UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2005

or

For the transition period from  to                               

Commission File Number 0-23229

Independence Community Bank Corp.

(Exact name of registrant as specified in its charter)

(718) 722-5300

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ     No  o

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12-b-2 of the Exchange Act.

Yes  þ     No  o

      Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At May 5, 2005, the registrant had 83,932,335 shares of common stock ($.01 par value per share) outstanding.

INDEPENDENCE COMMUNITY BANK CORP.

Table of Contents

Independence Community Bank Corp.

Consolidated Statements of Financial Condition

(In Thousands, Except Share and Per Share Amounts)

See accompanying notes to consolidated financial statements.

Independence Community Bank Corp.

Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)

(Unaudited)

See accompanying notes to consolidated financial statements.

Independence Community Bank Corp.

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended March 31, 2005 and 2004

(In Thousands, Except Share Amounts)

(Unaudited)

See accompanying notes to consolidated financial statements.

Independence Community Bank Corp.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

See accompanying notes to consolidated financial statements.

INDEPENDENCE COMMUNITY BANK CORP.

Notes to Consolidated Financial Statements

      Independence Community Bank was originally founded as a New York-chartered savings bank in 1850. In April 1992, the Bank reorganized into the mutual holding company form of organization pursuant to which the Bank became a wholly owned stock savings bank subsidiary of a newly formed mutual holding company (the “Mutual Holding Company”).

      In April 1997, the Board of Directors of the Bank and the Board of Trustees of the Mutual Holding Company adopted a plan of conversion (the “Plan of Conversion”) to convert the Mutual Holding Company to the stock form of organization and simultaneously merge it with and into the Bank and all of the outstanding shares of Bank common stock held by the Mutual Holding Company would be cancelled (the “Conversion”).

      As part of the Conversion, Independence Community Bank Corp. (the “Company”) was incorporated under Delaware law in June 1997. The Company is regulated by the Office of Thrift Supervision (“OTS”) as a registered savings and loan holding company. The Company completed its initial public offering on March 13, 1998, issuing 70,410,880 shares of common stock resulting in proceeds of $685.7 million, net of $18.4 million of expenses. The Company used $343.0 million, or approximately 50% of the net proceeds, to purchase all of the outstanding stock of the Bank. The Company also loaned $98.9 million to the Company’s Employee Stock Ownership Plan (the “ESOP”) which used such funds to purchase 5,632,870 shares of the Company’s common stock in the open market subsequent to completion of the initial public offering. As part of the Plan of Conversion, the Company formed the Independence Community Foundation (the “Foundation”) and concurrently with the completion of the initial public offering donated 5,632,870 shares of common stock of the Company valued at the time of their contribution at $56.3 million. The Foundation was established in order to further the Company’s and the Bank’s commitment to the communities they serve.

      The Company increased its issued and outstanding common shares by 28,200,070 shares as the stock portion of the consideration paid in connection with the merger with Staten Island Bancorp, Inc. (“SIB”) which was effective as of the close of business on April 12, 2004. (See Note 2).

      The Bank established, in accordance with the requirements of the New York State Banking Department (the “Department”), a liquidation account for the benefit of depositors of the Bank as of March 31, 1996 and September 30, 1997 in the amount of $319.7 million, which was equal to the Bank’s total equity as of the date of the latest consolidated statement of financial condition (August 31, 1997) appearing in the final prospectus used in connection with the Conversion. The liquidation account is reduced as, and to the extent that, eligible and supplemental eligible account holders (as defined in the Bank’s Plan of Conversion) have reduced their qualifying deposits as of each March 31st. Subsequent increases in deposits do not restore an eligible or supplemental eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, each eligible account holder or supplemental eligible account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying balances for accounts then held.

      In addition to the restriction on the Bank’s equity described above, the Bank may not declare or pay cash dividends on its shares of common stock if the effect thereof would cause the Bank’s stockholder’s equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration and payment would otherwise violate regulatory requirements.

      The Bank provides financial services primarily to individuals and small to medium-sized businesses within the New York City metropolitan area. The Bank is subject to regulation by the Federal Deposit Insurance Corporation (“FDIC”) and the Department.

      The Board of Directors declared the Company’s twenty-seventh consecutive quarterly cash dividend on April 22, 2005. The dividend amounted to $0.27 per share of common stock and is payable on May 25, 2005 to stockholders of record on May 11, 2005.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      On July 24, 2003 the Company announced that its Board of Directors authorized the eleventh stock repurchase plan for up to three million shares of the Company’s outstanding common shares subject to the completion of their tenth stock repurchase program. The Company completed its tenth stock repurchase plan and commenced its eleventh stock repurchase program on August 26, 2003. As of March 31, 2005, 1,035,462 shares had been repurchased at an average cost of $38.35 per share under the eleventh repurchase plan, with approximately 1,964,538 shares remaining to be purchased pursuant to the Company’s eleventh repurchase program. Repurchases will be made by the Company from time to time in open-market transactions as, in the opinion of management, market conditions warrant.

      The repurchased shares are held as treasury stock. A portion of such shares was utilized to fund the stock portion of the merger consideration paid in two acquisitions of other financial institutions by the Company in prior years as well as consideration paid in October 2002 to increase the Company’s minority equity investment in Meridian Capital Group, LLC (“Meridian Capital”). Treasury shares also are being used to fund the Company’s stock benefit plans, in particular, the 1998 Stock Option Plan (the “Option Plan”), the Directors Fee Plan and the 2002 Stock Incentive Plan (the “Stock Incentive Plan”). The Company issued 390,238 shares of treasury stock in connection with the exercise of options with an aggregate value of $7.0 million at the date of issuance during the quarter ended March 31, 2005.

      During the quarter ended March 31, 2005, the Company repurchased 825,791 shares of its common stock at an aggregate cost of $32.8 million. At March 31, 2005, the Company had repurchased a total of 34,338,307 shares pursuant to the eleven repurchase programs at an aggregate cost of $586.8 million and reissued 14,587,653 shares with an aggregate value, as calculated, of $213.0 million.

      The Company’s principal business is conducted through the Bank, which is a full-service, community-oriented financial institution headquartered in Brooklyn, New York. As of March 31, 2005, the Bank operated 123 banking offices, including the 35 additional branches which resulted from the merger with SIB in April 2004 (See Note 2), located in the greater New York City metropolitan area, which includes the five boroughs of New York City, Nassau and Suffolk counties of New York and New Jersey. At its banking offices located on Staten Island, the Bank conducts business as SI Bank & Trust, a division of the Bank. During the three months ended March 31, 2005, the Company opened three new offices and currently expects to expand its branch network through the opening of approximately four additional branch locations during the remainder of 2005. In March 2005, the Company closed three branch offices, one each in Brooklyn, Westchester and New Jersey. In addition, the Bank maintains one branch facility in Maryland and lending offices in Maryland, Florida and Illinois as a result of the expansion of the Company’s commercial real estate lending activities.

      During July 2003, the Company announced the expansion of its commercial real estate lending activities to the Baltimore-Washington market and the Boca Raton, Florida market. During the third quarter of 2004, the Company expanded its commercial real estate lending activities to the Chicago market. The loans generated in these areas are obtained primarily from referrals from Meridian Capital, which already has an established presence in these market areas.

      The Bank’s deposits are insured to the maximum extent permitted by law by the Bank Insurance Fund and the Savings Association Insurance Fund administered by the FDIC. The Bank is subject to examination and regulation by the FDIC, which is the Bank’s primary federal regulator, and the Department, which is the Bank’s chartering authority and its primary state regulator. The Bank also is subject to certain reserve requirements established by the Board of Governors of the Federal Reserve System and is a member of the Federal Home Loan Bank (“FHLB”) of New York, which is one of the 12 regional banks comprising the FHLB system. The Company is subject to the examination and regulation of the OTS as a registered savings and loan holding company.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      On April 12, 2004, the Company completed its merger with SIB and the merger of SIB’s wholly owned subsidiary, SI Bank & Trust (“SI Bank”), with and into the Bank. SI Bank, a full service federally chartered savings bank, operated 17 full service branch offices on Staten Island, three full service branch offices in Brooklyn, and a total of 15 full service branch offices in New Jersey.

      In addition to the opportunity to enhance shareholder value, the merger provided the Company with a number of strategic opportunities and benefits that have assisted its growth as a leading community-oriented financial institution. The opportunities include expanding the Company’s asset generation capabilities through use of SIB’s strong core deposit funding base; increasing deposit market share in the Company’s core New York City metropolitan area market and strengthening its balance sheet.

      As a result of the SIB transaction, the Company acquired approximately $7.15 billion in assets (including loans totaling $3.56 billion and securities totaling $2.09 billion) and assumed approximately $3.79 billion in deposits, $2.65 billion in borrowings and $84.2 million in other liabilities. Included in the $84.2 million of other liabilities was $23.7 million of accrued severance costs. The Company has paid approximately $8.4 million of severance costs since April 12, 2004 and had $15.3 million of such liability remaining at March 31, 2005. The results of operations of SIB are included in the Consolidated Statements of Income and Comprehensive Income subsequent to April 12, 2004.

      Under the terms of the Agreement and Plan of Merger between the Company and SIB dated November 24, 2003 (the “SIB Agreement”), the aggregate consideration paid in the merger consisted of $368.5 million in cash and 28,200,070 shares of the Company’s common stock. Holders of SIB common stock received cash or shares of the Company’s common stock pursuant to an election, proration and allocation procedure subject to the total consideration being comprised of approximately 75% paid in the Company’s common stock and 25% paid in cash. The SIB transaction had an aggregate value of approximately $1.48 billion assuming an acquisition value of $24.3208 per share (the average share price used to calculate the exchange ratio).

      In addition on March 1, 2004, SIB announced the completion of the sale of the majority of the assets and operations of Staten Island Mortgage Corp., the mortgage banking subsidiary of SI Bank, to Lehman Brothers. The remaining Staten Island Mortgage Corp. offices were sold or ceased operations by March 31, 2004. At March 31, 2005, Staten Island Mortgage Corp. (which is a subsidiary of the Bank as a result of the SIB merger) had $54.9 million of loans available-for-sale.

      The merger was accounted for as a purchase and the excess cost over the fair value of net assets acquired (“goodwill”) in the transaction was $1.01 billion. Under the provisions of SFAS No. 142, goodwill is not being amortized in connection with this transaction and the Company estimates that the goodwill will not be deductible for income tax purposes. The Company also recorded a core deposit intangible asset of $87.1 million, which is being amortized using the interest method over 14 years.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table presents data with respect to the fair values of assets and liabilities acquired in the SIB transaction.

      The Company recorded $59.8 million in net income, or $0.72 diluted earnings per share, for the three months ended March 31, 2005 compared to net income of $34.2 million or $0.42 per diluted share for the three months ended March 31, 2004 if the merger had taken place on January 1, 2004. This proforma results of operations is not necessarily indicative of the results of operations that would have occurred if the merger had been completed on the date indicated or which may be obtained in the future.

      The following is a description of the significant accounting policies of the Company and its subsidiaries. These policies conform with accounting principles generally accepted in the United States of America.

      The accompanying consolidated financial statements of the Company were prepared in accordance with instructions to Form 10-Q and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. All normal, recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the consolidated financial statements have been included. Certain reclassifications have been made to the prior years’ financial statements to conform with the current year’s presentation. The Company uses the equity method of accounting for investments in less than majority-owned entities.

      The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

      The results of operations for the three months ended March 31, 2005 are not necessarily indicative of the results to be expected for the year ending December 31, 2005. These interim financial statements should be read in conjunction with the Company’s consolidated audited financial statements and the notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (“2004 Annual Report”).

      The Company has identified the evaluation of the allowance for loan losses, goodwill and deferred tax assets as critical accounting estimates where amounts are sensitive to material variation. Critical accounting estimates are significantly affected by management judgment and uncertainties and there is a likelihood that materially different amounts would be reported under different, but reasonably plausible, conditions or assumptions. A description of these policies, which significantly affect the determination of the Company’s financial condition and results of operations are summarized in Note 3 (“Summary of Significant Accounting Policies”) of the Consolidated Financial Statements in the 2004 Annual Report.

      For stock options granted prior to January 1, 2003, the Company uses the intrinsic value based methodology which measures compensation cost for such stock options as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the amount an employee or non-employee director must pay to acquire the stock. To date, no compensation expense has been recorded at the time of grant for stock options granted prior to January 1, 2003, since, for all granted options, the market price on the date of grant equaled the amount employees or non-employee directors must pay to acquire the stock covered thereby. However, compensation expense has been recognized as a result of the accelerated vesting of options occurring upon the retirement of senior officers. Under the terms of the Company’s option plans, unvested options held by retiring senior officers and non-employee directors of the Company only vest upon retirement if the Board of Directors or the Committee administering the option plans allow the acceleration of the vesting of such unvested options.

      Effective January 1, 2003, the Company recognizes stock-based compensation expense on options granted subsequent to January 1, 2003 in accordance with the fair value-based method of accounting described in Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation, as amended (“SFAS No. 123”).

      The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including dividend yield, stock volatility, the risk free rate of return, expected term and turnover rate. The fair value of each option is expensed over its vesting period. Because the Company recognized the fair value provisions prospectively, compensation expense related to employee stock options granted did not have a full impact during 2003. The adoption of SFAS No. 123 did not have a material effect on the Company’s financial condition or results of operations. See Note 13 hereof. See also Note 4 hereof for a discussion of SFAS No. 123 (revised 2004), “Share-Based Payment” which was issued in December 2004.

      Comprehensive income includes net income and all other changes in equity during a period, except those resulting from investments by owners and distribution to owners. Other Comprehensive Income (“OCI”) includes revenues, expenses, gains and losses that under generally accepted accounting principles are included

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in comprehensive income, but excluded from net income. Comprehensive income and accumulated OCI are reported net of related income taxes. Accumulated OCI consists of unrealized gains and losses on available-for-sale securities, net of related income taxes.

      The following is a description of new accounting pronouncements and their effect on the Company’s financial condition and results of operations.

      In November 2003, the FASB issued Emerging Issues Task Force (“EITF”) Issue 03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments.” The Company complied with the disclosure provisions of this rule in Note 3 to the Consolidated Financial Statements included in its 2004 Annual Report. In March 2004, the FASB reached a consensus regarding the application of a three-step impairment model to determine whether cost method investments are other-than-temporarily impaired. The Company is currently evaluating the impact of adopting the provisions of this rule, which are required to be applied prospectively to all current and future investments accounted for in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and other cost method investments for reporting periods beginning after June 15, 2004. However, in September 2004, the effective date of these provisions was delayed until the finalization of a FASB Staff Position (FSP) to provide additional implementation guidance. The FASB staff has reviewed the comments on the proposed FSP and identified the issues of most concern to respondents.

      The FASB will consider adding a project to its agenda to converge its impairment models for financial instruments with the International Accounting Standards Board’s impairment model. Therefore, the FASB staff has deferred asking the FASB to deliberate the staff’s comment letter analysis and its recommendations based on that analysis until the FASB decides whether to add a convergence project for the impairment of financial instruments.

      In May 2004, the FASB issued FASB Staff Position (“FSP”) FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP FAS 106-2”), in response to the signing into law in December 2003 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). The Act provides for a federal subsidy equal to 28% of prescription drug claims for sponsors of retiree health care plans with drug benefits that are at least actuarially equivalent to those to be offered under Medicare Part D. FSP FAS 106-2 requires the effect of this subsidy to be included in the measurement of postretirement health care benefit costs effective for interim or annual periods beginning after June 15, 2004. Therefore, the expense amounts shown in Note 12 for the quarter ended March 31, 2005 reflect the effects of the Act.

      On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment”, (“SFAS No. 123(R)”) a revision of FASB Statement No. 123. Statement No. 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” and amends FASB Statement No. 95, “Statement of Cash Flows”. SFAS No. 123(R) replaces existing requirements under SFAS No. 123, and eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25 which did not require companies to expense options. Under the terms of the Statement, the accounting for similar transactions involving parties other than employees or the accounting for employee stock ownership plans that

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

are subject to American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans, remains unchanged. The Company recognizes stock-based compensation expense on options granted subsequent to January 1, 2003 in accordance with SFAS No. 123.

      The Company will incur additional expense in 2006 for unvested options at January 1, 2006 that were granted prior to January 1, 2003.

      For public companies, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally would be measured at fair value at the grant date. The grant-date fair value would be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments (unless observable market prices for the same or similar options are available). The cost would be recognized over the requisite service period (often the vesting period). The cost of employee services received in exchange for liabilities would be measured initially at the fair value (rather than the previously allowed intrinsic value under APB Opinion No. 25, Accounting for Stock Issued to Employees) of the liabilities and would be remeasured subsequently at each reporting date through settlement date.

      The statement will be applied to public entities prospectively for fiscal years beginning after June 15, 2005 as if all share-based compensation awards vesting, granted, modified, or settled after December 15, 1994 had been accounted for using the fair value-based method of accounting.

      The adoption of SFAS No. 123(R) is not expected to have a material impact on the Company’s financial condition or results of operations.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The amortized cost and estimated fair value of securities available-for-sale at March 31, 2005 are as follows:

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The amortized cost and estimated fair value of securities available-for-sale at December 31, 2004 are as follows:

      Loans available-for-sale are carried at the lower of aggregate cost or fair value and are summarized as follows:

      The Company originates and sells multi-family residential mortgage loans in the secondary market to Fannie Mae while retaining servicing. The Company underwrites these loans using its customary underwriting standards, funds the loans, and sells the loans to Fannie Mae pursuant to forward sales agreements previously entered into at agreed upon pricing thereby eliminating rate and basis exposure to the Company. The Company can originate and sell loans to Fannie Mae for not more than $20.0 million per loan. During the

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

three months ended March 31, 2005, the Company originated for sale $228.2 million and sold $277.0 million of fixed-rate multi-family loans, including $53.8 million of loans held in portfolio, in the secondary market to Fannie Mae with servicing retained by the Company. Under the terms of the sales program, the Company retains a portion of the associated credit risk. The Company has a 100% first loss position on each multi-family residential loan sold to Fannie Mae under such program until the earlier to occur of (i) the aggregate losses on the multi-family residential loans sold to Fannie Mae reaching the maximum loss exposure for the portfolio as a whole (as discussed below) or (ii) until all of the loans sold to Fannie Mae under this program are fully paid off. The maximum loss exposure is available to satisfy any losses on loans sold in the program subject to the foregoing limitations. Substantially all the loans sold to Fannie Mae under this program are newly originated using the Company’s underwriting guidelines. At March 31, 2005, the Company serviced $5.43 billion of loans sold to Fannie Mae pursuant to this program with a maximum potential loss exposure of $163.0 million.

      The maximum loss exposure of the associated credit risk related to the loans sold to Fannie Mae under this program is calculated pursuant to a review of each loan sold to Fannie Mae. A risk level is assigned to each such loan based upon the loan product, debt service coverage ratio and loan to value ratio of the loan. Each risk level has a corresponding sizing factor which, when applied to the original principal balance of the loan sold, equates to a recourse balance for the loan. The sizing factors are periodically reviewed by Fannie Mae based upon its ongoing review of loan performance and are subject to adjustment. The recourse balances for each of the loans are aggregated to create a maximum loss exposure for the entire portfolio at any given point in time. The Company’s maximum loss exposure for the entire portfolio of sold loans is periodically reviewed and, based upon factors such as amount, size, types of loans and loan performance, may be adjusted downward. Fannie Mae is restricted from increasing the maximum exposure on loans previously sold to it under this program as long as (i) the total borrower concentration (i.e., the total amount of loans extended to a particular borrower or a group of related borrowers) as applied to all mortgage loans delivered to Fannie Mae since the sales program began does not exceed 10% of the aggregate loans sold to Fannie Mae under the program and (ii) the average principal balance per loan of all mortgage loans delivered to Fannie Mae since the sales program began continues to be $4.0 million or less. Neither condition has occurred to date.

      Although all of the loans serviced for Fannie Mae (both loans originated for sale and loans sold from portfolio) are currently fully performing, the Company has established a liability related to the fair value of the retained credit exposure. This liability represents the amount that the Company estimates that it would have to pay a third party to assume the retained recourse obligation. The estimated liability represents the present value of the estimated losses that the portfolio is projected to incur based upon an industry-based default curve with a range of estimated losses. At March 31, 2005 the Company had an $8.2 million liability related to the fair value of the retained credit exposure for loans sold to Fannie Mae.

      As a result of retaining servicing on $5.48 billion of multi-family loans sold to Fannie Mae, which includes both loans originated for sale and loans sold from portfolio, the Company had an $10.7 million servicing asset at March 31, 2005.

      At March 31, 2005, the Company also had a $5.8 million loan servicing asset related to $579.0 million of single-family loans that were sold in the secondary market with servicing retained as a result of the SIB transaction.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      A summary of changes in loan servicing assets, which is included in other assets, is summarized as follows:

      During the third quarter of 2003, the Company announced that ICM Capital, L.L.C. (“ICM Capital”), a subsidiary of the Bank, was approved as a Delegated Underwriting and Servicing (“DUS”) mortgage lender by Fannie Mae. Under the Fannie Mae DUS program, ICM Capital will underwrite, fund and sell mortgages on multi-family residential properties to Fannie Mae, with servicing retained. Participation in the DUS program requires ICM Capital to share the risk of loan losses with Fannie Mae with one-third of all losses assumed by ICM Capital with the remaining two-thirds of all losses being assumed by Fannie Mae. There have been no loans originated under this DUS program since inception.

      The Bank has a two-thirds ownership interest in ICM Capital and Meridian Company, LLC (“Meridian Company”), a Delaware limited liability company, has a one-third ownership interest. ICM Capital’s operations will be coordinated with those of Meridian Capital. Meridian Capital is 65% owned by Meridian Capital Funding, Inc. (“Meridian Funding”), a New York-based mortgage brokerage firm, with the remaining 35% minority equity investment held by the Company. Meridian Funding and Meridian Company have the same principal owners. See Note 15 hereof.

      Over the past several years, the Company has de-emphasized the origination for portfolio of single-family residential mortgage loans in favor of higher yielding loan products. In November 2001, the Company entered into a private label program for the origination of single-family residential mortgage loans through its branch network under a mortgage origination assistance agreement with Cendant Mortgage Corporation, doing business as PHH Mortgage Services (“Cendant”). In January 2005, Cendant was spun off from its parent company, Cendant Corporation, to PHH Corporation. Cendant was subsequently renamed PHH Mortgage Corporation (“PHH Mortgage”). Under this program, the Company utilizes PHH Mortgage’s loan origination platforms (including telephone and Internet platforms) to originate loans that close in the Company’s name. The Company funds the loans directly, and, under a separate loan and servicing rights purchase and sale agreement, sells the loans and related servicing to PHH Mortgage on a non-recourse basis at agreed upon pricing. During the three months ended March 31, 2005, the Company originated for sale $20.6 million and sold $20.3 million of single-family residential mortgage loans through the program. At March 31, 2005, the Company had $5.1 million of loans for sale under this program. Included in the $60.0 million of single-family residential loans available-for-sale at March 31, 2005 are $54.9 million of loans acquired in the SIB transaction.

      The Company originated, for portfolio, approximately $6.4 million of such loans during the three months ended March 31, 2005. In the future, the Company may continue to originate certain adjustable and fixed-rate residential mortgage loans for portfolio retention, but at significantly reduced levels.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      A summary of mortgage-banking activity income is as follows for the periods indicated:

      Mortgage loan commitments to borrowers related to loans originated for sale are considered a derivative instrument under SFAS No. 149. In addition, forward loan sale agreements with Fannie Mae and PHH Mortgage also meet the definition of a derivative instrument under SFAS No. 133. See Note 14 hereof.

      The following table sets forth the composition of the Company’s loan portfolio at the dates indicated.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The loan portfolio is concentrated primarily in loans secured by real estate located in the New York metropolitan area. The real estate loan portfolio is diversified in terms of risk and repayment sources. The underlying collateral consists of multi-family residential apartment buildings, single-family residential properties and owner occupied/non-owner occupied commercial properties. The risks inherent in these portfolios are dependent not only upon regional and general economic stability, which affects property values, but also the financial condition and creditworthiness of the borrowers.

      During the third quarter of 2003, the Company announced the expansion of its commercial real estate lending activities to the Baltimore-Washington and the Boca Raton, Florida markets. During the third quarter of 2004, the Company continued the expansion of its commercial real estate lending activities to the Chicago market. The loans generated from these market areas are referred primarily by Meridian Capital, which already has an established presence in these markets. During the three months ended March 31, 2005, the Company originated for portfolio $58.0 million of multi-family residential loans and $15.7 million of commercial real estate loans and originated for sale $21.3 million of multi-family residential loans in the Baltimore-Washington market. During the three months ended March 31, 2005, the Company also originated $106.3 million of loans for portfolio retention in the Florida market. Of such loans, $17.4 million were commercial real estate loans and $49.9 million were multi-family residential loans. The Company also originated for sale $39.0 million of multi-family residential loans in the Florida market. During the three months ended March 31, 2005, the company also originated $11.1 million of multi-family loans in the Chicago market. The Company will review this expansion program periodically and establish and adjust its targets based on market acceptance, credit performance, profitability and other relevant factors.

      At March 31, 2005, the Company’s total loans outstanding secured by properties located in the Baltimore-Washington market area consisted primarily of $84.0 million of mortgage warehouse lines of credit, $100.5 million of commercial real estate loans and commercial business loans and $206.3 million of multi-family residential loans. The Company’s total loans outstanding secured by properties located in the Florida market consisted primarily of $151.0 million of commercial real estate and commercial business loans and $159.9 million of multi-family residential loans at March 31, 2005. The Company’s total loans outstanding secured by properties located in the Chicago market consisted primarily of $11.1 million of multi-family residential loans.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table sets forth information with respect to non-performing assets identified by the Company, including non-performing loans and other real estate owned at the dates indicated. Non-performing loans consist of non-accrual loans and loans 90 days or more past due as to interest or principal.

      The determination of the level of the allowance for loan losses and the periodic provisions to the allowance charged to income is the responsibility of management. In assessing the level of the allowance for loan losses, the Company considers the composition and outstanding balance of its loan portfolio, the growth or decline of loan balances within various segments of the overall portfolio, the state of the local (and to a certain degree, the national) economy as it may impact the performance of loans within different segments of the portfolio, the loss experience related to different segments or classes of loans, the type, size and geographic

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

concentration of loans held by the Company, the level of past due and non-performing loans, the value of collateral securing the loan, the level of classified loans and the number of loans requiring heightened management oversight. The continued shifting of the composition of the loan portfolio to be more commercial-bank like by increasing the balance of commercial real estate and business loans and mortgage warehouse lines of credit may increase the level of known and inherent losses in the Company’s loan portfolio.

      The formalized process for assessing the level of the allowance for loan losses is performed on a quarterly basis. Individual loans are specifically identified by loan officers as meeting the criteria of pass, criticized or classified loans. Such criteria include, but are not limited to, non-accrual loans, past maturity loans, impaired loans, chronic delinquencies and loans requiring heightened management oversight. Each loan is assigned to a risk level of special mention, substandard, doubtful and loss. Loans that do not meet the criteria to be characterized as criticized or classified are categorized as pass loans. Each risk level, including pass loans, has an associated reserve factor that increases as the risk level category increases. The reserve factor for criticized and classified loans becomes larger as the risk level increases. The reserve factor for pass loans differs based upon the loan and collateral type. Commercial business loans have a larger loss factor applied to pass loans since these loans are deemed to have higher levels of known and inherent loss than commercial real estate and multi-family residential loans. The reserve factor is applied to the aggregate balance of loans designated to each risk level to compute the aggregate reserve requirement. This method of analysis is performed on the entire loan portfolio.

      The reserve factors that are applied to pass, criticized and classified loans are generally reviewed by management on a quarterly basis unless circumstances require a more frequent assessment. In assessing the reserve factors, the Company takes into consideration, among other things, the state of the national and/or local economies which could affect the Company’s customers or underlying collateral values, the loss experience related to different segments or classes of loans, changes in risk categories, the acceleration or decline in loan portfolio growth rates and underwriting or servicing weaknesses. To the extent that such assessment results in an increase or decrease to the reserve factors that are applied to each risk level, the Company may need to adjust its provision for loan losses which could impact earnings in the period in which such provisions are taken.

      The Company will continue to monitor and modify its allowance for loan losses as conditions dictate. Management believes that, based on information currently available, the Company’s allowance for loan losses at March 31, 2005 was at a level to cover all known and inherent losses in its loan portfolio at such date that were both probable and reasonable to estimate. In the future, management may adjust the level of its allowance for loan losses as economic and other conditions dictate. In addition, the FDIC and the Department as an integral part of their examination process periodically review the Company’s allowance for possible loan losses. Such agencies may require the Company to adjust the allowance based upon their judgment.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table sets forth the activity in the Company’s allowance for loan losses during the periods indicated.

      Effective April 1, 2001, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), which resulted in discontinuing the amortization of goodwill. Under SFAS No. 142, goodwill is instead carried at its book value as of April 1, 2001 and any future impairment of goodwill will be recognized as non-interest expense in the period of impairment. However, under SFAS No. 142, identifiable intangible assets (such as core deposit premiums) with identifiable lives will continue to be amortized.

      The Company’s goodwill was $1.19 billion and $1.16 billion at March 31, 2005 and December 31, 2004, respectively. The $38.1 million increase in goodwill during the three months ended March 31, 2005 was a result of the SIB transaction which became effective on the close of business on April 12, 2004 (See Note 2).

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company did not recognize an impairment loss as a result of its most recent annual impairment test effective October 1, 2004. In accordance with SFAS No. 142, the Company tests the value of its goodwill at least annually.

      The Company’s identifiable intangible assets were $76.1 million and $79.1 million at March 31, 2005 and December 31, 2004, respectively. The decrease was a result of the amortization of the $87.1 million core deposit intangible recognized as a result of the SIB transaction. Core deposit intangibles currently held by the Company are being amortized using the interest method over fourteen years.

      The following table sets forth the Company’s identifiable intangible assets at the dates indicated which consist solely of deposit intangibles:

      The following sets forth the estimated amortization expense for the years ended December 31:

      Amortization expense related to identifiable intangible assets was $2.9 million and $0.1 million for the quarters ended March 31, 2005 and 2004, respectively.

      Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution of common stock equivalents. Shares of common stock held by the ESOP that have not been allocated to participants’ accounts or are not committed to be released for allocation and unvested restricted stock awards from the 1998 Recognition and Retention Plan and Trust Agreement (the “Recognition Plan”) and the 2002 Stock Incentive Plan are not considered to be outstanding for the calculation of basic EPS. However, a portion of such shares is considered in the calculation of diluted EPS as common stock equivalents of basic EPS. Diluted EPS also reflects the potential dilution that would occur if stock options were exercised and converted into common stock. The dilutive effect of unexercised stock options is calculated using the treasury stock method.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table is a reconciliation of basic and diluted weighted-average common shares outstanding for the periods indicated.

      At March 31, 2005 and March 31, 2004, there were 31,000 and 83,846 shares, respectively, that could potentially dilute EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive. For additional disclosures regarding outstanding stock options and restricted stock awards, see Note 13.

      The Company has a noncontributory defined benefit pension plan (the “Pension Plan”) covering substantially all of its full-time employees and certain part-time employees who qualify. Employees first hired on or after August 1, 2000 are not eligible to participate in the Pension Plan. The Company makes annual contributions to the Pension Plan equal to the amount necessary to satisfy the funding requirements of the Employee Retirement Income Security Act (“ERISA”).

      The Company also has a Supplemental Executive Retirement Plan (the “Supplemental Plan”). The Supplemental Plan is a nonqualified, unfunded plan of deferred compensation covering those senior officers of the Company participating in the Pension Plan whose benefits under the Pension Plan would be limited by Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended.

      The Company changed the Plan’s measurement date from January 1st, to December 1st, effective December 1, 2004. The Company used a December 1, 2004 measurement date for December 31, 2004 and a January 1, 2004 measurement date for December 31, 2003.

      In connection with the SIB transaction on April 12, 2004, the Company acquired the SI Bank & Trust Retirement Plan (“Staten Island Plan”), a noncontributory defined benefit pension plan, which was frozen effective as of December 31, 1999. It is expected that the Staten Island Plan will be merged with the Pension Plan by June 30, 2005. The Company’s Pension Plan, the Supplemental Plan and the Staten Island

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Plan (collectively, the “Plan”) are presented on a consolidated basis (since April 12, 2004 for the Staten Island Plan) in the following table.

      Net pension (benefit) expense of the Pension Plan, Supplemental Plan and Staten Island Plan included the following components:

      The Company contributed $71,000 to the Supplemental Plan during the three months ended March 31, 2005 and expects to contribute an additional $213,000 for the remainder of the year ended December 31, 2005.

      The Company currently provides certain health care and life insurance benefits to eligible retired employees and their spouses. The coverage provided depends upon the employee’s date of retirement and years of service with the Company. The Company’s plan for its postretirement benefit obligation is unfunded. Effective April 1, 1995, the Company adopted SFAS No. 106 “Employer’s Accounting for Postretirement Benefits Other Than Pensions” (“SFAS No. 106”). In accordance with SFAS No. 106, the Company elected to recognize the cumulative effect of this change in accounting principle over future accounting periods.

      In connection with the SIB transaction on April 12, 2004, the Company became the sponsor of the Postretirement Welfare Plan of SI Bank. The active and retired participants from the SI Bank Postretirement Welfare Plan were transferred into the Company’s postretirement benefit plan.

      The Company changed the measurement date for its postretirement benefit plan from January 1st, to December 1st, effective December 1, 2004. The Company used a December 1, 2004 measurement date for its postretirement benefit obligation as of December 31, 2004 and a January 1, 2004 measurement date for the December 31, 2003 postretirement benefit obligation.

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Net postretirement benefit cost, which includes costs for SI Bank’s post-retirement benefit plans since April 12, 2004, included the following components:

      In May 2004, the FASB issued FSP FAS 106-2 related to the Act which provides for a federal subsidy equal to 28% of prescription drug claims for sponsors of retiree health care plans with drug benefits that are at least actuarially equivalent to those to be offered under Medicare Part D.

      The Company has determined that its drug benefits are at least actuarially equivalent to those under Medicare Part D. The expected subsidy reduced the Company’s benefit plan obligation by $3.5 million to $30.0 million at December 31, 2004 and also reduced the benefit cost by $0.2 million to $0.8 million for the quarter ended March 31, 2005.

      The Company also sponsors an incentive savings plan (“401(k) Plan”) whereby eligible employees may make tax deferred contributions up to certain limits. The Company makes matching contributions up to the lesser of 6% of employee compensation, or $3,000. Beginning in fiscal 1999, the matching contribution for full-time employees was in the form of Company common stock held in the ESOP while the contribution for part-time employees remained a cash contribution. However, beginning January 1, 2001, the matching contribution for all employees, full- and part-time, is in the form of Company common stock held in the ESOP. The Company may reduce or cease matching contributions if it is determined that the current or accumulated net earnings or undivided profits of the Company are insufficient to pay the full amount of contributions in a plan year.

      As a result of the SIB merger, effective June 22, 2004, the SI Bank & Trust 401(k) Savings Plan was transferred into the 401(k) Plan, at which time the SI Bank & Trust 401 (k) Savings Plan was merged out of existence.

      The Company established the ESOP for full-time employees in March 1998 in connection with the Conversion. To fund the purchase in the open market of 5,632,870 shares of the Company’s common stock, the ESOP borrowed funds from the Company. The collateral for the loan is the common stock of the Company purchased by the ESOP. The loan to the ESOP is being repaid principally from the Bank’s contributions to the ESOP over a period of 20 years. Dividends paid by the Company on shares owned by the ESOP are also utilized to repay the debt. The Bank contributed $1.2 million and $1.4 million to the ESOP during the three months ended March 31, 2005 and 2004, respectively. Dividends paid on ESOP shares, which reduced the Bank’s contribution to the ESOP and were utilized to repay the ESOP loan, totaled $1.4 million and $1.2 million for the three months ended March 31, 2005 and 2004, respectively. The loan from the Company had an outstanding principal balance of $79.9 million and $80.7 million at March 31, 2005 and

INDEPENDENCE COMMUNITY BANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2004, respectively. The interest expense paid on the loan was $1.7 million and $1.8 million for the three months ended March 31, 2005 and 2004 respectively.

      Shares held by the ESOP are held by an independent trustee for allocation among participants as the loan is repaid. The number of shares released annually is based upon the ratio that the current principal and interest payment bears to the original total principal and interest payments to be made. ESOP participants become 100% vested in the ESOP after three years of service. Shares allocated are first used to satisfy the employer matching contribution for the 401(k) Plan with the remaining shares allocated to the ESOP participants based upon includable compensation in the year of allocation. Forfeitures from the 401(k) Plan match portions are used to reduce the employer 401(k) Plan match while forfeitures from shares allocated to the ESOP participants are allocated among the participants.

      The Company recorded compensation expense of $2.4 million for both the three months ended March 31, 2005 and 2004 respectively, which was equal to the 70,411 shares committed to be released by the ESOP multiplied by the average fair value of the common stock during the period in which they were committed to be released. At March 31, 2005, there were 1,612,672 shares allocated, 3,661,366 shares unallocated and 358,832 shares that had been distributed to participants in connection with their withdrawal from the ESOP. At March 31, 2005, the 3,661,366 unallocated shares had a fair value of $142.8 million.