities		411,653								362,909

Total Liabilities		22,328,307								20,070,866
Stockholders’ Equity		1,963,594								1,531,312

Total Liabilities and Stockholders’ Equity	$	24,291,901							$	21,602,178

Net Interest Income and Net Interest Margin (3)				721,058			4.27	%				627,469			4.19	%
Less: Tax Equivalent Adjustment (3)				(20,659	)							(18,647	)

Net Interest Income			$	700,399							$	608,822

(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 nine months ended September 30, 2004; and $1.77, $1.66, $1.55, $1.24, and $1.07 for the nine months ended September 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.

(5) During the nine months ended September 30, 2004, average money market investments included $188 million in Federal Funds Sold to GreenPoint at an average yield 1.53%.

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 September 30,									Nine Months Ended September 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	$	15,607		$	16,662		$	32,269		$	(200	)	$	10,706		$	10,506
Loans		57,318			(17,582	)		39,736			112,038			(57,761	)		54,277
Money Market Investments		2,067			20			2,087			2,504			(91	)		2,413

Total Interest Income		74,992			(900	)		74,092			114,342			(47,146	)		67,196

Interest Expense on Liabilities:
Savings, NOW & Money Market Deposits	$	6,292		$	2,194		$	8,486		$	14,816		$	(1,447	)	$	13,369
Time Deposits		2,999			(2,236	)		763			3,105			(8,671	)		(5,566	)
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase		620			4,185			4,805			(33,022	)		16,845			(16,177	)
Federal Home Loan Bank Advances		(2,844	)		1,570			(1,274	)		(12,968	)		613			(12,355	)
Subordinated Debt		(307	)		702			395			(789	)		(4,017	)		(4,806	)
Junior Subordinated Debt		(149	)		360			211			(261	)		(597	)		(858	)

Total Interest Expense		6,611			6,775			13,386			(29,119	)		2,726			(26,393	)

Net Change in Net Interest Income	$	68,381		$	(7,675	)	$	60,706		$	143,461		$	(49,872	)	$	93,589

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
	3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			3rd Qtr
Interest Earning Assets:
Securities		4.65	%		4.52	%		4.40	%		4.29	%		3.84	%
Loans		6.07			6.16			6.27			6.47			6.62
Money Market Investments		1.53			.88			1.19			.93			1.34

Total Interest Earning Assets		5.47	%		5.49	%		5.57	%		5.64	%		5.56	%

Interest Bearing Liabilities:
Total Savings and Time Deposits		.99	%		.94	%		.92	%		.95	%		1.01	%
Total Borrowings		3.84			3.86			3.74			3.72			3.30

Total Interest Bearing Liabilities		1.63	%		1.61	%		1.62	%		1.66	%		1.67	%

Interest Rate Spread		3.84	%		3.88	%		3.95	%		3.98	%		3.89	%
Net Interest Margin		4.23			4.26			4.33			4.39			4.23

Net interest income improved $60.0 million or 30% in the current quarter when compared to the third quarter of 2003, while the net interest margin of 4.23% remained unchanged compared to the prior year quarter. For the nine months ended September 30, 2004, net interest income improved by $91.6 million or 15% from the prior year period, while the net interest margin improved 8 basis points from 4.19% to 4.27%. The improvement in net interest income during 2004 was primarily due to: (a) the acquisition of TCNJ, (b) loan growth funded with core deposits, especially demand deposits, and (c) an increase in securities yields due to higher market interest rates and a corresponding slow down in prepayment activity. The net interest margin for the current quarter was negatively impacted by 7 basis points as a direct result of selling federal funds at prevailing market rates to GreenPoint which in turn used the proceeds to finance their held-for-investment loan growth. Federal Funds Sold to GreenPoint averaged $560 million during the third quarter at an average rate of 1.5%.

Interest income in the third quarter of 2004 increased $73.3 million to $337.3 million compared to $264.0 million in 2003. During this same period, the yield on average interest earning assets declined 9 basis points from 5.56% to 5.47%.

Loans averaged $15.7 billion for the quarter representing a $3.7 billion increase or 31% when compared to the 2003 third quarter, while yields declined 55 basis points to 6.07%. Higher average loan balances resulted in increased interest income during the period, however lower yields partially offset this benefit. The lower yields resulted as new originations and refinancing activity occurred at lower market rates. Loan growth was experienced in all categories; however it has been concentrated in higher yielding commercial loans and commercial mortgages which also contributed to commercial deposit growth. The loans-to-deposits ratio as of September 30, 2004 was 79%. Loan demand remains strong and should result in growth at levels consistent with the first nine months of 2004.

Securities averaged $8.8 billion in the third quarter of 2004 representing a $1.5 billion or 21% increase compared to 2003, while yields improved 81 basis points to 4.65%. Interest income and portfolio yields benefited from higher market interest rates. Portfolio cash flows were reinvested at higher yields, while premium amortization slowed due to lower prepayment activity. During 2003, yields and income were negatively impacted by increased prepayment activity, which shortened our security portfolios’ anticipated lives and accelerated premium amortization. Net premium amortization affected security yields by 21 basis points during the current as quarter compared to 118 basis points in the comparable 2003 period.

Average interest bearing liabilities increased $3.7 billion to $19.0 billion, while funding costs declined 4 basis points to 1.63%. Although we experienced an increase in market interest rates during the period, overall funding costs declined as interest earning assets growth, primarily loans, was funded with low cost core deposits. (defined as Demand, Savings, NOW and Money Market deposits)

Average demand deposits grew $1.6 billion or 44% to $5.4 billion during the third quarter of 2004. Total demand deposits contributed 78 basis points to our net interest margin this quarter compared to 57 basis points in the same period of 2003. At period end, demand deposits represented 28% of total deposits. Core deposits increased $3.1 billion or 40% to $11.0 billion, while the corresponding cost of funds increased 10 basis points to 83 basis points. Core deposits have traditionally provided us with a low cost funding source, which benefits our net interest margin and net interest income. These core deposits favorably enhance the value of our franchise and are historically less sensitive to the potential impact of rising interest rates. Average time deposits, excluding the $1.3 billion acquired from TCNJ, decreased $.6 billion, while their related cost also declined 27 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 cost.

Average total borrowings declined $.2 billion to $4.3 billion in the third quarter 2004 compared to 2003, while the related cost of funds increased 54 basis points to 3.84%. Average borrowings represented 22% of total interest bearing liabilities as compared to 29% during the third quarter of 2003, a direct result of our growth in core deposits. Certain collateralized borrowings were extended and their costs fixed through the use of interest rate swaps, which increased interest expense by approximately $1.5 million and $2.7 million for the third quarters of 2004 and 2003, respectively. For the nine months ended September 30, 2004 and 2003, these swaps increased interest expense by $6.6 million and $21.2 million, respectively. The decline in swap related interest expense is primarily due to the maturity of $850 million in 2003. (See “Condensed Notes to the Consolidated Financial Statements – Note 9 – Derivative Financial Instruments” for additional information).

During the latter part of 2003, interest rate swaps were used to convert $500 million of Subordinated Debt from fixed to floating indexed to three-month LIBOR. For the three months ended September 30, 2004 and 2003, these swaps decreased interest expense by approximately $2.2 million and $2.6 million, respectively. 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 months ended September 30, 2004, and 2003, these swaps decreased interest expense by approximately $3.1 million and $3.3 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 third quarter of 2004, unchanged when compared to the same period in 2003. As of September 30, 2004, the ratio of the allowance for loan losses to non-performing loans was 815% and the allowance for loans losses to total loans was 87 basis points. Net charge-offs, as an annualized percentage of average loans, was 15 basis points in the third quarter of 2004. (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 increased $8.1 million or 24% to $42.1 million in the third quarter of 2004 compared to $34.0 million in 2003. Customer related fees and service charges grew $4.7 million or 22% to $25.4 million resulting from the acquisition of TCNJ, continued growth in core deposits, expansion of both our retail and commercial customer base, and a broadened use of fee based services. Growth in non-interest income was partially offset by a $1.5 million decline in mortgage banking income reflecting

decreased origination, refinancing and sales activity from record highs during 2003. Net securities gains recognized during the third quarter of 2004 were $4.3 million as compared to securities gains of $.4 million in prior year period. Gains recognized during 2004 and 2003 were derived primarily from the sale of certain corporate debt and equity securities.

Non-Interest Expense

Non-interest expense grew $29.7 million or 35% to $114.5 million in the third quarter of 2004 compared to $84.8 million in the third quarter of 2003. Contributing to this increase was an additional $16.5 million in employee compensation and benefits, $5.1 million in occupancy and equipment costs and $6.0 million in other operating expenses. Each of these expense categories were impacted by the acquisition of TCNJ. The current quarter reflects the first full quarters’ impact of operating the TCNJ business. Employee compensation and benefits was also impacted by the hiring of several senior lenders and support staff. Also contributing to the increase were the opening of 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 24% 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. Other operating expenses were also impacted by other customer related programs and expenses. The increase in amortization of identifiable intangibles was 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 37.6% and 36.3% for the three and nine months ended September 30, 2004, respectively. This ratio was impacted by the hiring of several senior lenders and support staff and will continue to be impacted in the near term due to the timing of merging GreenPoint Bank with North Fork Bank.

Income Taxes

Our effective tax rate for both the three and nine months ended September 30, 2004 was 33.7%, as compared to our effective tax rate for the three and nine months ended September 30, 2003 of 33.7% and 33.9%, respectively.

Financial Condition

Loan Portfolio

Loans grew $1.8 billion or 15% to $15.9 billion, (exclusive of the $2.1 billion in loans acquired from TCNJ) for the quarter ended September 30, 2004, compared to $12.0 billion at September 30, 2003. Loan growth on a linked quarter basis was approximately $480 million, an annualized growth rate of 13%. Loan demand continues to remain strong in most categories. Based on the current loan pipeline, growth in the fourth quarter should remain consistent with the first nine months of 2004.

Commercial and commercial mortgage portfolios increased $1.6 billion or 37% due to the acquisition of TCNJ, our expanded presence in the New York City market, small business lending initiatives and robust equipment and lease financing activity. We focus on these higher yielding and interest rate sensitive loans that generate core deposit relationships. Multi-family loan growth was $ .2 billion during the period; however, it continues 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 adjustable rate mortgages, which comprise a significant portion of our origination volume. Consumer loans, which are mostly comprised of auto loans, have been negatively impacted by automobile manufacturers offering aggressive incentives and zero percent financing. Loan growth, excluding the completed and pending acquisitions, for the remainder of 2004 will approximate last year’s experience. (See “Condensed Notes to the Consolidated Financial Statements – Note – 4 –Loans” for additional information)

Mortgage loans are primarily 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 address 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 include 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.

Several initiatives were undertaken by management to expand its commercial loan and deposit generation capabilities. They included hiring several senior lenders and support personnel in New Jersey, allowing us to leverage our recent acquisition of TCNJ and to grow in Long Island by strengthen our middle market commercial lending division. We also formed an asset based/structured finance subsidiary (North Fork Business Capital Corp.) led by approximately 25 seasoned lenders and support personnel. North Fork Business Capital Corp. will serve middle market businesses through four offices located throughout the country. Substantially, all these new employees joined us effective July 1, 2004.

Securities Portfolio

Securities grew $1.8 billion or 25% to $8.8 billion for the quarter ended September 30, 2004, compared to $7.0 billion at September 30, 2003. The growth achieved during the period was due to $1.4 billion in securities acquired from TCNJ. At September 30, 2004, Mortgage Backed Securities represented 79% 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 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 3.7 and 3.0 years, respectively at September 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 against interest income over a longer period of time, resulting in higher MBS portfolio yields and interest income. Conversely, the opposite would occur in a declining interest rate environment. At September 30, 2004, net premiums total $32.3 million and represented approximately 47 basis points 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, available-for-sale securities may be sold 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 $5.3 billion or 36% to $20.1 billion at September 30, 2004, compared to September 30, 2003. TCNJ contributed $2.8 billion of this growth, while the balance was achieved through our continued efforts to grow core deposits (demand, savings, NOW and money market deposits).

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, excluding $1.8 billion from TCNJ, increased $2.9 billion or 24% at September 30, 2004, compared to the same date 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, (iii) expanded branch hours providing additional accessibility and convenience, (iv) commercial loan growth and (v) incentive based compensation linked to deposit growth.

During the past several years, the goal has been to expand our presence in Manhattan where growth has outpaced all other regions. Manhattan deposits comprised 21% of total deposits and accounted for 47% of deposit growth (excluding TCNJ) over the 12 month period ended September 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 for the periods ended:


	September 30,		December 31,		September 30,
(in thousands)	2004		2003		2003
Manhattan (28 branches)
Demand	$	1,268,146	$	1,027,017	$	889,349
Savings, Now & Money Market		2,691,871		1,897,448		1,906,853
Time		362,401		370,095		345,076

Total	$	4,322,418	$	3,294,560	$	3,141,278

New Jersey (73 branches)
Demand	$	556,377		—		—
Savings, Now & Money Market		1,225,783		—		—
Time		1,055,548		—		—

Total	$	2,837,708		—		—

All Other Locations (157 branches)
Demand	$	3,749,638	$	3,053,117	$	3,054,157
Savings, Now & Money Market		7,141,382		6,392,711		6,126,267
Time		2,097,058		2,375,727		2,495,536

Total	$	12,988,078	$	11,821,555	$	11,675,960

Total (258 branches)
Demand	$	5,574,161	$	4,080,134	$	3,943,506
Savings, Now & Money Market		11,059,036		8,290,159		8,033,120
Time		3,515,007		2,745,822		2,840,612

Total	$	20,148,204	$	15,116,115	$	14,817,238

Commercial demand deposit balances aggregated $3.8 billion or 69% of total demand deposits as compared to $2.6 billion or 66% of total demand deposits at September 30, 2003. Once again, these advances were achieved 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 September 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. 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	$	(5.7	)		(0.55	)%
+ 100 Basis Points	$	(4.7	)		(0.46	)%
- 100 Basis Points	$	(19.1	)		(1.84	)%
Board Policy Limit		N/A			(10.00	)%

The objective of our interest rate risk management process 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 effected 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	$	(246.9	)		(3.50	)%
Flat Interest Rates		—			—
- 200 Basis Points	$	(285.3	)		(4.00	)%
Board Policy Limit		N/A			(40	)%

The market value of equity changes exhibit 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 market value 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.

The Company’s 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 September 30, 2004, dividends for North Fork Bank were limited under such guidelines to $788 million. From a regulatory capital standpoint, North Fork Bank, with its current balance sheet structure, had the ability to dividend approximately $200 million, while still meeting the criteria for a well-capitalized institution under regulatory guidelines. Additional sources of liquidity 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 have the ability to borrow an additional $7.7 billion on a secured basis, utilizing mortgage related loans and securities as collateral. At September 30, 2004, we 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 $1.8 billion at September 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 September 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. As of September 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:


	September 30, 2004					September 30, 2003
(dollars in thousands )	Amount		Ratio			Amount		Ratio
Tier 1 Capital	$	1,652,047		10.12	%	$	1,237,188		10.19	%
Regulatory Requirement		652,820		4.00	%		485,532		4.00	%
Excess	$	999,227		6.12	%	$	751,656		6.19	%

Total Risk Adjusted Capital	$	2,290,769		14.04	%	$	1,859,718		15.32	%
Regulatory Requirement		1,305,640		8.00	%		971,063		8.00	%
Excess	$	985,129		6.04	%	$	888,655		7.32	%

Total Risk Weighted Assets	$	16,320,501				$	12,138,291

At September 30, 2004 and 2003, the Leverage Ratio was 6.32% and 6.06%, respectively. North Fork Bank’s Tier 1 Capital, Total Risk Based and Leverage Ratios were 10.39%, 11.25%, and 6.47%, respectively, at September 30, 2004. Superior Savings of New England’s Tier 1 Capital, Total Risk Based and Leverage Ratios were 16.86%, 17.47% and 7.73%, respectively, at September 30, 2004.

On September 28, 2004, the Board of Directors declared a 3-for-2 stock split and a 10% increase in its regular quarterly cash dividend from $.30 per common share to $.33 per common share (Pre-split basis). The dividend payment and the stock split distribution will be made on November 15, 2004 to shareholders of record at the close of business on October 29, 2004. Diluted earnings per common share on a post stock split basis was $.47 and $1.37 per share for the three and nine months ended September 30, 2004, respectively as compared to $.42 and $1.28 per share for the three and nine months ended September 30, 2003, respectively.

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. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, have 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 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. Unregistered Sales of Equity Securities and Use of Proceeds

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

Average

Total Number of

Maximum Number of

Total Number

Price

Shares Purchased as

Shares that May Yet Be

of Shares

Paid Per

Part of Publicly

Purchased Under the

Period

Purchased (1)

Share

Announced Program

Program (2)

July 1, 2004 – July 31, 2004

—

n/a

—

2,829,100 Shares

August 1, 2004 – August 31, 2004

—

n/a

—

2,829,100 Shares

September 1, 2004 - September 30, 2004

—

n/a

—

2,829,100 Shares

(1) We did not repurchase shares of our common stock during the third 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

On August 31, 2004, North Fork held a special meeting of stockholders (the “Special Meeting”) to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of February 15, 2004, by and between North Fork and GreenPoint, pursuant to which GreenPoint would merge with and into North Fork.

At the Special Meeting, 116,075,304 shares were voted for the proposal, 529,503 shares were voted against the proposal, and 1,020,033 shares abstained.

Item 6. Exhibits

(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


For the Nine Months Ended September 30,	2004		2003
(in thousands)
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest Expense	$	197,972	$	247,723

Income Taxes	$	141,867	$	157,263

During the Period the Company Purchased Various Securities which Settled in the Subsequent Period	$	9,370	$	115,132

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	$	4,027,830
Goodwill & Indentifiable Intangible Assets		632,784
Common Stock Issued and Fair Value of Options, net of taxes		744,125

Liabilities Assumed	$	3,916,489


Date: November 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		3
Consolidated Statements of Income		4
Consolidated Statements of Cash Flows		5-6
Consolidated Statements of Changes in Stockholders’ Equity		7
Consolidated Statements of Comprehensive Income		8
Condensed Notes to the Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition And Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 4. Submission of Matters to a Vote of Security Holders		36
Item 6. Exhibits		36
STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
CERTIFICATION
CERTIFICATION
CERTIFICATION
CERTIFICATION
SUPPLEMENT PERFORMANCE MEASUREMENTS

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

(2)		Excludes $30.6 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 may be greater than expected;

•		expected cost savings and revenue enhancements from the GreenPoint and TCNJ 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 27% increase in net income compared to the prior year, with an 11% increase in diluted earnings per share

•		A 30% increase in net interest income in the current quarter compared to the prior year, attributable in part to a strong net interest margin in the current period of 4.23%

•		Annualized demand and core deposit growth in the quarter of 24% and 14%, respectively

•		Annualized loan growth of 13%

•		Increased expenditures in support of new business initiatives

•		Board of Directors’ approval of a 10% increase in our quarterly cash dividend to $.33 per share and a three-for-two stock split

•		The acquisition of GreenPoint effective October 1, 2004

(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 September 30, 2004; and $1.77, $1.67, $1.55, $1.25, and $1.06 for the three months ended September 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.

(5)		During the third quarter 2004, average money market investments included $560 million in Federal Funds Sold to GreenPoint at an average yield of 1.53%.

•		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 third 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.