UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended

March 31, 2003

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

0-22516

Securities and Exchange Commission File Number

GreenPoint Financial Corp.
(Exact name of registrant as specified in its charter)

Delaware		06-1379001
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

90 Park Avenue, New York, New York		10016
(Address of principal executive offices)		(Zip Code)

(212) 834-1000		Not Applicable
(Registrant’s telephone number, including area code)		(Former name, former address and former fiscal year if changed since last report)

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 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. ý Yes o No

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

As of April 30, 2003, there were 93,182,374 shares of common stock outstanding.

GreenPoint Financial Corp.

FORM 10-Q

For the Quarterly Period Ended

March 31, 2003

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Statements of Financial Condition (unaudited) as of March 31, 2003 and December 31, 2002

Consolidated Statements of Income (unaudited) for the quarter ended March 31, 2003 and 2002

Consolidated Statements of Comprehensive Income (unaudited) for the quarter ended March 31, 2003 and 2002

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the quarter ended March 31, 2003 and 2002

Consolidated Statements of Cash Flows (unaudited) for the quarter ended March 31, 2003 and 2002

Notes to the Unaudited Consolidated Financial Statements

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

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

Item 4 - Controls and Procedures

PART II – OTHER INFORMATION

Item 1 - Legal Proceedings

Item 6 - Exhibits and Reports on Form 8-K

GreenPoint Financial Corp. and Subsidiaries
Part I – Item 1. Financial Statements

Consolidated Statements of Financial Condition

(Unaudited)

(In millions, except share amounts)	March 31, 2003			Dec. 31, 2002
ASSETS
Cash and due from banks	$	274		$	277
Money market investments:
Interest-bearing deposits in other banks	22			21
Federal funds sold and securities purchased under agreements to resell	11			71
Total cash and cash equivalents	307			369
Securities:
Securities available for sale	3,511			2,006
Securities available for sale-pledged to creditors	2,209			2,087
Retained interests in securitizations available for sale	78			108
Federal Home Loan Bank of New York stock	240			300
Securities held to maturity (fair value of $3 and $3, respectively)	3			3
Total securities	6,041			4,504
Loans receivable held for sale	5,042			5,595
Loans receivable held for investment (net of allowance for loan losses of $78)	9,607			9,901
Other interest-earning assets	140			141
Accrued interest receivable	85			87
Banking premises and equipment, net	174			168
Servicing assets	109			117
Goodwill (net of accumulated amortization and impairment of $788)	395			395
Other assets	499			537
Total assets	$	22,399		$	21,814

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
N.O.W. and checking	$	2,294		$	1,877
Savings	1,398			1,323
Variable rate savings	2,293			2,296
Money market	1,169			991
Total core deposits	7,154			6,487
Term certificates of deposit	5,053			5,309
Total deposits	12,207			11,796
Borrowings:
Securities sold under agreements to repurchase	2,100			2,000
Other short term borrowings	740			285
Federal Home Loan Bank of New York advances	4,200			4,600
Subordinated bank notes	150			150
Guaranteed preferred beneficial interest in Company’s junior subordinated debentures	200			200
Total borrowings	7,390			7,235
Mortgagors’ escrow	76			68
Liability under recourse exposure	290			301
Other liabilities	533			490
Total liabilities	20,496			19,890
Commitments and contingencies
Stockholders’ equity:
Preferred stock ($0.01 par value; 50,000,000 shares authorized; none issued)	—			—
Common stock ($0.01 par value; 220,000,000 shares authorized; 110,261,164 shares issued)	1			1
Additional paid-in capital	912			907
Unallocated Employee Stock Ownership Plan (ESOP) shares	(88		)	(89		)
Unearned stock plans shares	—			—
Retained earnings	1,664			1,563
Accumulated other comprehensive income, net	15			24
Treasury stock, at cost (16,567,378 shares and 13,953,333 shares, respectively)	(601		)	(482		)
Total stockholders’ equity	1,903			1,924
Total liabilities and stockholders’ equity	$	22,399		$	21,814

(See accompanying notes to the unaudited consolidated financial statements)

Consolidated Statements of Income

(Unaudited)

	Quarter Ended March 31,
(In millions, except per share amounts)	2003			2002
Interest income:
Mortgage loans held for investment	$	166.7		$	194.8
Loans held for sale	75.9			59.3
Securities	52.1			56.0
Other	3.6			7.5
Total interest income	298.3			317.6
Interest expense:
Deposits	62.7			78.5
Other borrowed funds	52.7			49.3
Long-term debt	8.1			10.4
Total interest expense	123.5			138.2
Net interest income	174.8			179.4
Provision for loan losses	(0.3		)	(0.4		)
Net interest income after provision for loan losses	174.5			179.0
Non-interest income:
Income from fees and commissions:
Loan servicing fees	5.8			5.2
Banking services fees and commissions	14.5			12.6
Fees, commissions and other income	3.4			2.6
Total income from fees and commissions	23.7			20.4
Net gain on sales of loans	124.3			90.0
Change in valuation of retained interests	(0.7		)	—
Net gain on sale of securities	1.2			1.8
Total non-interest income	148.5			112.2
Non-interest expense:
General and administrative expenses:
Salaries and benefits	61.6			49.3
Employee Stock Ownership and stock plans expense	6.1			6.0
Net expense of premises and equipment	20.9			18.0
Federal deposit insurance premiums	0.5			0.5
Other administrative expenses	31.5			26.9
Total general and administrative expenses	120.6			100.7
Other real estate owned operating expense (income)	0.2			(0.5		)
Total non-interest expense	120.8			100.2
Income from continuing operations before income taxes	202.2			191.0
Income taxes related to earnings from continuing operations	75.3			70.5
Net income from continuing operations	126.9			120.5
Discontinued operations:
Net income from disposal of discontinued business	0.3			1.5
Net income	$	127.2		$	122.0

Basic earnings per share:
Net income from continuing operations	$	1.50		$	1.36
Net income from discontinued operations	—			0.01
Net income	$	1.50		$	1.37
Diluted earnings per share:
Net income from continuing operations	$	1.47		$	1.32
Net income from discontinued operations	—			0.01
Net income	$	1.47		$	1.33
Dividends declared per share	$	0.31		$	0.25

(See accompanying notes to the unaudited consolidated financial statements.)

Consolidated Statements of Comprehensive Income

(Unaudited)

	Quarter Ended March 31,
(In millions)	2003			2002

Net income	$	127.2		$	122.0
Other comprehensive income, before tax:
Unrealized losses on securities:
Unrealized holding losses arising during period	(13.8		)	(32.7		)
Less: reclassification adjustment for gains included in net income	(1.2		)	(1.8		)
Other comprehensive loss, before tax	(15.0		)	(34.5		)
Income tax benefit related to items of other comprehensive income	6.2			14.6
Other comprehensive loss, net of tax	(8.8		)	(19.9		)
Total comprehensive income, net of tax	$	118.4		$	102.1

(See accompanying notes to the unaudited consolidated financial statements.)

Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)

	Quarter Ended March 31,
(In millions)	2003			2002
Common stock
Balance at beginning of period	$	1		$	1
Balance at end of period	1			1
Additional paid-in capital
Balance at beginning of period	907			877
Reissuance of treasury stock	(2		)	(2		)
Amortization of ESOP shares committed to be released	6			7
Tax benefit for vested stock plans shares	1			3
Balance at end of period	912			885
Unallocated ESOP shares
Balance at beginning of period	(89		)	(95		)
Amortization of ESOP shares committed to be released	1			2
Balance at end of period	(88		)	(93		)
Unearned stock plans shares
Balance at beginning of period	—			(1		)
Amortization of stock plans shares	—			—
Balance at end of period	—			(1		)
Retained earnings
Balance at beginning of period	1,563			1,148
Net income	127			122
Dividends declared	(26		)	(22		)
Balance at end of period	1,664			1,248
Accumulated other comprehensive income, net
Balance at beginning of period	24			11
Net change in accumulated other comprehensive income, net	(9		)	(20		)
Balance at end of period	15			(9		)
Treasury stock, at cost
Balance at beginning of period	(482		)	(285		)
Reissuance of treasury stock	6			18
Purchase of treasury stock	(125		)	(13		)
Balance at end of period	(601		)	(280		)
Total stockholders’ equity	$	1,903		$	1,751

(See accompanying notes to the unaudited consolidated financial statements)

Consolidated Statements of Cash Flows

(Unaudited)

	Quarter Ended March 31,
(In millions)	2003			2002
Cash flows from operating activities:
Net income	$	127		$	122
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	8			8
Gain on sale of securities	1			3
ESOP and stock plans expense	8			8
Capitalization of servicing assets	(1		)	(8		)
Amortization and impairment of servicing assets	9			19
(Increase) decrease in assets associated with operating activities:
Loans receivable held for sale:
Loan originations	(9,328		)	(6,526		)
Proceeds from loan sales	9,822			7,270
Other	59			(73		)
Retained interests in securitizations	28			18
Accrued interest receivable	2			(1		)
Other assets	45			(2		)
Increase (decrease) in liabilities associated with operating activities:
Liabilities under recourse exposure	(11		)	(68		)
Other liabilities	43			434
Other, net	10			1
Net cash provided by operating activities	822			1,205
Cash flows from investing activities:
Net change in:
Loans receivable held for investment	279			143
Premises and equipment	(14		)	(9		)
Available for sale securities:
Proceeds from maturities	796			51
Proceeds from sales	787			304
Purchase of securities	(4,130		)	(2,763		)
Principal repayments	898			538
Purchases of Federal Home Loan Bank Stock	60			18
Other, net	12			7
Net cash used in investing activities	(1,312		)	(1,711		)
Cash flows from financing activities:
Net change in:
Domestic deposits	411			121
Mortgagors’ escrow accounts	8			23
Proceeds from Securities sold under agreements to repurchase and other borrowings	16,044			46,524
Repayments of Securities sold under agreements to repurchase and other borrowings	(15,489		)	(46,043		)
Proceeds from advances from Federal Home Loan Bank	61,960			60,790
Repayments of advances from Federal Home Loan Bank	(62,360		)	(60,990		)
Cash dividends paid	(26		)	(22		)
Treasury stock purchased	(125		)	(13		)
Exercise of stock options	5			16
Net cash provided by financing activities	428			406
Net decrease in cash and cash equivalents	(62		)	(100		)
Cash and cash equivalents at beginning of period	369			357
Cash and cash equivalents at end of period	$	307		$	257
Non-cash activities:
Additions to other real estate owned, net	$	(12	)	$	(6	)
Unsettled trades	$	—		$	(484	)
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	20		$	38
Interest paid	$	126		$	151

(See accompanying notes to the unaudited consolidated financial statements)

Notes To The Unaudited Consolidated Financial Statements

NOTE 1 Summary of Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements of GreenPoint Financial Corp. and Subsidiaries (“GreenPoint” or the “Company”) are prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the Company’s interim financial condition as of the dates indicated and the results of operations for the periods presented have been included. Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. The results of operations for the interim periods shown are not necessarily indicative of results that may be expected for the entire year.

The Company adopted a plan to exit the manufactured housing lending business in December 2001. Current and comparative prior period consolidated statements of income present the results of continuing operations and discontinued operations separately.

These unaudited consolidated interim financial statements presented should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report to shareholders for the year ended December 31, 2002.

Accounting for Loan Sales

GreenPoint sells loans both in the whole loan market and through various securitization vehicles.

When GreenPoint has sold mortgages on a whole loan basis, in some cases it has retained the servicing rights related to the loans. In instances where GreenPoint does not retain the servicing rights to the loans, the gain or loss on the sale is equal to the difference between the proceeds received and the book basis of the loans sold. In instances where GreenPoint does retain the servicing rights, the gain or loss also depends in part on the fair value attributed to the servicing rights.

GreenPoint has sold mortgages subject to various representations and warranties. Upon loan sale, GreenPoint establishes a loss reserve for estimated losses to be incurred under these agreements. Additions to the representation and warranty reserve are reported as reduction to gain on sale of loans.

When GreenPoint has securitized certain mortgages, in some cases it has retained the servicing rights and one or more retained interests. In calculating the gain or loss on the sale, GreenPoint allocates the cost basis of the loans sold between the assets sold, and the retained interests and servicing rights based on their relative fair values at the date of sale. A gain or loss is recognized as the difference between the cash proceeds from the sale and the allocated cost basis of the assets sold.

Retained Interests

Retained interests include interest-only strips, subordinated certificates, transferor interests, demand notes and the recorded liabilities for limited recourse provided on mortgage loans and recourse provided on manufactured housing loans securitized and sold.

GreenPoint classifies its retained interest assets as available for sale and carries these securities at fair value. Generally, if the fair value of retained interests declines below its amortized cost basis, the change in valuation is recognized in the consolidated statement of income and is classified as a change in valuation of retained interests. Unrealized gains are reported, net of applicable taxes, in accumulated other comprehensive income, as a separate component of stockholders’ equity.

GreenPoint reviews the adequacy of the liability under recourse exposure based on management’s best estimate of future cash flows associated with the recourse arrangement. The change in valuation is recognized in the consolidated statement of income and is classified as discontinued operations.

To obtain fair values, quoted market prices are used, if available. Because market quotes are generally not available for retained interests, GreenPoint generally estimates fair value based upon the present value of estimated future cash flows using assumptions of prepayments, defaults, loss severity rates, and discount rates that GreenPoint believes market participants would use for similar assets and liabilities.

Servicing Assets

Servicing assets are carried at the lower of cost or fair value based on defined risk strata and are amortized in proportion to and over the expected servicing period.

GreenPoint stratifies its servicing assets based on the risk characteristics of the underlying loan pools and the assets are evaluated for impairment based on the risk characteristics. A valuation allowance is recognized through a charge to current earnings for servicing assets that have an amortized balance in excess of the current fair value.

The fair value of servicing assets is determined by calculating the present value of estimated future net servicing cash flows, using assumptions of prepayments, defaults, servicing costs and discount rates that GreenPoint believes market participants would use for similar assets.

Goodwill Amortization

Goodwill, which is attributable to the retail banking segment, is carried at its January 1, 2002 book value and is tested, at least annually, for impairment.

Stock-Based Compensation Plans

The Company adopted the disclosure approach under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”. Under these standards the Company discloses in the notes to the financial statements the pro forma effects on net income and earnings per share, determined as if the fair value-based method had been applied in measuring compensation cost. The Company continues to apply APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) in accounting for its plans. Accordingly, no compensation cost has been recognized for the Company’s stock option plans.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

	Quarter Ended
(In millions)	March 31, 2003			March 31, 2002

Net income as reported	$	127.2		$	122.0
Deduct: Total stock-based employee compensation expense determined under fair value based method net of related tax effects	(2.3		)	(2.1		)
Proforma net income	$	124.9		$	119.9

Earnings per share:
Basic – as reported	$	1.50		$	1.37
Basic – pro forma	$	1.48		$	1.35
Diluted – as reported	$	1.47		$	1.33
Diluted – pro forma	$	1.45		$	1.31

NOTE 2 Loans Receivable

The Company’s loans receivable held for sale balances are summarized as follows:

(In millions)	March 31, 2003		Dec. 31, 2002
Conventional first mortgage loans:
Residential one-to four-family	$	4,238	$	5,062
Commercial property	69		78
Second mortgage and home equity loans	682		404
Other	1		1
Total loans receivable held for sale	4,990		5,545
Net deferred loan origination costs	52		50
Loans receivable held for sale, net	$	5,042	$	5,595

The Company’s loans receivable held for investment balances are summarized as follows:

(In millions)	March 31, 2003			Dec. 31, 2002
Conventional first mortgage loans:
Residential one-to four-family	$	8,291		$	8,666
Residential multi-family	295			319
Commercial property	721			620
Second mortgage and home equity loans	271			267
Manufactured housing loans	7			9
Other	57			60
Total loans receivable held for investment	9,642			9,941
Net deferred loan origination costs and purchase premium	43			38
Allowance for loan losses	(78		)	(78		)
Loans receivable held for investment, net	$	9,607		$	9,901

NOTE 3 Securities Available for Sale

The amortized cost and estimated fair value of securities available for sale at March 31, 2003 and December 31, 2002 are summarized as follows:

	March 31, 2003
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government and Federal Agency Obligations:
U.S. Treasury notes/bills	$	30	$	1	$	—		$	31
Agency notes	122		—		—			122
Mortgage-backed securities	320		15		—			335
Collateralized mortgage obligations	4,842		18		(9		)	4,851
Trust certificates collateralized by GNMA securities	4		—		—			4
Corporate bonds	122		—		(4		)	118
Municipal bonds	56		4		—			60
Equity securities	202		2		(5		)	199
Total securities available for sale	$	5,698	$	40	$	(18	)	$	5,720

	December 31, 2002
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government and Federal Agency Obligations:
U.S. Treasury notes/bills	$	6	$	—	$	—		$	6
Agency notes	107		—		—			107
Mortgage-backed securities	388		18		—			406
Collateralized mortgage obligations	3,197		29		(7		)	3,219
Trust certificates collateralized by GNMA securities	4		—		—			4
Corporate bonds	122		—		(4		)	118
Municipal bonds	56		4		—			60
Equity securities	177		3		(7		)	173
Total securities available for sale	$	4,057	$	54	$	(18	)	$	4,093

NOTE 4 Recourse Arrangements, Retained Interests in Securitizations and Servicing Assets

The following describes the balances associated with recourse arrangements, the balances and activity in the corresponding retained interests, the balances and activity in servicing assets and the economic assumptions used in valuing the retained interests and servicing assets.

Recourse Arrangements

GreenPoint has established liabilities for limited recourse provided on mortgage loans and recourse provided on manufactured housing loans that have been securitized or sold. The investors and the securitization trusts have no recourse to GreenPoint’s other assets for failure of debtors to pay when due, except for the retained interests related to both mortgage and manufactured housing securitizations and the liability under the corporate guarantee related to the manufactured housing securitizations.

GreenPoint has loans sold with recourse with the following principal balances, maximum recourse exposures and recorded liabilities.

	March 31, 2003
(In millions)	Principal Balance		Maximum Recourse Exposure (1)		Recorded Liability
Manufactured housing securitizations	$	4,057	$	601	$	284
Manufactured housing sales	252		252		5
Mortgage securitizations (2)	620		79		—
Mortgage sales (3)	270		265		1

	December 31, 2002
(In millions)	Principal Balance		Maximum Recourse Exposure (1)		Recorded Liability
Manufactured housing securitizations	$	4,202	$	621	$	295
Manufactured housing sales	258		258		5
Mortgage securitizations (2)	829		108		—
Mortgage sales (3)	323		317		1

(1) Represents the maximum recourse exposure relating to recourse arrangements in the form of the retention of subordinated interests, the issuance of a corporate guarantee, or a demand note.

(2) The net present value of expected cash outflows on the mortgage securitization recourse arrangements is reflected in the valuation of the mortgage retained interests.

(3) The recourse arrangements under the mortgage sale transactions represent a risk sharing arrangement in which GreenPoint has transferred the first 2% of losses to the purchaser.

Manufactured housing securitization letter of credit exposure is as follows:

(In millions)	March 31, 2003			Dec. 31, 2002
Letters of credit outstanding	$	598		$	617
Projected letter of credit draws	(312		)	(326		)
Remaining letter of credit exposure	$	286		$	291

At March 31, 2003, GreenPoint has six manufactured housing securitizations with principal balances of $1.7 billion, which have projected letter of credit draws equal to the maximum recourse exposure for those securitizations. GreenPoint records a liability based on the net present value of the projected letter of credit draws. At March 31, 2003, the projected draws exceed the recorded liability by $28 million, representing future interest expense.

In the third quarter of 2002, GreenPoint agreed to issue additional letters of credit totaling $52 million in favor of a surety provider on four of its outstanding securitizations. Additionally, GreenPoint agreed to exercise its optional termination right and retire each transaction insured by the surety provider when the underlying loans in each securitization total 10% of the original loan balance. The exercise of this option is a standard and expected operating procedure in the securitization markets, and its projected financial statement impact is included in the projected operating results of the discontinued business. In exchange, the surety provider agreed to amend servicer termination provisions, which, prior to their amendment, would have enabled the surety provider to transfer the servicing of certain loans to a third party.

Consistent with this agreement, an additional liability under recourse exposure was recorded to recognize the additional draws that could arise from the new letters of credit. The balances and corresponding liability relating to manufactured housing securitizations included in this note reflect the impact of the agreement. Additionally, the servicing asset valuation and the projected operating results have been adjusted to reflect the amended servicing termination provisions.

The following presents quantitative information about delinquencies on loans sold with recourse:

	March 31, 2003		Dec. 31, 2002		March 31, 2003		Dec. 31, 2002
(In millions)	Manufactured Housing				Mortgage
Principal balance of loans	$	4,309	$	4,460	$	890	$	1,152
Principal balance of loans 90 days or more past due (1)	210		220		56		62

(1) Manufactured housing past due loans include repossessed inventory.

In addition to the recourse arrangements described in the tables above, GreenPoint has established liabilities related to representations and warranties for mortgage loans of $32 million and $29 million, at March 31, 2003 and December 31, 2002, respectively.

Balances and Changes in Retained Interests

The activity in the recorded liability for manufactured housing securitizations and sales is summarized as follows:

	At and for the Quarter Ended March 31,
(In millions)	2003			2002
Liability for Recourse Exposure
Balance at beginning of period	$	300		$	467
Interest expense	5			7
Letter of credit draws and other charges	(17		)	(78		)
Change in valuation of retained interests	1			3
Balance at end of period	$	289		$	399

The assets recognized as retained interests in securitizations include interest-only strips, transferor interests and subordinated certificates. The activity in retained interests in securitizations is summarized as follows:

	At and for the Quarter Ended March 31,
	2003			2002			2003			2002
(In millions)	Manufactured Housing						Mortgage
Retained Interests in Securitizations
Balance at beginning of period	$	4		$	1		$	104		$	130
Additions from securitizations	—			—			—			6
Interest and other income	—			2			2			5
Cash received	—			(3		)	(29		)	(13		)
Change in unrealized gain	—			—			(1		)	(2		)
Change in valuation of retained interests	(1		)	—			(1		)	—
Balance at end of period	$	3		$	—		$	75		$	126

On a quarterly basis, GreenPoint reviews retained interests for impairment based on management’s best estimate of the fair value of future cash flows associated with the retained interests. GreenPoint also reviews the adequacy of the value of the recorded liability on a quarterly basis, based on management’s best estimate of future cash flows associated with the corporate guarantee.

The increase in cash received for mortgage retained interests was primarily due to GreenPoint’s exercise of its optional clean-up call provisions for six mortgage securitizations during the quarter ended March 31, 2003.

Valuation Assumptions

There were no new securitizations recorded during the quarter ended March 31, 2003. The key economic assumptions used in estimating the fair value of the entire portfolio of retained interests at March 31, 2003 and December 31, 2002 were as follows:

	Estimate of Fair Value at
	March 31, 2003		Dec. 31, 2002		March 31, 2003		Dec. 31, 2002
	Manufactured Housing				Mortgage
Weighted average life (in years)	4.9		4.9		0.8		0.9
Weighted average prepayment rate (1)	8.2	%	8.2	%	56.4	%	52.6	%
Weighted average default rate	6.1	%	6.3	%	N/A		N/A
Loss severity rate	90.8	%	86.6	%	N/A		N/A
Weighted average loss rate	5.6	%	5.5	%	3.5	%	3.3	%
Cumulative loss (2)	27.4	%	27.0	%	2.7	%	3.0	%
Asset cash flows discounted at	14.0	%	14.0	%	8.4	%	9.3	%
Liability cash flows discounted at	6.6	%	6.6	%	—		—

(1) Excludes weighted average default rate.

(2) Remaining net losses divided by outstanding principal balance.

Servicing Assets

On a quarterly basis, GreenPoint reviews capitalized servicing rights for impairment. This review is performed based on risk strata, which are determined on a disaggregated basis given the predominant risk characteristics of the underlying loans. For manufactured housing loans, the predominant risk characteristics are loan type and interest rate type. For mortgage loans, the predominant risk characteristics are loan type and interest rate.

The activity in servicing assets is summarized as follows:

	At and for the Quarter Ended March 31,
	2003			2002			2003			2002
(In millions)	Manufactured Housing						Mortgage
Servicing Assets
Balance at beginning of period	$	101		$	127		$	112		$	86
Additions	—			3			20			12
Sales	—			—			(20		)	(7		)
Amortization	(2		)	(7		)	(7		)	(8		)
Balance at end of period	99			123			105			83
Reserve for impairment of servicing assets
Balance at beginning of period	(69		)	(67		)	(27		)	(23		)
Recoveries (additions)	—			(4		)	1			—
Balance at end of period	(69		)	(71		)	(26		)	(23		)
Servicing assets, net	$	30		$	52		$	79		$	60

The estimated fair values of manufactured housing servicing assets were $38 million and $52 million at March 31, 2003 and 2002, respectively, and $38 million at December 31, 2002.

The estimated fair values of mortgage servicing assets were $82 million and $62 million at March 31, 2003 and 2002, respectively, and $90 million at December 31, 2002.

Servicer advances receivable totaled $98 million and $85 million at March 31, 2003 and December 31, 2002, respectively.

The significant assumptions used in estimating the fair value of the servicing assets at March 31, 2003 and December 31, 2002 were as follows:

	March 31, 2003		Dec. 31, 2002		March 31, 2003		Dec. 31, 2002
	Manufactured Housing				Mortgage
Weighted average prepayment rate	7.4	%(1)	7.4	%(1)	28.4	%(2)	25.4	%(2)
Weighted average life (in years)	5.1		5.1		4.3		4.6
Weighted average default rate	5.1	%	5.2	%	N/A		N/A
Cash flows discounted at	14.0	%	14.0	%	10.0	%	10.2	%

(1) Excludes weighted average default rate.

(2) Includes weighted average default rate.

NOTE 5 Derivative Financial Instruments

GreenPoint enters into mandatory commitments to deliver mortgage whole loans to various investors and to issue private securities and Fannie and Freddie Mac securities (“forward delivery commitments”). The forward delivery commitments are used to manage the interest rate risk associated with mortgage loans and interest rate lock commitments made by GreenPoint to mortgage borrowers. The notional amounts of these contracts were $4.2 billion and $3.2 billion at March 31, 2003 and December 31, 2002, respectively. The forward delivery commitments designated as fair value hedges associated with mortgage loans had notional values of $2.6 billion and $2.4 billion at March 31, 2003 and December 31, 2002, respectively. The notional amounts of forward delivery commitments used to manage the interest rate risk associated with interest rate lock commitments on mortgage loans were $1.6 billion and $833 million at March 31, 2003 and December 31, 2002, respectively. The amount of hedge ineffectiveness for the three months ended March 31, 2003 and 2002 was a gain of $2 million and a loss of $1 million, respectively, and is included in gain on sale of loans.

The notional amounts of derivatives do not represent amounts exchanged by the parties and, thus, are not a measure of the Company’s exposure through its use of derivatives. The amounts exchanged are determined by reference to the notional amounts and the other terms of the derivatives.

The risks inherent in derivatives are the potential inability of a counterpart to meet the terms of its contract and the risk associated with changes in the fair values of the contracts due to movements in the underlying interest rates. The current credit exposure of derivatives is represented by the fair value of contracts with a positive fair value at the reporting date. At March 31, 2003 and December 31, 2002, the receivable on contracts with a positive fair value was $1 million for both periods. To reduce credit risk, management may deem it necessary to obtain collateral.

NOTE 6 Stock Incentive Plans

For the quarter ended March 31, 2003, the Company granted options to purchase 1,354,200 shares of the Company’s common stock to certain officers, at an exercise price of $45.78. These awards vest at various intervals over three years, on the anniversary dates of the awards.

NOTE 7 Discontinued Operations

The assets and liabilities from discontinued operations at March 31, 2003 and December 31, 2002 were as follows:

(In millions)	March 31, 2003		Dec. 31, 2002
Assets:
Cash, cash equivalents and securities	$	34	$	34
Retained interests in securitizations	3		4
Loans receivable held for investment	41		44
Servicing assets	30		32
Other assets	244		243
Total assets	$	352	$	357
Liabilities:
Liability under recourse exposure	$	289	$	300
Other liabilities and allocated capital	63		57
Total liabilities and equity	$	352	$	357

Net income from discontinued operations was $0.3 million and $1.5 million for the three months ended March 31, 2003 and 2002, respectively.

The notional value of swaps related to specific manufactured housing securitizations was $620 million and $639 million at March 31, 2003 and December 31, 2002, respectively.

During the quarter ended March 31, 2002, GreenPoint originated manufactured housing loans totaling $91 million. These loans related to commitments outstanding at December 31, 2001 and were recorded at their estimated fair value. These loans were sold during the second and third quarters of 2002 at a sales price, which approximated their previously estimated fair value.

NOTE 8 Business Segments

The Company consists of three domestic business segments offering unique products and services. The Mortgage Banking segment specializes in Alt A and NoDoc mortgage loan products which are primarily obtained from the Company’s network of registered mortgage brokers. The Retail Banking segment consists of 84 full service banking offices offering a variety of financial services to the Greater New York area. The Balance Sheet Management segment includes earnings from the held for investment mortgage portfolios and other corporate investment activities.

The accounting policies of the segments are the same as described in Note 1 “Summary of Significant Accounting Policies”. The Company evaluates the performance of its business segments based on income before income taxes. Expenses under the direct control of each business segment and the expense of premises and equipment incurred to support business operations are allocated accordingly, by segment. Credit losses are charged to the asset management segment in an amount equal to net charge-offs. The expenses relating to administrative units of the Company such as executive, finance and audit are not allocated to individual operating segments.

	Quarter Ended March 31, 2003
(In millions)	Balance Sheet Management(1)			Retail Banking			Sub-total Banking			Mortgage Banking			Segment Totals			Other(4)			Consolidated Continuing Operations
Net interest income	$	66.8		$	58.8		$	125.6		$	49.2		$	174.8		$	—		$	174.8
Provision for loan losses	(0.3		)	—			(0.3		)	—			(0.3		)	—			(0.3		)
Net interest income after provision for loan losses	66.5			58.8			125.3			49.2			174.5			—			174.5
Non-interest income:
Loan servicing fees	—			—			—			1.5			1.5			4.3			5.8
Banking fees and commissions	—			14.5			14.5			—			14.5			—			14.5
Other income	4.1			—			4.1			(0.7		)	3.4			—			3.4
Net gain on sale of loans	—			—			—			139.0			139.0			(14.7		)	124.3
Change in valuation of retained interests	—			—			—			(0.7		)	(0.7		)	—			(0.7		)
Net gain on securities	1.2			—			1.2			—			1.2			—			1.2
Total non-interest income	5.3			14.5			19.8			139.1			158.9			(10.4		)	148.5
Non-interest expense:
Depreciation	—			2.3			2.3			3.8			6.1			1.4			7.5
ESOP and stock plans expense	—			1.5			1.5			3.6			5.1			1.0			6.1
Other expenses	0.3			30.0			30.3			57.9			88.2			19.0			107.2
Total non-interest expense	0.3			33.8			34.1			65.3			99.4			21.4			120.8
Segment income (loss) before taxes	$	71.5		$	39.5		$	111.0		$	123.0		$	234.0		$	(31.8	)	$	202.2
Total Assets	$	16,083		$	490	(2)	$	16,573		$	5,462		$	22,035		$	364	(3)	$	22,399

	Quarter Ended March 31, 2003
(In millions)	Balance Sheet Management(1)			Retail Banking			Sub-total Banking			Mortgage Banking			Segment Totals			Other(4)			Consolidated Continuing Operations
Net interest income	$	82.0		$	57.0		$	139.0		$	40.4		$	179.4		$	—		$	179.4
Provision for loan losses	(0.4		)	—			(0.4		)	—			(0.4		)	—			(0.4		)
Net interest income after provision for loan losses	81.6			57.0			138.6			40.4			179.0			—			179.0
Non-interest income:
Loan servicing fees	—			—			—			5.5			5.5			(0.3		)	5.2
Banking fees and commissions	—			12.6			12.6			—			12.6			—			12.6
Other income	3.1			0.3			3.4			(0.8		)	2.6			—			2.6
Net gain on sale of loans	—			—			—			101.9			101.9			(11.9		)	90.0
Change in valuation of retained interests	—			—			—			—			—			—			—
Net gain on securities	1.8			—			1.8			—			1.8			—			1.8
Total non-interest income	4.9			12.9			17.8			106.6			124.4			(12.2		)	112.2
Non-interest expense:
Depreciation	—			2.3			2.3			3.5			5.8			1.1			6.9
ESOP and stock plans expense	—			1.1			1.1			3.5			4.6			1.4			6.0
Other expenses	0.4			22.8			23.2			47.9			71.1			16.2			87.3
Total non-interest expense	0.4			26.2			26.6			54.9			81.5			18.7			100.2
Segment income (loss) before taxes	$	86.1		$	43.7		$	129.8		$	92.1		$	221.9		$	(30.9	)	$	191.0
Total Assets	$	15,651		$	479	(2)	$	16,130		$	4,494		$	20,624		$	448	(3)	$	21,072

(1) Balance Sheet Management segment largely consists of the mortgage portfolio, MBS and investment securities.

(2) Retail Banking segment excludes intercompany funds transfers. Intersegment assets and liabilities eliminated for consolidation purposes were $12.2 billion and $10.8 billion for the quarter ended March 31, 2003 and 2002, respectively.

(3) Includes the assets of the discontinued business segment.

(4) Other includes intercompany eliminations and unallocated administrative expenses.

(5) Intersegment revenues, in the mortgage banking segment, for the quarter ended March 31, 2003 and 2002 were $10.4 million and $12.2 million.

NOTE 9 Earnings Per Share

	Quarter Ended March 31,
(In millions, except per share amounts)	2003		2002

Net income from continuing operations	$	126.9	$	120.5
Net income from discontinued operations	0.3		1.5
Net income	$	127.2	$	122.0

Weighted average number of common shares outstanding during each period – basic	84,698,000		88,782,000
Effect of dilutive securities – stock options	1,520,000		2,564,000
Weighted average number of common shares and common stock equivalents outstanding during each period – diluted	86,218,000		91,346,000

Basic earnings per share:
Net income from continuing operations	$	1.50	$	1.36
Net income from discontinued operations	—		0.01
Net income	$	1.50	$	1.37

Diluted earnings per share:
Net income from continuing operations	$	1.47	$	1.32
Net income from discontinued operations	—		0.01
Net income	$	1.47	$	1.33

(1) Options to purchase 1,407,200 shares of common stock at prices between $45.78 and $50.10 per share were outstanding at March 31, 2003, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares for the quarter ended March 31, 2003.

(2) There were no options outstanding at March 31, 2002 that were not included in the computation of diluted earnings per share because the options’ exercise prices were less than the average market price of the common shares for the quarter ended March 31, 2002.

GreenPoint Financial Corp. and Subsidiaries
Part I – Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

	Quarter Ended
(Dollars in millions, except per share data)	March 31, 2003			Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			March 31, 2002
Performance Ratios – Continuing Operations (Annualized):
Return on average assets	2.40		%	2.28		%	2.38		%	2.45		%	2.51		%
Return on average equity	26.52			27.05			27.32			27.53			27.50
Net interest margin	3.51			3.64			3.85			4.06			4.03
Net interest spread	3.37			3.52			3.72			3.91			3.88
Operating expense to average assets	2.28			2.17			1.91			2.05			2.10
Total non-interest expense to operating revenue	27.0			26.4			23.2			23.5			23.3
Efficiency ratio (1)	37.3			37.6			33.8			34.6			34.5
Average interest-earning assets to average interest-bearing liabilities	1.06		x	1.05		x	1.05		x	1.06		x	1.05		x

Per Share Data:
Basic earnings per share – continuing operations	$	1.50		$	1.49		$	1.44		$	1.39		$	1.36
Diluted earnings per share – continuing operations	1.47			1.46			1.41			1.35			1.32
Book value per common share	22.50			22.07			21.35			20.45			19.15
Tangible book value per common share	17.83			17.53			16.94			16.09			14.82
Dividends per share	0.31			0.25			0.25			0.25			0.25
Shares used in calculations (in thousands):
Average (2)	86,218			88,158			89,905			90,968			91,346
Period-end (3)	84,586			87,177			89,415			90,609			91,372
Total shares outstanding (shares issued less treasury stock purchased)	93,694			96,308			98,362			99,402			100,119

Asset Quality Ratios – continuing operations:
Non-accruing loans held for investment to mortgage loans held for investment	1.67		%	1.61		%	1.57		%	1.60		%	1.67		%
Non-accruing loans held for sale to mortgage loans held for sale	1.87			1.18			0.99			0.95			0.78
Non-performing assets to total assets	1.23			1.12			1.02			1.02			0.98
Allowance for loan losses to non-performing loans held for investment	46.4			46.6			48.4			47.5			45.5
Allowance for loan losses to mortgage loans held for investment	0.78			0.75			0.76			0.76			0.76
Net loan charge-off experience (annualized) to average mortgage loans held for investment	0.01			0.04			0.02			0.01			0.02
Ratio of allowance for loan losses to annualized net charge-offs	64.4		x	20.8		x	42.8		x	57.3		x	43.1		x

Capital Data:
Tier I Capital (to risk weighted assets)	11.53		%	11.43		%	11.66		%	12.07		%	11.42		%
Total Risk Based Capital (to risk weighted assets)	13.08			12.96			13.25			13.77			13.09
Tier I Capital to average assets	7.97			7.51			7.86			8.05			7.82
Tangible equity to tangible managed assets	5.87			5.98			5.68			5.90			5.40
Tangible equity to managed receivables	8.13			7.69			7.27			7.51			7.17
Purchase of treasury stock	$	125		$	93		$	72		$	72		$	13

Other Data:
Mortgage loan originations	$	9,328		$	9,985		$	9,730		$	7,041		$	6,434
Total managed assets (4)	25,856			25,595			26,456			24,620			25,642
Total managed receivables (5)	18,354			19,555			20,338			18,990			19,024
Earnings to combined fixed charges: (6)
Excluding interest on deposits	20.67		x	20.61		x	19.09		x	15.92		x	16.52		x
Including interest on deposits	3.77		x	3.58		x	3.49		x	3.28		x	3.09		x
Full-service consumer bank offices	84			81			75			74			74

(1) The efficiency ratio is calculated by dividing general and administrative expenses by the sum of net interest income and non-interest income.

(2) Used in the calculation of fully diluted earnings per share.

(3) Used in the calculation of common book value and tangible common book value ratios.

(4) Managed assets are the sum of total assets and off-balance sheet managed receivables.

(5) Managed receivables are the sum of on-balance sheet loans and off-balance sheet managed receivables.

(6) For purposes of computing the ratio of earnings to combined fixed charges, earnings represent net income plus applicable income taxes and fixed charges of a consolidated subsidiary. Fixed charges represent interest expense on long-term debt and one-third (the portion deemed to be representative of the interest factor) of rents.

Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements, which are based on management’s current expectations. These forward-looking statements include information concerning possible or assumed future results of operations, trends, financial results and business plans, including those relating to earnings growth; revenue growth; origination volume in the Company’s mortgage business; non-interest income levels, including fees from product sales; credit performance on loans made by the Company; tangible capital generation; margins on sales or securitizations of loans; market share; expense levels; results from new business initiatives in the retail banking business; and other business operations and strategies. For these statements, GreenPoint claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 to the extent provided by applicable law. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to: risks and uncertainties related to acquisitions, divestitures and terminating business segments, including related integration and restructuring activities; prevailing economic conditions; changes in interest rates, loan demand, real estate values, and competition, which can materially affect origination levels and gain on sale results in the Company’s mortgage business; the level of defaults, losses and prepayments on loans made by the Company, whether held in portfolio, sold in the whole loan secondary markets or securitized, which can materially affect charge-off levels, required loan loss reserve levels and the Company’s periodic valuation of its retained interests from securitizations; changes in accounting principles, policies, and guidelines; adverse changes or conditions in capital or financial markets, which can adversely affect the ability of the Company to sell or securitize loan originations on a timely basis or at prices which are acceptable to the Company; actions by rating agencies and the affects of these actions on the Company’s businesses, operations and funding requirements; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services; and the risk factors or other uncertainties described from time to time in the Company’s filings with the Securities and Exchange Commission, including the Risk Factors section included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed with the Securities and Exchange Commission on March 28, 2003. The forward-looking statements are made as of the date of this report, and the Company assumes 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.

The Company regularly explores opportunities for acquisitions of and holds discussions with financial institutions and related businesses, and also regularly explores opportunities for acquisitions of liabilities and assets of financial institutions and other financial services providers. The Company routinely analyzes its lines of business and from time to time may increase, decrease or terminate one or more activities.

General

GreenPoint Financial Corp. (the “Corporation”, “Company” or “GreenPoint”), a $22 billion asset bank holding company consists of two primary businesses – a New York retail bank and a national mortgage business. The retail bank is a New York State chartered savings bank and is the second largest thrift depository in the Greater New York area with $12 billion in deposits in 84 branches serving more than 400,000 households. GreenPoint Mortgage (“GPM”), headquartered in Novato, California, originates a wide variety of exclusively “A” quality loans. This includes agency qualifying loans and Jumbo A loans, and GreenPoint’s specialty Alternative A mortgages.

Overview Of First Quarter 2003 Financial Results

• Net income from continuing operations for the first quarter of 2003 was $1.47 per diluted share, or $127 million, an increase of 11% over the first quarter of 2002. The results reflect the strength and complementary nature of the Company’s mortgage and retail banking businesses. Core deposit growth and a substantial increase in mortgage banking revenues more than offset the reduced net interest margin which resulted from a decline in interest rates.

• Retail banking initiatives led to a growth in core deposits and a growth in fee income over the first quarter of 2002. The Company opened seven new branches in 2002 and three additional branches in the first quarter of 2003.

• The mortgage banking business continued to experience a high level of originations as the favorable interest rate environment provided an ideal climate for continued growth. Total mortgage loan originations for the first quarter of 2003 were $9.3 billion, an increase of 45% over the $6.4 billion originated during the first quarter of 2002.

• Mortgage sales and securitizations totaled $8.8 billion resulting in realized gains of $124 million, compared with sales and securitizations of $5.6 billion and a gain of $90 million in the comparative quarter a year ago.

• The gain on sale of specialty loans was 289 basis points, up from 240 basis points in the fourth quarter of 2002.

• Net interest income from continuing operations totaled $175 million, a decrease of 3% from the $179 million in the first quarter of 2002. The net interest margin was 3.51%, decreasing from 4.03% in the first quarter of 2002.

• Asset quality in the mortgage portfolio remained strong. Non-accruing loans held for investment were 1.67% of mortgage loans held for investment, compared with 1.61% at the end of 2002 and flat versus the first quarter a year ago.

• GreenPoint continues to maintain a strong capital position with a leverage ratio of 7.97%, a Tier 1 risk-based ratio of 11.53% and a total risk-based capital ratio of 13.08% at March 31, 2003.

• On February 11, 2003 GreenPoint increased the quarterly dividend distribution per share 25% from $0.25 to $0.3125, which represents an annualized distribution of $1.25 per share.

• Net income from the discontinued manufactured housing business was $0.3 million, reflecting a performance consistent with management’s most recent projections.

Business Segment Results

The Company consists of two primary continuing businesses – a banking business and a mortgage business. The banking business includes the results of the retail banking segment and the balance sheet management segment. The retail banking segment represents the results of the activities of 84 full service banking offices operating in the greater New York area and the balance sheet management segment includes earnings from the held for investment mortgage portfolio and other corporate investment activities. The sub-total defined as the total banking business represents the results of the Company’s traditional banking operations as distinguished from its mortgage banking operations. Following is an analysis of the results of the two primary businesses.

Banking Business

	Quarter Ended March 31,
(In millions)	2003			2002
Net interest income	$	125.6		$	139.0
Provision for loan losses	(0.3		)	(0.4		)
Net interest income after provision for loan losses	125.3			138.6
Non-interest income:
Banking fees and commissions	14.5			12.6
Other income	4.1			3.4
Net gain on securities	1.2			1.8
Total non-interest income	19.8			17.8
Non-interest expense	34.1			26.6
Net income before income taxes	$	111.0		$	129.8
Total Assets	$	16,573		$	16,130

The banking business reported pre-tax income of $111 million for the first quarter of 2003, a decrease of 14% from the $130 million reported for the first quarter a year ago. The results included pre-tax income of $40 million from the retail banking segment, a 10% decrease from a year ago, and $72 million from the balance sheet management segment, a decrease of 17% from a year ago. The decrease from a year ago quarter was primarily the result of lower interest rates, which reduced the net interest income in the balance sheet management segment and increased costs primarily associated with the de novo branching program.

Mortgage Banking

	Quarter Ended March 31,
(In millions)	2003			2002
Net interest income	$	49.2		$	40.4
Non-interest income:
Loan servicing fees	1.5			5.5
Other income	(0.7		)	(0.8		)
Net gain on sale of loans	139.0			101.9
Change in valuation of retained interests	(0.7		)	—
Total non-interest income	139.1			106.6
Non-interest expense	65.3			54.9
Net income before income taxes	$	123.0		$	92.1
Total Assets	$	5,462		$	4,494

The mortgage banking business reported pre-tax income of $123 million, an increase of 34% from the $92 million reported in the first quarter of 2002. Net interest income increased $9 million, or 22% due to a higher average balance of loans held for sale and net gain on sale of mortgage loans increased $37 million or 36% due to an increase in origination volume from the year ago period. Non-interest expense increased $10 million to $65 million versus the first quarter a year ago. The increase reflects higher costs associated with the higher level of mortgage originations.

Net Interest Income

Net interest income on a fully taxable-equivalent basis, decreased by $6 million, or 3%, to $176 million for the quarter ended March 31, 2003. Net interest margin declined to 3.51% from 4.03% in the comparable quarter a year ago, primarily due to the low interest rate environment.

Average earning assets increased by $1.9 billion, or 11% to $20.0 billion in the quarter from $18.1 billion a year ago. The increase from the prior year first quarter reflected growth in loans held for sale due to higher origination volume, and higher investment securities. The yield on interest-earning assets and rates paid on interest-bearing liabilities decreased due to declining market interest rates from a year ago.

The growth in average earning assets was funded in part by a substantial growth in core deposits as the average balance increased 35% over the comparable quarter a year ago. The growth resulted from the continued success of the Company’s sales culture, checking programs, de novo branching program and small business banking initiative.

Average Consolidated Balance Sheet, Interest and Rates

The following table sets forth certain information relating to the continuing operations of the Company’s average statements of financial condition (unaudited) and statements of income (unaudited) for the quarter ended March 31, 2003 and 2002, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such annualized yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances. Average balances and yields include non-accrual loans. The yields and costs include fees that are considered adjustments to yields. Interest and yields are presented on a taxable-equivalent yield basis.

	Quarter Ended
	March 31, 2003							March 31, 2002
(Taxable-equivalent interest and rates, in millions)(1)	Average Balance			Interest		Average Yield/ Cost		Average Balance			Interest		Average Yield/ Cost
Assets:
Interest-earning assets:
Mortgage loans held for investment (2)	$	9,749		$	166.3	6.82	%	$	10,179		$	194.4	7.64	%
Other loans (2)	20			0.4		7.71		20			0.4		8.48
Loans held for sale	5,093			75.9		5.96		3,554			59.3		6.77
Securities (3)	4,835			53.3		4.42		4,033			57.5		5.71
Other interest-earning assets	340			4.0		4.74		314			9.2		11.86
Total interest-earning assets	20,037			299.9		5.99		18,100			320.8		7.11
Non-interest earning assets (4)	1,132							1,087
Total assets	$	21,169						$	19,187

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Deposits:
Savings	$	1,359		3.0		0.90		$	1,244		4.5		1.47
Demand deposits and N.O.W.	2,016			7.7		1.54		678			0.7		0.47
Money market and variable rate savings	3,378			12.9		1.55		3,094			15.2		1.99
Total core deposits	6,753			23.6		1.42		5,016			20.4		1.65
Term certificates of deposit	5,148			39.1		3.08		5,728			58.1		4.11
Total deposits	11,901			62.7		2.14		10,744			78.5		2.96
Mortgagors’ escrow	64			0.3		1.74		84			0.4		1.78
Borrowed funds	6,665			52.4		3.15		5,946			48.9		3.30
Senior bank notes	—			—		—		134			2.3		6.73
Subordinated bank notes	150			3.5		9.36		150			3.5		9.36
Guaranteed preferred beneficial interest in Company’s junior subordinated debentures	200			4.6		9.16		200			4.6		9.16
Total interest-bearing liabilities	18,980			123.5		2.62		17,258			138.2		3.23
Other liabilities (5)	275							177
Total liabilities	19,255							17,435
Stockholders’ equity	1,914							1,752
Total liabilities and stockholders’ equity	$	21,169						$	19,187
Net interest income/interest rate spread (6)				$	176.4	3.37	%				$	182.6	3.88	%
Net interest-earning assets/net interest margin (7)	$	1,057				3.51	%	$	842				4.03	%
Ratio of interest-earning assets to interest-earning liabilities	1.06		x					1.05		x

(1) Net interest income is calculated on a taxable-equivalent basis.

(2) In computing the average balances and average yield on loans, non-accruing loans have been included.

(3) The average yield does not give effect to changes in fair value that are reflected as a component of stockholders’ equity.

(4) Includes goodwill, banking premises and equipment, servicing assets, deferred tax assets, accrued interest receivable, and other miscellaneous non-interest earning assets.

(5) Includes accrued interest payable, accounts payable and other miscellaneous non-interest bearing obligations of the Company.

(6) Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(7) Net interest margin represents net interest income divided by average interest-earning assets.

Rate/Volume Analysis

The following table presents the effects of changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities on the Company’s interest income on a tax equivalent basis and interest expense during the periods indicated. Information is provided in each category on changes (i) attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to volume and rate.

	Quarter Ended March 31, 2003 Compared to Quarter Ended March 31, 2002 Increase/(Decrease)
	Due to
(In millions)	Average Volume			Average Rate			Net Change
Mortgage loans held for investment (1)	$	(7.9	)	$	(20.2	)	$	(28.1	)
Other loans (1)	—			—			—
Loans held for sale	23.5			(6.9		)	16.6
Securities	10.2			(14.4		)	(4.2		)
Other interest-earning assets	0.7			(5.9		)	(5.2		)
Total interest earned on assets	26.5			(47.4		)	(20.9		)
Savings	0.4			(1.9		)	(1.5		)
Demand deposits and N.O.W.	2.9			4.1			7.0
Money market and variable rate savings	1.3			(3.6		)	(2.3		)
Term certificates of deposit	(5.5		)	(13.5		)	(19.0		)
Mortgagors’ escrow	(0.1		)	—			(0.1		)
Borrowed funds	5.7			(2.2		)	3.5
Senior bank notes	(2.3		)	—			(2.3		)
Subordinated bank notes	—			—			—
Guaranteed preferred beneficial interest in Company’s junior subordinated debentures	—			—			—
Total interest paid on liabilities	2.4			(17.1		)	(14.7		)
Net change in net interest income	$	24.1		$	(30.3	)	$	(6.2	)

(1) In computing the volume and rate components of net interest income for loans, non-accrual loans have been included.

Provision for loan losses

The provision for loan losses was $0.3 million for the first quarter of 2003, flat to the provision in the year ago quarter. The provision equaled net charge-offs for all periods.

Non-Interest Income

The following table summarizes the components of non-interest income:

	Quarter Ended March 31,
(In millions)	2003			2002
Income from fees and commissions:
Loan servicing fees	$	5.8		$	5.2
Banking services fees and commissions	14.5			12.6
Fees, commissions and other income	3.4			2.6
Total income from fees and commissions	23.7			20.4
Net gain on sales of mortgage loans	124.3			90.0
Change in valuation of retained interests	(0.7		)	—
Net gain on securities	1.2			1.8
Total non-interest income	$	148.5		$	112.2

Non-interest income in the first quarter was $149 million, up 32% from the comparable period a year ago. The increase versus the year ago period was due to a substantial increase in net gain on sale of mortgage loans. The gain on sale of loans is described in further detail in the following paragraphs.

Income from fees and commissions was $24 million for the quarter ended March 31, 2003, versus $20 million in the year ago period. The increase included a $2 million increase in banking fees due to an increase in the number of checking accounts.

Gain on sale of loans

The following table summarizes loans sold and average margins earned:

	Quarter Ended March 31,
(In millions)	2003			2002
Whole loan – Mortgage:
Sales	$	8,802		$	5,454
Gain on sale	$	123		$	86
Average margin	1.41		%	1.58		%
Average margin by product type:
Specialty products (1)	2.89		%	2.98		%
Home equity / Seconds	1.23		%	1.70		%
Agency / Jumbo	0.69		%	0.70		%
Securitizations – Mortgage:
Sales	$	34		$	163
Gain on sale (2)	$	1		$	4
Average margin	1.59		%	2.32		%

(1) Specialty products include: Alt A, No Doc and A minus programs.

(2) Includes draws from prior period securitizations.

Gain on sale of mortgage loans increased for the quarter ended March 31, 2003, versus the comparable periods a year ago, principally due to a higher volume of loans sold. The sale margin was 141 basis points compared to 158 basis points for the first quarter of 2002. The lower margin is the result of a change in product mix as the prior year included a higher proportion of specialty products sold, and lower margins earned on specialty product and agency loans. As a percentage of total mortgage loans sold, specialty mortgages sold were 32% for the quarter ended March 31, 2003, compared with 38% for the corresponding period in 2002. The margins on specialty products declined to 289 basis points from 298 basis points in the first quarter of 2002 while agency / jumbo margins were essentially unchanged from the prior year’s first quarter.

In the first quarter of 2003, the Company recognized a gain of $1 million related to previously securitized home equity lines of credit. This compared to a $4 million gain in the year ago period from securitized home equity lines.

Non-Interest Expense

The following is a summary of the components of non-interest expense:

	Quarter Ended March 31,
(In millions)	2003		2002
Salaries and benefits	$	61.6	$	49.3
Employee Stock Ownership and stock plans expense	6.1		6.0
Net expense of premises and equipment	20.9		18.0
Advertising	4.4		2.9
Federal deposit insurance premiums	0.5		0.5
Other administrative expenses	27.1		24.0
Total general and administrative expenses	120.6		100.7
Other real estate owned operating income, net	0.2		(0.5		)
Total non-interest expense	$	120.8	$	100.2

Total general and administrative expense increased $20 million to $121 million from $101 million for the quarter ended March 31, 2002. The non-interest expense increase versus a year ago reflected the increased mortgage origination volume and higher costs associated with the de novo branching program and retail banking promotions. The salaries and benefits expense increase of $12 million to $62 million from $49 million a year ago is a result of increase incentive compensation that reflected strong growth in both businesses.

Income Tax Expense

Income tax expense increased $5 million, or 7%, to $75 million for the first quarter of 2003, versus the comparable period a year ago. The rise in the current quarter, compared to 2002, is due to higher pre-tax income and an increase in the effective tax rate from 36.9% to 37.3%.

Loan Originations

The following table summarizes loan origination activity for each of the reported periods:

	Quarter Ended March 31,
(In millions)	2003		2002
Mortgage:
Total applications received	$	18,389	$	12,036
Loans originated:
Specialty products	$	2,760	$	2,191
Home equity / Seconds	528		618
Agency / Jumbo	6,040		3,625
Total loans originated	$	9,328	$	6,434
Commitments to originate loans (end of period)	$	8,997	$	5,931
Loans held for sale (end of period)	$	5,042	$	4,175

Total loan originations during the quarter for the mortgage business were $9.3 billion, up from $6.4 billion during the first quarter of 2002. Specialty product originations were $2.8 billion for the quarter, up from $2.2 billion in the comparable period a year ago. Agency / Jumbo originations increased from $3.6 billion to $6.0 billion for the quarter ended March 31, 2003 versus the same period a year ago. The change in loan origination product mix reflects the declining interest rate environment and strong demand for mortgage refinancing.

Non-Performing Assets:

Non-performing assets consist of non-accruing loans and other real estate owned. GreenPoint reports non-accruing loans separately for the held for investment and held for sale portfolios. The ratio of non-accruing loans held for investment to mortgage loans held for investment increased to 1.67% at March 31, 2003 from 1.61% at December 31, 2002 and the ratio of non-performing assets to total assets increased to 1.23% at March 31, 2003 from 1.12% at December 31, 2002. GreenPoint attempts to convert these assets to interest-earning assets as quickly as possible, while minimizing potential losses on conversion.

Non-performing loans held for sale represent delinquent loans in the mortgage warehouse that mostly have been acquired as repurchases against representations and warranties. These loans increased to $94 million at the end of the first quarter from $66 million at December 31, 2002. This increase has resulted from the substantial growth in loans sold over the past two years. GreenPoint maintains a valuation reserve through which the value of these loans is adjusted to the estimated fair value.

Non-performing assets, were as follows:

(In millions)	March 31, 2003		Dec. 31, 2002
Non-accrual loans receivable held for investment (1)	$	161	$	160
Non-accrual loans receivable held for sale	94		66
Total non-performing loans	255		226
Total other real estate owned, net	21		17
Total non-performing assets	$	276	$	243

Other loans 90 days or more delinquent and still accruing	$	1	$	1

(1) Includes $5 million of non-accrual mortgage loans under 90 days past due at both March 31, 2003 and December 31, 2002.

Loan Servicing Portfolio

The following table summarizes the dollar amount of loans serviced for GreenPoint and for others:

(In millions)	March 31, 2003		Dec. 31, 2002
Mortgage:
Serviced for GreenPoint (1)	$	12,991	$	14,936
Serviced for others (third parties)	15,059		14,647
Total loan servicing portfolio	$	28,050	$	29,583

(1) Includes loans held for sale and loans held for investment at end of period.

Allowance for Possible Loan Losses:

The following is a summary of the provision and allowance for possible loan losses:

	Quarter Ended March 31,
(In millions)	2003			2002
Balance at beginning of period	$	77.7		$	80.6
Provision charged to income:
Continuing	0.3			0.4
Discontinued	0.1			—
Charge-offs:
Mortgage	(0.4		)	(0.4		)
Manufactured housing	(1.6		)	—
Manufactured housing – transfer to loans receivable held for sale	—			(2.9		)
Recoveries:
Mortgage	0.1			—
Manufactured housing	1.5			—
Balance at end of period	$	77.7		$	77.7

Net mortgage loan charge-offs were $0.3 million for the quarter ended March 31, 2003, down from $0.4 million in the year ago period.

Capital Ratios

The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. The Board of Governors of the Federal Reserve System establishes minimum capital requirements for the consolidated bank holding company, as well as for the Bank.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. These guidelines require minimum ratios of risk-based capital to risk adjusted assets of 4% for Tier 1 capital and 8% for total capital. The Federal Reserve Board also has guidelines for a leverage ratio that is designed to complement the risk-based capital ratios in determining the overall capital adequacy of banks and bank holding companies. A minimum leverage ratio of Tier 1 capital to average total assets of 3% is required for banks and bank holding companies, with an additional 100 to 200 basis points required for all but the highest rated institutions. Management believes, as of March 31, 2003, that the Company and the Bank meet all capital adequacy requirements to which it is subject.

FDICIA, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires federal banking regulatory agencies to implement systems for “prompt corrective action” for insured depository institutions that do not meet minimum capital requirements based on these categories. As of March 31, 2003, the Bank was well capitalized based on the prompt corrective action guidelines.

The most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum Tier 1 capital, total capital and leverage ratios of 6%, 10% and 5%, respectively. There have been no conditions or events since that notification that management believes have changed the Company’s or Bank’s category.

The Company’s Total Capital and Tier 1 Capital (to risk weighted assets) improved from 12.96% and 11.43%, respectively, at December 31, 2002 to 13.08% and 11.53%, respectively at March 31, 2003. The Company’s ratio of period-end stockholders’ equity to ending total assets at March 31, 2003 was 8.50% compared to 8.82% at December 31, 2002.

	Actual				Required for Capital Adequacy Purposes
(In millions)	Amount		Ratio		Amount		Ratio
As of March 31, 2003
Total Capital (to Risk Weighted Assets):
Company	$	1,913	13.08	%	$	1,170	8.00	%
Bank	1,924		13.17		1,169		8.00
Tier 1 Capital (to Risk Weighted Assets):
Company	$	1,685	11.53	%	$	585	4.00	%
Bank	1,697		11.61		585		4.00
Tier 1 Capital (to Average Assets):
Company	$	1,685	7.97	%	$	846	4.00	%
Bank	1,697		8.03		845		4.00

As of December 31, 2002
Total Capital (to Risk Weighted Assets):
Company	$	1,924	12.96	%	$	1,188	8.00	%
Bank	1,905		12.83		1,188		8.00
Tier 1 Capital (to Risk Weighted Assets):
Company	$	1,696	11.43	%	$	594	4.00	%
Bank	1,678		11.30		594		4.00
Tier 1 Capital (to Average Assets):
Company	$	1,696	7.51	%	$	904	4.00	%
Bank	1,678		7.42		904		4.00

Stock Repurchase Program

In February 2003, the Company’s Board of Directors authorized a new share repurchase program of up to 5%, or approximately 4.8 million, of its outstanding shares. The repurchase will be at the Company’s discretion, based on ongoing assessments of the capital needs of the business and the market valuation of its stock.

The Company’s previous share repurchase program was completed during the first quarter. Under this program, the Company repurchased 5 million shares, at a cost of approximately $218 million. The repurchased shares are being held in treasury.

Shares repurchased and cost for the quarters ended March 31, 2003 and 2002 are summarized as follows:

	Quarter Ended March 31,
(Dollars in millions)	2003		2002

Number of shares repurchased	2,862,800		294,400
Cost of repurchases	$	125	$	13

Supplemental Performance Measurements – Cash Earnings

Cash earnings is a non-GAAP measurement that GreenPoint defines as net income from continuing operations less a non-cash charge related to the Employee Stock Ownership Plan (“ESOP”). This non-cash expense, unlike other expenses incurred by the Company, does not reduce GreenPoint’s tangible capital thereby enabling the Company to increase shareholder value through the growth of earning assets, increases in cash dividends and additional repurchases of the Company’s stock.

	Quarter Ended
	March 31, 2003			Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			March 31, 2002
Net income from continuing operations	$	126.9		$	128.6		$	126.5		$	122.6		$	120.5
Add back:
Employee Stock Ownership and stock plans expense	6.1			6.9			6.3			7.0			6.0
Cash earnings from continuing operations	$	133.0		$	135.5		$	132.8		$	129.6		$	126.5

Diluted earnings per share from continuing operations	$	1.47		$	1.46		$	1.41		$	1.35		$	1.32
Effect of employee stock plans expense	0.07			0.08			0.07			0.08			0.06
Cash earnings per share (1)	$	1.54		$	1.54		$	1.48		$	1.43		$	1.38

Performance Ratios (Annualized)
Cash earnings return on average assets	2.51		%	2.40		%	2.50		%	2.59		%	2.64		%
Cash earnings return on average equity	27.80			28.50			28.67			29.11			28.87
Cash earnings return on tangible equity	35.58			36.89			37.43			37.75			37.66

(1) Based on the weighted average shares used to calculate diluted earnings per share.

Consolidated Statement of Financial Condition

Total assets of $22.4 billion at March 31, 2003 increased from $21.8 billion at December 31, 2002. The balance sheet reflects growth in the securities portfolio of $1.5 billion. This was partially offset by a decrease in both loans receivable held for sale and held for investment of $553 million and $294 million, respectively.

The balance of core deposits increased $667 million since year-end 2002, reflecting the continued success of a variety of initiatives to attract checking accounts. This growth was offset in part by a decline of $256 million in higher-cost certificates of deposit. Market borrowings increased $155 million since year-end 2002, reflecting the net additional funding needed.

Risk Management

The Company has a Corporate Risk Oversight Committee which monitors and supervises the wide variety of risks encountered in the course of business. The Committee is chaired by the President and Chief Operating Officer and includes the heads of its two businesses, the Chief Financial Officer, the Head of Risk Management and the General Counsel. The Committee meets periodically to review credit risk, including both on-balance sheet and off-balance sheet exposure, market risk and operating and business risks which include, but are not limited to, legal and systems risks. These individual types of risks are also analyzed and monitored by separate committees comprised of experts within the business units and on the corporate staff. Liquidity and Credit Risk Management are described fully below. The Market Risk analysis is included in Part I – Item 3 (page 34).

Liquidity Risk Management

The Bank’s primary sources of funding from financing activities include deposit gathering, advances from the FHLB, short and long-term borrowings under repurchase agreements and overnight and term Federal Funds purchases. Cash flows related to operating activities primarily consist of cash disbursed to fund loan originations and cash received from loan sales and securitizations. Cash flows related to investing activities include purchases of securities and loans receivable held for investment, funds received from loan and securities principal repayments, and sales and maturities of mortgage-backed and other investment securities. While maturities and scheduled amortization of loans and securities are a predictable source of funds, the amount of prepayments on loans and mortgage-backed securities can only be estimated, as they tend to fluctuate with various exogenous factors including the general level, and direction, of interest rates.

Funds provided from financing activities totaled $428 million for the quarter ended March 31, 2003. At March 31, 2003 total borrowings were $7.4 billion, up $155 million from $7.2 billion at December 31, 2002. Membership in the FHLB allows the Bank to secure advances in proportion to its investment in FHLB stock. At March 31, 2003 the Bank had $2.9 billion in outstanding FHLB term advances. The Bank’s ability to secure further advances from the FHLB is based on the market value of the pledged loan portfolio. At March 31, 2002, based on the then current market value of the pledged portfolio, the Bank had additional FHLB borrowing capacity of $1.1 billion. The Bank also uses its mortgage-backed and other investment securities as collateral under short and long-term repurchase agreements. As of March 31, 2003 the Bank had $2.1 billion in outstanding repurchase agreements, which was an increase of $100 million from December 31, 2002. At March 31, 2003 the company had un-pledged securities eligible as collateral for repurchase agreements of $2.8 billion. The Bank also secures overnight and term funding in the Federal Funds market. At March 31, 2003 the Bank had $740 million of overnight purchased Federal Funds.

Deposits continue to be the primary funding source for the Company. Deposit balances experienced a net $411 million increase in the first quarter of 2003. Lower-cost core deposits increased by $667 million offset by a decrease in higher cost certificates of deposit of $256 million. The decline in certificate of deposit balances resulted from management’s decision to utilize lower cost alternative funding sources rather than pay higher priced retail rates. Time deposits maturing within one year totaled $3.5 billion at March 31, 2003. Consistent with historical trends, a substantial portion of these deposits are expected to be renewed. To the extent these deposits are not renewed, funding is expected to be provided through continued growth in core deposits (checking, savings and money market deposits) and through alternative financing sources.

Credit Risk Management

During the first quarter of 2003, the Company originated mortgage loans for its own portfolio and for disposition in the secondary markets in the form of whole loan sales and securitizations. In general, whole loan sales transfer the credit risk to the purchasers. In contrast, for loans placed in the portfolio, or for loans securitized, the Company retains all or much of the credit risk. As of December 31, 2001, the Company discontinued the origination of manufactured housing loans. However, it continues to service its manufactured housing loan portfolio, including its securitized loan pools. During the fourth quarter of 2002, GreenPoint Bank began to originate small business loans through its branch system to its business banking customers for the Bank’s portfolio.

GreenPoint Bank and GreenPoint Mortgage maintain underwriting policies, procedures and approval authorities appropriate to their businesses. The chief credit executive in GreenPoint Mortgage reports directly to the chief executive of the business, outside of the production organization. The chief credit executive in the small business banking group within GreenPoint Bank reports directly to the head of the small business banking group. With respect to mortgage loans originated for whole loan sale to the secondary markets, where credit risk is transferred, underwriting criteria are established to meet the investor requirements. An executive-level Risk Management Division determines the criteria required for loans which will be transferred to GreenPoint’s portfolio or sold through securitizations. With respect to business loans at GreenPoint Bank, a sophisticated scoring system is one of the tools being utilized in the underwriting process.

Oversight of the appraiser approval and appraisal review process is conducted independent of the production organization. Appraisers are required to meet strict standards for approval by GreenPoint, and their performance is monitored on a regular basis. With oversight by Risk Management, a comprehensive quality control process is in place to ensure that mortgage loans being originated meet the Company’s underwriting standards, and that required operating procedures are followed. Loans are selected monthly on a pre and post funding basis for review by quality control analysts and staff appraisers. A quality control process has also been established for the small business loans being originated by GreenPoint with monthly reviews on a post-funding basis.

Risk Management personnel monitor closely the performance of all loans on which the Company retains credit risk. On securitization or sale, expectations are set on the default, recovery and voluntary prepayment rates. Each pool of loans is reviewed monthly to ensure that performance is meeting those expectations. In the event performance does not meet expectations, the assumptions are revised. Final responsibility for these judgments resides with executive management, independent of the business unit.

Risk Management reviews monthly the delinquency and loss trends for all of the mortgage, manufactured housing, and small business loans serviced by the Company, whether or not it retains credit exposure. These reviews are intended to identify significant changes in credit quality which may indicate changes to the Company’s exposures or to the efficacy of its underwriting of loans sold to other investors. Such changes could prompt adjustments to the Company’s underwriting criteria or servicing procedures.

GreenPoint’s mortgage loan origination activity is geographically diversified throughout the United States. The Company tracks economic and housing market trends to identify areas for expansion and as an early warning mechanism. The Company also closely monitors trends in delinquent and non-performing loans through cycles in the economy and in the real estate market. These economic and performance trends are analyzed in the ongoing fine-tuning of lending practices.

The Company uses various collection strategies to maintain contact with the borrowers in order to obtain repayment. Collection activities for GreenPoint Mortgage are centralized in a servicing unit in Columbus, Georgia. GreenPoint Credit’s collection activities were centralized during 2002 in a servicing center in Atlanta, Georgia in order to target delinquent accounts more effectively utilizing more advanced technology. Remarketing activities for GreenPoint Credit remain decentralized among several regional offices in order to repossess and liquidate collateral more effectively, thereby minimizing the loss severity. Collection efforts for GreenPoint Bank’s business banking loans are handled in a collaborative manner by the credit analysts in New York and the servicing center in Columbus, Georgia.

The Company has set forth a policy for establishment and review of the adequacy of the allowance for loan losses in order to provide for estimated costs related to the problem loans. Management believes that the allowance for loan losses is adequate. However, such determination is susceptible to the effect of future unanticipated changes in general economic and market conditions that may affect the financial circumstances of borrowers and/or residential real estate values within the Company’s lending areas. The Company has also established a reserve to cover losses associated with repurchases of sold loans due to representation and warranty violations. This reserve was sized using historical loss data associated with loan sales and additional reserves are set aside as the volume of sold loans increases.

GreenPoint Financial Corp. and Subsidiaries
Part I – Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk Management

Overview

The Company’s market risk exposure is limited solely to interest rate risk. Interest rate risk is defined as the sensitivity of the Company’s current and future earnings to changes in the level of market interest rates. Part of the Company’s interest rate risk resides on the balance sheet, as the maturity and repricing characteristics of its assets do not match those of its liabilities. Additionally, a significant source of the Company’s revenue, the proceeds from the sale of mortgage loans, depends on the volume of loan originations, which is sensitive to the level and direction of market interest rates.

Market Risk Management Process

Management of interest rate risk is conducted within policies and limits approved by the Board of Directors. These policies and limits set forth the maximum risks to earnings and market value that the Board of Directors deems prudent. In addition, they govern permissible investments and off-balance sheet transactions, and maximum counterpart exposure limits. The formulation and implementation of any Risk Management strategy involves numerous day-to-day decisions involving the acquisition or divestiture of loans and investment securities, reinvestment of cash flows, the selection of funding instruments and maturities and the use of off-balance sheet instruments. Together, these incremental decisions result in a strategy that is represented by the interest rate risk position. The performance of the positions and strategies are formally reviewed by the Asset and Liability Management Committee (“ALCO”) in the context of the outlook for interest rates and general business conditions, as well as for compliance with established risk tolerances and policies. The committee is chaired by the Chief Financial Officer and includes the Treasurer, the Head of Risk Management and the Company’s Senior Business Unit and Financial Executives.

Interest Rate Risk Management Strategies

Interest rate risk inherent on the balance sheet is managed taking into account the risks to earnings in the Company’s main businesses. Most importantly, the Company’s mortgage origination business is sensitive to the level of interest rates. In a low or declining interest rate environment mortgage volumes tend to increase as demand for home purchases and mortgage refinancing increases, leading to growth in mortgage banking revenues. Conversely, high or rising rates subdue mortgage demand, leading to less revenue.

These dynamics tend to be partly offset by the sensitivity of retail banking revenues to changes in the level of interest rates. Typically in a high rate environment, spreads earned on retail deposits increase, as rates paid on those deposits increase more slowly than market rates in general. Additionally, the balance sheet is normally positioned to allow for higher net interest income and wider net interest margins as rates rise. This is known as an asset sensitive balance sheet position, and provides a further offset to the interest rate cyclically of mortgage banking revenue.

The interest rate sensitivity of the Company’s balance sheet originates with the cash flow characteristics of its loan portfolios and deposit products. Management alters the overall balance sheet sensitivity through adjustments to the securities investment portfolio and the maturities of market borrowings, as well as various deposit pricing and derivatives strategies.

Interest Rate Risk Measurement

The principal tool used to measure balance sheet sensitivity at any point in time, and to assess the impact of potential business and rate risk management strategies, is a simulation of net interest income. The simulation gives effect to management assumptions concerning the repricing of assets and liabilities, as well as business volumes under a variety of hypothetical interest rate scenarios. These hypothetical scenarios incorporate parallel yield curve shifts in interest rates of plus or minus 100, 200 and 300 basis points. In addition, non-parallel yield curve flattening and steepening scenarios are modeled.

The most crucial management assumptions concern prepayments on the Company’s mortgage loan portfolio and the pricing of retail deposits in various interest rate environments. As interest rates decline, mortgage prepayments tend to increase, reducing loan portfolio growth and lowering the portfolio’s average yield. Management’s assumptions are guided by analyzing the prepayment performance of the Company’s portfolio in past rate cycles as well as publicly available research on the prepayment behavior of similar mortgage assets.

Rates on non-maturity deposits rise and fall with market rates, but tend to move less than proportionately. Rates offered on retail certificates of deposit tend to move in close concert with market rates, though history suggests they increase less rapidly as market rates rise. Extensive historical analysis shows that the Company’s deposit volumes are relatively insensitive to interest rate movements within the range encompassed by the scenarios.

The following table presents the results of the simulations under a variety of hypothetical interest rate scenarios, based on the Company’s balance sheet position at March 31, 2003. The results are expressed as the percentage change in pretax net interest income from the base scenario in which interest rates are unchanged. The change in income is measured over a period of twelve months.

	Short-term Rate Changes:
Yield Curve	-200 bps		+200 bps
-150 bps	(17.3	)%	6.0	%
Parallel	(10.7	)%	10.1	%
+150 bps	(3.8	)%	13.5	%

The columns represent 200 basis point changes—down and up—in the level of short-term interest rates over a twelve-month time span. The rows indicate changes in the shape of the yield curve over the same time period. The parallel row corresponds to changes in rate levels in which the yield curve retains its shape. In the -150 basis point scenarios, the yield curve flattens, and in the +150 basis point simulations the curve steepens. For example, a parallel downward shift of 200 basis points would reduce net interest income by 10.7% from what would be earned if rates remained constant. (As of March 31, 2003 not all rates could fall 200 basis points without reaching zero. In these scenarios rates are reduced until they reach zero. These scenarios are retained to allow for historical comparisons.) However, a decline of 200 basis points at the short end of the yield curve, accompanied by a 150 basis point steeper curve, would decrease net interest income by 3.8% over the unchanged scenario.

At March 31, 2002 a parallel 200 basis point downward movement in interest rates was estimated to reduce net interest income by 1.1% from the base case. A parallel 200 basis point rise in rates was estimated to benefit net interest income by 0.5%.

The simulations measure the exposure of net interest income to changes in interest rates at a particular point of time. The risk position is always changing. Management continuously monitors the Company’s risk profile as it changes, and alters the rate sensitivity to ensure limits are adhered to, and that the resulting risk profile is appropriate to its views on the likely course of interest rates and developments in its core businesses.

In addition, the fair value of the mortgage company’s servicing assets and retained interests from securitizations are directly affected by the level of prepayments associated with the underlying loans. As interest rates decline the value of these assets will decline. Conversely as interest rates rise, the value of these assets will increase.

Derivative Financial Instruments

Interest rate derivatives, such as interest rate swaps and Eurodollar futures, are periodically integrated into the Company’s interest rate positions and, therefore, its simulations. The notional amount of these instruments are not included in the company’s balance sheet. There were no outstanding derivative financial instruments hedging the Company’s interest rate position at March 31, 2003.

The Company does currently utilize derivative instruments to manage its exposure to interest rate risk associated with mortgage loan commitments and mortgage loans held for sale.

Prior to the closing of the loan, the Company generally extends an interest rate lock commitment to the borrower. The Company is exposed to subsequent changes in the level of market interest rates, and the spread over Treasuries required by investors. An increase in market interest rates or a widening of spreads will reduce the prices paid by investors and the resultant gain on sale. To mitigate this risk, at the time the Company extends the interest rate lock commitment to the borrower, the Company will enter into mandatory commitments to deliver mortgage whole loans to various investors, or to issue private securities and/or Fannie Mae and Freddie Mac securities (forward delivery commitments.) These commitments effectively establish the price the Company will receive for the related mortgage loan thereby minimizing the risk of subsequent changes in interest rates. At March 31, 2003, the Company had mandatory forward delivery commitments outstanding amounting to $4.2 billion.

GreenPoint Financial Corp. and Subsidiaries
Part I – Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have determined that the Company’s disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934 (“Act”)), which are designed to ensure that information required to be disclosed by the Company in the periodic reports it files under the Act is recorded, processed, summarized and reported in a timely manner, are effective based on their evaluation of these controls and procedures as of a date within 90 days prior to the filing date of this Quarterly Report on Form 10-Q (“Evaluation Date”).

Changes in Internal Controls

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date, including any corrective actions with regard to significant deficiencies and material weakness.

GreenPoint Financial Corp. and Subsidiaries
Part II – Item 1. Legal Proceedings

In the ordinary course of business, the Corporation and its subsidiaries are defendants in or parties to a number of pending and threatened legal actions and proceedings, and are also involved from time to time in investigations and administrative proceedings by governmental agencies. Certain of such actions and proceedings involve alleged violations of consumer protection laws, including claims relating to the Corporation’s loan origination and collection efforts, and other federal and state banking laws. Certain of such actions and proceedings include claims for breach of contract, restitution, compensatory damages, punitive damages and other forms of relief. Due to the difficulty of predicting the outcome of such matters, the Corporation can give no assurance that it will prevail on all claims made against it; however, management believes, based on current knowledge and after consultation with counsel, that these legal matters and administrative proceedings and the losses, if any, resulting from the final outcome thereof, will not have a material adverse effect on the Corporation and its subsidiaries’ financial position, results of operations or liquidity, but can give no assurance that they will not have such an effect.

GreenPoint Financial Corp. and Subsidiaries
Part II – Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit Number:

12.1		Ratios of Earnings to Combined Fixed Charges

99.1		Certification of Periodic Report of Thomas S. Johnson, Chairman and Chief Executive Officer

99.2		Certification of Periodic Report of Jeffrey R. Leeds, Executive Vice President and Chief Financial Officer

(b) Reports on Form 8-K

None.

GreenPoint Financial Corp. and Subsidiaries

SIGNATURES

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

	GreenPoint Financial Corp.



	By:	/s/ Thomas S. Johnson
		Thomas S. Johnson
		Chairman of the Board and
		Chief Executive Officer


	By:	/s/ Jeffrey R. Leeds
		Jeffrey R. Leeds
		Executive Vice President and
		Chief Financial Officer


	By:	/s/ Joseph D. Perillo
		Joseph D. Perillo
		Senior Vice President and
		Controller


Dated May 13, 2003

GreenPoint Financial Corp. and Subsidiaries

CERTIFICATIONS

I, Thomas S. Johnson, Chairman and Chief Executive Officer of GreenPoint Financial Corp., certify that:

1. I have reviewed this quarterly report on Form 10-Q of GreenPoint Financial Corp.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 13, 2003

	/s/ Thomas S. Johnson
	Thomas S. Johnson
	Chairman and Chief Executive Officer GreenPoint Financial Corp.

I, Jeffrey R. Leeds, Executive Vice President and Chief Financial Officer of GreenPoint Financial Corp., certify that:

1. I have reviewed this quarterly report on Form 10-Q of GreenPoint Financial Corp.;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: May 13, 2003

	/s/ Jeffrey R. Leeds
	Jeffrey R. Leeds
	Executive Vice President and Chief Executive Officer GreenPoint Financial Corp.