10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

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

For the period ended: March 31, 2006

NORTH FORK BANCORPORATION, INC.

(Exact name of Company as specified in its charter)


DELAWARE		36-3154608

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


275 BROADHOLLOW ROAD, MELVILLE, NEW YORK		11747

(Address of principal executive offices)		(Zip Code)

(631) 531-2970

(Company’s telephone number, including area code)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

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


CLASS OF COMMON STOCK		NUMBER OF SHARES OUTSTANDING –5/1/06

$.01 Par Value		465,182,848

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited)


	March 31,			December 31,			March 31,
(in thousands except share amounts)	2006			2005			2005
Assets:
Cash & Due from Banks	$	940,045		$	1,037,406		$	712,195
Money Market Investments		146,962			24,843			40,809
Securities:
Available-for-Sale ($4,976,569, $4,107,473 and $6,367,537 pledged at March 31, 2006, December 31, 2005 and March 31, 2005, respectively)		10,615,327			11,295,977			14,983,603
Held-to-Maturity ($12,462, $13,409 and $21,331 pledged at March 31, 2006, December 31, 2005 and March 31, 2005, respectively)		101,486			104,210			133,745

Total Securities		10,716,813			11,400,187			15,117,348


Loans:
Loans Held-for-Sale		4,190,465			4,359,267			5,350,823
Loans Held-for-Investment		34,202,653			33,232,236			31,857,021
Less: Allowance for Loan Losses		221,256			217,939			215,307

Net Loans Held-for-Investment		33,981,397			33,014,297			31,641,714

Goodwill		5,918,116			5,918,116			5,886,693
Identifiable Intangibles		105,232			114,091			141,601
Premises & Equipment		444,546			438,040			417,900
Mortgage Servicing Rights		276,191			267,424			283,268
Accrued Income Receivable		209,458			205,892			213,195
Other Assets		776,155			837,308			974,854

Total Assets	$	57,705,380		$	57,616,871		$	60,780,400


Liabilities and Stockholders’ Equity:
Deposits:
Demand	$	7,440,561		$	7,639,231		$	7,106,826
Savings, NOW & Money Market		22,097,622			20,910,161			21,725,437
Time		8,155,517			8,067,181			7,705,470

Total Deposits		37,693,700			36,616,573			36,537,733

Federal Funds Purchased & Collateralized Borrowings		8,820,804			9,700,621			12,931,678
Other Borrowings		1,455,851			1,477,364			1,484,468

Total Borrowings		10,276,655			11,177,985			14,416,146

Accrued Interest Payable		128,822			102,229			81,387
Dividends Payable		115,880			116,754			104,924
Accrued Expenses & Other Liabilities		544,618			601,089			632,019

Total Liabilities	$	48,759,675		$	48,614,630		$	51,772,209

Stockholders’ Equity:
Preferred Stock, par value $1.00; authorized 10,000,000 shares, unissued	$	—		$	—		$	—
Common Stock, par value $0.01; authorized 1,000,000,000 shares; issued 480,682,118 Shares at March 31, 2006		4,807			4,806			4,775
Additional Paid in Capital		7,027,189			7,035,314			7,004,048
Retained Earnings		2,675,536			2,581,047			2,218,134
Accumulated Other Comprehensive Loss		(167,116	)		(108,898	)		(87,300	)
Deferred Compensation		(146,800	)		(154,772	)		(121,011	)
Treasury Stock at Cost; 17,161,919 Shares at March 31, 2006		(447,911	)		(355,256	)		(10,455	)

Total Stockholders’ Equity		8,945,705			9,002,241			9,008,191

Total Liabilities and Stockholders’ Equity	$	57,705,380		$	57,616,871		$	60,780,400

See accompanying notes to consolidated financial statements

Consolidated Statements of Income (Unaudited)


For the Three Months Ended March 31,	2006		2005
(in thousands, except per share amounts)
Interest Income:
Loans Held-for-Investment	$	505,736	$	452,217
Loans Held-for-Sale		63,692		66,848
Mortgage-Backed Securities		99,515		142,007
Other Securities		28,645		29,407
Money Market Investments		542		733

Total Interest Income		698,130		691,212


Interest Expense:
Savings, NOW & Money Market Deposits		117,433		69,596
Time Deposits		59,790		33,466
Federal Funds Purchased & Collateralized Borrowings		83,474		99,007
Other Borrowings		19,956		17,824

Total Interest Expense		280,653		219,893

Net Interest Income		417,477		471,319
Provision for Loan Losses		9,000		9,000

Net Interest Income after Provision for Loan Losses		408,477		462,319


Non-Interest Income:
Mortgage Banking Income		96,072		111,096
Customer Related Fees & Service Charges		41,103		42,006
Investment Management, Commissions & Trust Fees		9,669		11,071
Other Operating Income		14,510		14,077
Securities Gains, net		6,722		4,635

Total Non-Interest Income		168,076		182,885


Non-Interest Expense:
Employee Compensation & Benefits		141,311		135,369
Occupancy & Equipment, net		51,292		45,954
Amortization of Identifiable Intangibles		8,859		9,133
Other Operating Expenses		56,716		56,197

Total Non-Interest Expense		258,178		246,653

Income Before Income Taxes		318,375		398,551
Provision for Income Taxes		108,247		139,516

Net Income	$	210,128	$	259,035


Earnings Per Share:
Basic	$	0.46	$	0.56
Diluted	$	0.46	$	0.55

See accompanying notes to consolidated financial statements

Consolidated Statements of Cash Flows (Unaudited)


*For the Three Months Ended March 31,*	2006			2005
(in thousands)
Cash Flows from Operating Activities:
Net Income	$	210,128		$	259,035
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Loan Losses		9,000			9,000
Depreciation		11,721			10,186
Net Amortization/(Accretion):
Securities		6,178			6,472
Loans		3,683			3,026
Borrowings & Time Deposits		(31,502	)		(32,099	)
Intangibles		8,859			9,133
Deferred Compensation		7,019			5,457
Securities Gains		(6,722	)		(4,635	)
Capitalization of Mortgage Servicing Rights		(17,060	)		(50,055	)
Amortization of Mortgage Servicing Rights		23,598			19,989
Temporary Impairment Recovery of Mortgage Servicing Rights		(15,691	)		—
Loans Held-for-Sale:
Originations		(7,067,771	)		(8,314,765	)
Proceeds from Sale (1)		7,218,546			8,459,438
Gains on Sale of Loans		(81,749	)		(105,369	)
Other		99,776			385,818
Other, Net		37,506			72,694

Net Cash Provided by Operating Activities		415,519			733,325

Cash Flows from Investing Activities:
Originations of Loans Held-for-Investment, net of Principal Repayments and Net Charge Offs		(975,455	)		(1,410,327	)
Purchases of Securities Available-for-Sale		(484,172	)		(704,280	)
Proceeds from Sales of Securities Available-for-Sale		631,108			195,499
Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale		446,192			831,918
Purchases of Securities Held-to-Maturity		—			(500	)
Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity		2,670			9,223
Purchases of Premises and Equipment, net		(18,227	)		(12,084	)

Net Cash Used in Investing Activities	$	(397,884	)	$	(1,090,551	)

See accompanying notes to consolidated financial statements

Consolidated Statements of Cash Flows (Unaudited) — continued


*For the Three Months Ended March 31,*	2006			2005
(in thousands)
Cash Flows from Financing Activities:
Net Increase in Customer Deposits	$	1,083,263		$	1,734,749
Net Decrease in Borrowings		(858,847	)		(1,639,773	)
Purchase of Treasury Stock		(131,839	)		—
Exercise of Options and Common Stock Sold for Cash		31,060			56,503
Cash Dividends Paid		(116,514	)		(104,149	)

Net Cash Provided by Financing Activities		7,123			47,330

Net Increase/(Decrease) in Cash and Cash Equivalents		24,758			(309,896	)
Cash and Cash Equivalents at Beginning of the Period		1,062,249			1,062,900

Cash and Cash Equivalents at End of the Period	$	1,087,007		$	753,004

Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest Expense	$	285,563		$	240,635

Income Taxes	$	2,511		$	4,725

During the Period the Company Purchased Various Securities which Settled in the Subsequent Period	$	8,688		$	28,559


(1)		Excludes loans retained in the held-for-investment portfolio totaling $0.7 billion and $1.7 billion during the three months ended March 31, 2006 and 2005, respectively.

See accompanying notes to consolidated financial statements

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


			Additional						Accum. Other									Total
(Dollars in thousands, except			Paid In			Retained			Comp.			Deferred						Stockholders’
per share amounts)	Common Stock		Capital			Earnings			(Loss)/Income			Compensation			Treasury Stock			Equity
Balance, December 31, 2004	$	4,745	$	6,968,493		$	2,064,148		$	240		$	(125,174	)	$	(31,373	)	$	8,881,079
Net Income		—		—			259,035			—			—			—			259,035
Cash Dividends ($.22 per share)		—		—			(105,049	)		—			—			—			(105,049	)
Issuance of Stock (73,793 shares)		30		723			—			—			—			1,454			2,207
Restricted Stock Activity, net		—		512			—			—			4,163			833			5,508
Stock Based Compensation Activity, net		—		34,320			—			—			—			18,631			52,951
Other Comprehensive Loss		—		—			—			(87,540	)		—			—			(87,540	)

Balance, March 31, 2005	$	4,775	$	7,004,048		$	2,218,134		$	(87,300	)	$	(121,011	)	$	(10,455	)	$	9,008,191


Balance, December 31, 2005	$	4,806	$	7,035,314		$	2,581,047		$	(108,898	)	$	(154,772	)	$	(355,256	)	$	9,002,241
Net Income		—		—			210,128			—			—			—			210,128
Cash Dividends ($.25 per share)		—		—			(115,639	)		—			—			—			(115,639	)
Issuance of Stock (85,960 shares)		1		(34	)		—			—			—			2,249			2,216
Restricted Stock Activity, net		—		(3	)		—			—			7,972			(871	)		7,098
Stock Based Compensation Activity, net		—		(8,088	)		—			—			—			37,806			29,718
Purchases of Treasury Stock (5,101,900 shares)		—		—			—			—			—			(131,839	)		(131,839	)
Other Comprehensive Loss		—		—			—			(58,218	)		—			—			(58,218	)

Balance, March 31, 2006	$	4,807	$	7,027,189		$	2,675,536		$	(167,116	)	$	(146,800	)	$	(447,911	)	$	8,945,705

See accompanying notes to consolidated financial statements

Consolidated Statements of Comprehensive Income (Unaudited)


*For the Three Months Ended March 31,*	2006			2005
(in thousands)
Net Income	$	210,128		$	259,035


Other Comprehensive Income:
Unrealized Losses On Securities:
Changes in Unrealized Losses Arising During The Period	$	(96,286	)	$	(160,826	)
Less: Reclassification Adjustment For Gains Included in Net Income		(6,722	)		(4,635	)

Changes in Unrealized Losses Arising During the Period		(103,008	)		(165,461	)
Related Tax Effect on Unrealized Losses During the Period		44,294			71,113

Net Change in Unrealized Losses Arising During the Period		(58,714	)		(94,348	)

Unrealized Losses On Derivative Instruments:
Changes in Unrealized Losses Arising During the Period		578			10,841
Add: Reclassification Adjustment for Expenses Included in Net Income		293			1,100

Changes in Unrealized Losses Arising During the Period		871			11,941
Related Tax Effect on Unrealized Losses During the Period		(375	)		(5,133	)

Net Change in Unrealized Losses Arising During the Period		496			6,808


Net Other Comprehensive Loss	$	(58,218	)	$	(87,540	)

Comprehensive Income	$	151,910		$	171,495

See accompanying notes to consolidated financial statements

North Fork Bancorporation, Inc.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

March 31, 2006 and 2005

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

NOTE 1 — BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

North Fork Bancorporation, Inc. is a regional bank holding company organized under the laws of the State of Delaware and registered as a “bank holding company” under the Bank Holding Company Act of 1956, as amended. We are not a “financial holding company” as defined under the federal law. We are committed to providing superior customer service, while offering a full range of banking products and financial services, to both our consumer and commercial customers. Our primary subsidiary, North Fork Bank, operates from more than 350 retail bank branches in the New York Metropolitan area. We also operate a nationwide mortgage business, GreenPoint Mortgage Funding Inc. (“GreenPoint Mortgage” or “GPM”). Through our other non-bank subsidiaries, we offer financial products and services to our customers including asset management, securities brokerage, and the sale of alternative investment products. We also operate a second subsidiary bank, Superior Savings of New England, N.A. (“Superior”), which focuses on telephonic and media-based generation of deposits.

Proposed Plan of Merger with Capital One Financial Corporation

On March 12, 2006, North Fork announced that it had entered into an Agreement and Plan of Merger with Capital One Financial Corporation (“Capital One”) pursuant to which North Fork would merge with and into Capital One, with Capital One continuing as the surviving corporation. Capital One, headquartered in McLean, Virginia, is a financial holding company whose banking and non-banking subsidiaries market a variety of financial products and services. Its primary products and services offered through its subsidiaries include credit card products, deposit products, consumer and commercial lending, automobile and other motor vehicle financing, and a variety of other financial products and services for consumers, small businesses and commercial clients.

Subject to the terms and conditions of the merger agreement, each holder of North Fork common stock will have the right, subject to proration, to elect to receive, for each share of North Fork common stock, cash or Capital One common stock, in either case having a value equal to $11.25 plus the product of 0.2216 times the average closing sales price of Capital One’s common stock for the five trading days immediately preceding the merger date. Based on Capital One’s closing NYSE stock price of $89.92 on March 10, 2006, the transaction is valued at $31.18 per North Fork share, for a total transaction value of approximately $14.6 billion.

The merger is subject to certain conditions, including approval by North Fork stockholders and Capital One stockholders, receipt of regulatory approvals and other customary closing conditions, and is expected to close in the fourth quarter of 2006. On May 1, 2006, Capital One filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that included a preliminary joint proxy statement for Capital One and North Fork that also constitutes a prospectus for Capital One.

Basis of Presentation

The accounting and financial reporting policies of the Company and its subsidiaries are in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual results could differ from those estimates. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. All significant inter-company accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to current period presentation.

These unaudited interim consolidated financial statements and related management’s discussion and analysis should be read together with the consolidated financial information in our 2005 Annual Report on Form 10-K/A, previously filed with the United States Securities and Exchange Commission (“SEC”). Results of operations for the three months ended March 31, 2006 are not necessarily indicative of the results of operations which may be expected for the full year 2006 or any future interim period.

In reviewing and understanding the financial information contained herein, you are encouraged to read the significant accounting policies contained in Note 1 — Business and Summary of Significant Accounting Policies of our 2005 Annual Report in Form 10-K/A. There have not been any significant changes in the factors or methodology used in determining accounting estimates or applied in our critical accounting policies since December 2005 that are material in relation to our financial condition or results of operations.

Accounting for Stock-Based Compensation

On January 1, 2006, we adopted SFAS No. 123R — “Accounting for Stock Based Compensation, Share Based Payment”, (SFAS 123R) which replaced the guidance prescribed in SFAS 123. SFAS 123R requires that compensation costs relating to share-based payment transactions be recognized in the financial statements. The associated costs will be measured based on the fair value of the equity or liability instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Restricted stock awards are recorded as deferred compensation, a component of stockholders’ equity, at the fair value of these awards at the date of grant and are amortized to compensation expense in accordance with SFAS 123R. This accounting practice is consistent with our prior accounting treatment of restricted stock awards. Substantially, all employee stock options are awarded at the end of the year as part of an employees overall compensation, based on the individual’s performance during that year, and either vest immediately or over a nominal vesting period. Therefore, there is no effect on net income of expensing stock options during the three months ended March 31, 2006.

Critical Accounting Policies

We have identified four accounting policies that are critical to our financial statement presentation and require critical accounting estimates, involving significant valuation adjustments, on the part of management. The following is a description of those policies:

Provision and Allowance for Loan Losses

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

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

The loan portfolio is categorized according to collateral type, loan purpose or borrower type (i.e. commercial, consumer). The categories used include Multi-Family Mortgages, Residential 1-4 Family Mortgages, Commercial Mortgages, Commercial and Industrial, Consumer, and Construction and Land, which are more fully described in the section entitled Management’s Discussion and Analysis, — ”Loans Held-for-Investment.” An important consideration is our concentration of real estate related loans.

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

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

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

The initial allocation or specific-allowance methodology commences with loan officers and underwriters grading the quality of their loans on a risk classification scale ranging from 1-10. Loans identified as below investment grade are referred to our independent Loan Review Department (“LRD”) for further analysis and identification of those factors that may ultimately affect the full recovery or collectibility of principal and/or interest. These loans are subject to continuous review and monitoring while they remain in a criticized category. Additionally, LRD is responsible for performing periodic reviews of the loan portfolio independent from the

identification process employed by loan officers and underwriters. Loans that fall into criticized categories are further evaluated for impairment in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan.” The portion of the allowance allocated to impaired loans is based on the most appropriate of the following measures: discounted cash flows from the loan using the loan’s effective interest rate, the fair value of the collateral for collateral dependent loans, or the observable market price of the impaired loan.

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

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

Accounting for Derivative Financial Instruments

Derivative financial instruments are recorded at fair value as either assets or liabilities on the balance sheet. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Transactions hedging changes in the fair value of a recognized asset, liability, or firm commitment are classified as fair value hedges. Derivative instruments hedging exposure to variable cash flows of recognized assets, liabilities or forecasted transactions are classified as cash flow hedges.

Fair value hedges result in the immediate recognition through earnings of gains or losses on the derivative instrument, as well as corresponding losses or gains on the hedged financial instrument to the extent they are attributable to the hedged risk. The gain or loss on the effective portion of a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income, and reclassified to earnings in the same period that the hedged transaction affects earnings. The gain or loss on the ineffective portion of the derivative instrument, if any, is recognized in earnings for both fair value and cash flow hedges. Derivative instruments not qualifying for hedge accounting treatment are recorded at fair value and classified as trading assets or liabilities with the resultant changes in fair value recognized in earnings during the period of change.

In the event of early termination of a derivative contract, previously designated as part of a cash flow hedging relationship, any resulting gain or loss is deferred as an adjustment to the carrying value of the assets or liabilities, against which the hedge had been designated with a corresponding offset to other comprehensive income, and reclassified to earnings over the shorter of the remaining life of the designated assets or liabilities, or the derivative contract. However, if the hedged item is no longer on balance sheet (i.e. sold or canceled), the derivative gain or loss is immediately reclassified to earnings.

As part of our mortgage banking operations, we enter into commitments to originate or purchase loans whereby the interest rate on the loan is determined prior to funding (“interest rate lock commitment”). Interest rate lock commitments related to loans that we intend to sell in the secondary market are considered free-standing derivatives. These derivatives are required to be recorded at fair value, with changes in fair value recorded in current period earnings. In accordance with Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments”, interest rate lock commitments are initially valued at zero. Changes in fair value subsequent to inception are based on changes in the fair value of loans with similar characteristics and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and passage of time. In general, the probability that a loan will fund increases if mortgage rates rise and decreases if mortgage rates fall. The initial value inherent in the loan commitment at origination is recognized through gain on sale of loans when the underlying loan is sold.

We are exposed to interest rate risk from the time an interest rate lock commitment is made to a borrower to the time the resulting mortgage loan is sold in the secondary market. To manage this risk, we use derivatives, primarily forward sales contracts on mortgage backed securities and forward delivery commitments, in an amount equal to the portion of interest rate contracts expected to close. The duration of these derivatives are selected to have the changes in their fair value correlate closely with the changes in fair

value of the interest rate lock commitments on loans to be sold. These derivatives are also required to be recorded at fair value, with changes in fair value recorded in current period earnings.

Representation and Warranty Reserve

The representation and warranty reserve is available to cover probable losses inherent with the sale of loans in the secondary market. In the normal course of business, certain representations and warranties are made to investors at the time of sale, which permit the investor to return the loan to the seller or require the seller to indemnify the investor (make whole) for any losses incurred by the investor while the loan remains outstanding.

The evaluation process for determining the adequacy of the representation and warranty reserve and the periodic provisioning for estimated losses is performed for each product type on a quarterly basis. Factors considered in the evaluation process include historical sales volumes, aggregate repurchase and indemnification activity and actual losses incurred. Additions to the reserve are recorded as a reduction to the gain on sale of loans. Losses incurred on loans where we are required to either repurchase the loan or make payments to the investor under the indemnification provisions are charged against the reserve. The representation and warranty reserve is included in accrued expenses and other liabilities in the consolidated balance sheet.

Mortgage Servicing Rights

The right to service mortgage loans for others, or Mortgage Servicing Rights (“MSRs”), is recognized when mortgage loans are sold in the secondary market and the right to service those loans for a fee is retained. The MSRs initial carrying value is determined by allocating the recorded investment in the underlying mortgage loans between the assets sold and the interest retained based on their relative fair values at the date of transfer. Fair value of the MSRs is determined using the present value of the estimated future cash flows of net servicing income. MSRs are carried at the lower of the initial carrying value, adjusted for amortization, or fair value. MSRs are amortized in proportion to, and over the period of, estimated net servicing income. The amortization of MSRs is periodically analyzed and adjusted to reflect changes in prepayment speeds.

To determine fair value, a valuation model that calculates the present value of estimated future net servicing income is utilized. We use assumptions in the valuation model that market participants use when estimating future net servicing income, including prepayment speeds, discount rates, default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income and late fees.

MSRs are periodically evaluated for impairment based on the difference between the carrying amount and current fair value. To evaluate and measure impairment, the underlying loans are stratified based on certain risk characteristics, including loan type, note rate and investor servicing requirements. If it is determined that temporary impairment exists, a valuation allowance is established through a charge to earnings for any excess of amortized cost over the current fair value, by risk stratification. If determined in future periods that all or a portion of the temporary impairment no longer exists for a particular risk stratification, the valuation allowance is reduced by increasing earnings. However, if impairment for a particular risk stratification is deemed other-than-temporary (recovery of a recorded valuation allowance is remote), a direct write-down, permanently reducing the carrying value of the MSRs is recorded. The periodic evaluation of MSRs for other-than-temporary impairment considers both historical and projected trends in interest rates, payoff activity and whether impairment could be recovered through increases in market interest rates.

NOTE 2 — SECURITIES

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


	March 31, 2006				December 31, 2005				March 31, 2005
Available-for-Sale	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
CMO Agency Issuances	$	3,343,498	$	3,212,233	$	3,604,117	$	3,511,285	$	4,826,934	$	4,746,558
CMO Private Issuances		3,455,068		3,347,213		3,484,016		3,409,789		4,984,430		4,923,934
Agency Pass-Through Certificates		1,822,026		1,773,735		1,986,388		1,956,487		2,506,448		2,491,331
State & Municipal Obligations		864,743		858,651		884,742		881,238		980,352		979,304
Equity Securities (1) (2)		605,785		612,219		663,371		675,525		769,594		776,108
U.S. Treasury & Agency Obligations		189,803		185,872		233,468		231,152		360,920		357,407
Other Securities		626,274		625,404		628,737		630,501		704,211		708,961

Total Available for Sale Securities	$	10,907,197	$	10,615,327	$	11,484,839	$	11,295,977	$	15,132,889	$	14,983,603


(1)		Amortized cost and fair value includes $245.5 million, $265.8 million and $336.8 million in Federal Home Loan Bank Stock at March 31, 2006, December 31, 2005 and March 31, 2005, respectively.

(2)		Amortized cost and fair value includes $297.2 million and $301.6 million at March 31, 2006, respectively $332.3 million and $342.8 million at December 31, 2005, respectively and $369.6 million and $374.4 million at March 31, 2005, respectively of Freddie Mac and Fannie Mae Preferred Stock, respectively.

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


	March 31, 2006				December 31, 2005				March 31, 2005
Held-to-Maturity	Amortized		Fair		Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value		Cost		Value
Agency Pass-Through Certificates	$	44,257	$	43,111	$	46,155	$	45,814	$	54,118	$	54,483
State & Municipal Obligations		38,181		39,537		38,301		40,116		44,405		46,676
CMO Private Issuances		9,042		8,589		9,430		8,958		23,202		22,737
Other Securities		10,006		9,941		10,324		10,240		12,020		11,931

Total Held-to-Maturity Securities	$	101,486	$	101,178	$	104,210	$	105,128	$	133,745	$	135,827

At March 31, 2006, securities carried at $8.5 billion were pledged to secure securities sold under agreements to repurchase, other borrowings, and for other purposes as required by law. Securities pledged under agreements pursuant to which the collateral may be sold or repledged by the secured parties approximated $5.0 billion, while securities pledged under agreements pursuant to which the secured parties may not sell or repledge approximated $3.5 billion at March 31, 2006.

NOTE 3 — LOANS

Loans designated as held-for-sale are summarized as follows:


Loans Held-for-Sale	March 31,		% of			December 31,		% of			March 31,		% of
(dollars in thousands)	2006		Total			2005		Total			2005		Total
Mortgage Loans	$	3,505,357		84	%	$	3,824,547		89	%	$	4,239,366		80	%
Home Equity		647,542		16			496,656		11			1,061,352		20

Total	$	4,152,899		100	%	$	4,321,203		100	%	$	5,300,718		100	%
Deferred Origination Costs		37,566					38,064					50,105

Total Loans Held-for-Sale	$	4,190,465				$	4,359,267				$	5,350,823

The composition of loans held-for-investment are summarized as follows:


Loans Held-for-Investment	March 31,		% of			December 31,		% of			March 31,		% of
(dollars in thousands)	2006		Total			2005		Total			2005		Total
Commercial Mortgages	$	6,538,810		19	%	$	6,206,416		19	%	$	5,535,281		17	%
Commercial & Industrial		5,193,904		15			4,709,440		14			3,408,006		11

Total Commercial		11,732,714		34	%		10,915,856		33	%		8,943,287		28	%
Residential Mortgages		14,861,680		44			15,068,443		45			16,445,902		51
Multi-Family Mortgages		4,827,642		14			4,821,642		15			4,328,879		14
Consumer		1,619,812		5			1,558,782		5			1,554,499		5
Construction & Land		1,122,917		3			829,273		2			541,280		2

Total	$	34,164,765		100	%	$	33,193,996		100	%	$	31,813,847		100	%
Deferred Origination Costs, net		37,888					38,240					43,174

Total Loans Held-for-Investment	$	34,202,653				$	33,232,236				$	31,857,021

At March 31, 2006, loans held-for-investment of $3.5 billion were pledged as collateral under borrowing arrangements with the Federal Home Loan Bank of New York.

Non-Performing Assets

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

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


	March 31,			December 31,			March 31,
(dollars in thousands)	2006			2005			2005
Commercial Mortgages	$	3,664		$	498		$	11,459
Commercial & Industrial		10,277			7,970			8,152

Total Commercial		13,941			8,468			19,611
Residential Mortgages		24,924			19,315			91,411
Multi-Family Mortgages		135			550			1,293
Consumer		1,771			2,684			2,527
Construction and Land		—			—			—

Non-Performing Loans Held-for-Investment	$	40,771		$	31,017		$	114,842
Non-Performing Loans Held-for-Sale		31,201			13,931			45,780
Other Real Estate		5,455			4,101			14,243

Total Non-Performing Assets	$	77,427		$	49,049		$	174,865


Allowance for Loan Losses to Non-Performing Loans Held-for-Investment		543	%		703	%		187	%
Allowance for Loan Losses to Total Loans Held-for-Investment		.65			.66			.68
Non-Performing Loans to Total Loans Held-for-Investment		.12			.09			.36
Non-Performing Assets to Total Assets		.13			.09			.29

Non-performing loans held-for-investment includes loans ninety days past due and still accruing totaling $6.0 million, $3.5 million and $4.0 million at March 31, 2006, December 31, 2005 and March 31, 2005, respectively. Non-performing assets increased from the historically low year end levels, but remain notably lower than other quarters.

Future levels of non-performing assets will be influenced by prevailing economic conditions and the impact of those conditions on our customers, changes in both interest and unemployment rates, property values, and other internal and external factors, including potential sales of such assets.

NOTE 4 — ALLOWANCE FOR LOAN LOSSES

A summary of changes in the allowance for loan losses is shown below for the periods indicated:


	Three Months Ended
	March 31,			December 31,			March 31,
(in thousands)	2006			2005			2005
Balance at Beginning of Period	$	217,939		$	220,347		$	211,097
Provision for Loan Losses		9,000			9,000			9,000

Sub-Total		226,939			229,347			220,097
Recoveries Credited to the Allowance		3,152			3,025			5,002
Losses Charged to the Allowance		(8,835	)		(14,433	)		(9,792	)

Balance at End of Period	$	221,256		$	217,939		$	215,307

NOTE 5 — FEDERAL FUNDS PURCHASED AND COLLATERALIZED BORROWINGS

The following table summarizes the components of federal funds purchased and collateralized borrowings for the periods indicated:


	March 31,		December 31,		March 31,
(in thousands)	2006		2005		2005

Federal Funds Purchased	$	1,478,000	$	2,634,000	$	2,239,000
Securities Sold Under Repurchase Agreements		4,472,344		3,783,017		6,361,849
Federal Home Loan Bank Advances		2,870,460		3,283,604		4,330,829

Total Federal Funds Sold and Collateralized Borrowings	$	8,820,804	$	9,700,621	$	12,931,678

The expected maturity or repricing of Federal Home Loan Bank (“FHLB”) Advances and Repurchase Agreements (“Repos”) at March 31, 2006 is as follows:


(dollars in thousands)	FHLB		Average			Repurchase		Average					Total Average
Maturity	Advances		Rate (1)			Agreements		Rate (1)			Total (2)		Rate (1)
2006	$	1,525,015		4.01	%	$	2,457,761		4.08	%	$	3,982,776		4.05	%
2007		150,000		3.77			700,000		3.05			850,000		3.18
2008		800,000		2.59			800,000		4.13			1,600,000		3.36
2009		200,000		2.93			—		—			200,000		2.93
2010		100,000		5.90			275,000		3.90			375,000		4.44
Thereafter		—		—			200,000		4.82			200,000		4.82

Total	$	2,775,015		3.58	%	$	4,432,761		3.95	%	$	7,207,776		3.81	%


(1)		Reflects the impact of purchase accounting adjustments and interest rate swaps.

(2)		Excludes $135.0 million in purchase accounting discounts.

(3)		Federal funds purchased were $1,478,000 at March 31, 2006.

Interest rate swaps were used to convert $75 million in Repos from variable rates to fixed rates. These swaps qualify as cash flow hedges and are explained in more detail in “Note 9 — Derivative Financial Instruments.”

NOTE 6 — OTHER BORROWINGS

The following tables summarize other borrowings outstanding as of the dates indicated:

SUBORDINATED NOTES


	March 31,			December 31,			March 31,
(in thousands)	2006			2005			2005
Parent Company:
5.875% Subordinated Notes due August 2012	$	349,431		$	349,408		$	349,341
5.0% Subordinated Notes due August 2012		150,000			150,000			150,000
Subsidiary Bank:
9.25% Subordinated Bank Notes due October 2010		177,118			178,622			183,137

Total Subordinated Debt		676,549			678,030			682,478
Fair Value Hedge Adjustment		(38,498	)		(31,040	)		(33,354	)

Total Subordinated Notes Carrying Amount	$	638,051		$	646,990		$	649,124

$350 million of 5.875% Subordinated Notes and $150 million of 5% Fixed Rate/Floating Rate Subordinated Notes which mature in 2012, were issued in August 2002. These issuances qualify as Tier II capital for regulatory purposes. The 5.875% Subordinated Notes bear interest at a fixed rate through maturity, pay interest semi-annually and are not redeemable prior to maturity. The Fixed Rate/Floating Rate Notes bear interest at a fixed rate of 5% per annum for the first five years, and convert to a floating rate thereafter until maturity based on three-month LIBOR plus 1.87%. Beginning in the sixth year, we have the right to redeem the Fixed Rate/Floating Rate Notes at par plus accrued interest. There are $500 million in pay floating swaps, designated as fair value hedges, that were used to convert the stated fixed rate on these Notes to variable rates indexed to three-month LIBOR. (See Note 9 — “Derivative Financial Instruments” for additional information).

$150 million of 9.25% Subordinated Bank Notes mature in 2010, pay interest semi-annually of which $120 million qualify for regulatory purposes as Tier II capital. These Notes were assumed through a prior acquisition and include a remaining fair value discount totaling $27.1 million, $28.6 million and $33.1 million at March 31, 2006, December 31, 2005 and March 31, 2005, respectively, which reduced the effective cost of funds to 4.61%.

JUNIOR SUBORDINATED DEBT (related to Trust Preferred Securities):


	March 31,		December 31,		March 31,
(in thousands)	2006		2005		2005
8.70% Junior Subordinated Debt — due December 2026	$	102,842	$	102,839	$	102,830
8.00% Junior Subordinated Debt — due December 2027		102,814		102,811		102,801
8.17% Junior Subordinated Debt — due May 2028		46,547		46,547		46,547
9.10% Junior Subordinated Debt — due June 2027		232,210		235,867		236,906

Total Junior Subordinated Debt		484,413		488,064		489,084
Fair Value Hedge Adjustment		—		7,427		11,606

Total Junior Subordinated Debt Carrying Amount	$	484,413	$	495,491	$	500,690

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

The 9.10% Junior Subordinated Debt due June 2027 was assumed through a prior acquisition and includes a remaining fair value discount of $26.0 million, $29.7 million and $30.7 million at March 31, 2006, December 31, 2005 and March 31, 2005, respectively, which reduced the effective cost of funds to 7.63%.

Pay floating swaps with a $245 million notional value were previously designated as fair value hedges of the 8.70%, 8.00% and 8.17% Junior Subordinated Debt issuances. These swaps were used to convert a corresponding amount of debt from their stated fixed rates to variable rates indexed to three-month LIBOR. At March 31, 2006, these swaps were reclassified as trading instruments and accordingly the cumulative change in fair value on these swaps totaling $2.2 million was recorded in Other Income with no corresponding offset to the former hedged item. (See Note 9 — ”Derivative Financial Instruments — Trading Instruments” for additional information)

SENIOR NOTES:


	March 31,			December 31,			March 31,
(in thousands)	2006			2005			2005
3.20% Senior Notes — due June 2008 (1)	$	345,464		$	344,945		$	343,388
Fair Value Hedge Adjustment		(12,077	)		(10,062	)		(8,734	)

Total Senior Notes Carrying Amount	$	333,387		$	334,883		$	334,654

$350 million of 3.20% Senior Notes mature in 2008, and pay interest semi-annually. These notes include the remaining fair value premium from a prior acquisition of $4.5 million, $5.1 million and $6.6 million at March 31, 2006, December 31, 2005 and March 31, 2005, respectively, which increased the effective cost of funds to 3.84%.

Pay floating swaps of $350 million, designated as fair value hedges, were used to convert the stated fixed rate on these notes to variable rates indexed to the three-month LIBOR. (See Note 9 — ”Derivative Financial Instruments” for additional information).

NOTE 7 — MORTGAGE SERVICING RIGHTS

The following table sets forth the change in the carrying value and fair value of mortgage servicing rights for the periods indicated:


	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands)	2006			2005			2005

Mortgage Servicing Rights:
Balance, Beginning of Period	$	290,550		$	292,778		$	254,857
Originations		17,060			22,741			50,055
Amortization		(23,598	)		(23,591	)		(19,989	)
Sales		(386	)		(1,378	)		(1,655	)

Balance, End of Period	$	283,626		$	290,550		$	283,268

Valuation allowance:
Balance, Beginning of Period	$	(23,126	)	$	(25,431	)	$	—
Temporary Recovery/(Impairment)		15,691			2,305			—

Balance, End of Period	$	(7,435	)	$	(23,126	)	$	—



Mortgage Servicing Rights, net	$	276,191		$	267,424		$	283,268

Fair Value of Mortgage Servicing Rights	$	291,989		$	268,874		$	315,703


Ratio of Mortgage Servicing Rights to Related Loans Serviced for Others		0.97	%		0.92	%		0.97	%


Weighted Average Service Fee		0.29	%		0.29	%		0.30	%

The table below provides the significant assumptions used in estimating the fair value of the servicing assets for the periods indicated:


	March 31,			December 31,			March 31,
	2006			2005			2005
Weighted Avg. Prepayment Rate (includes default Rate)		26.40	%		28.10	%		23.60	%
Weighted Avg. Life (in years)		3.8			3.3			4.5
Cash Flows, Discount Rate		10.50	%		10.50	%		10.50	%

At March 31, 2006, the sensitivities to immediate 10% and 20% increases in the weighted average prepayment rates would decrease the fair value of mortgage servicing rights by $12.7 million and $24.0 million, respectively.

At March 31, 2006, the aggregate principal balance of mortgage loans serviced for others, excluding interim servicing was $28.4 billion.

NOTE 8 — REPRESENTATION AND WARRANTY RESERVE

The representation and warranty reserve is available to cover probable losses inherent with the sale of loans in the secondary market. In the normal course of business, certain representations and warranties are made to investors at the time of sale, which permit the investor to return the loan to us or require us to indemnify the investor (make whole) for any losses incurred by the investor while the loan remains outstanding. The representation and warranty reserve is included in accrued expenses and other liabilities on the consolidated balance sheet.

A summary of the changes in the representation and warranty reserve is shown below for the periods indicated:


	Three Months Ended
	March 31,			December 31,			March 31,
(in thousands)	2006			2005			2005
Balance, Beginning of Period	$	128,620		$	135,068		$	97,066
Provisions for Estimated Losses (1)		11,481			14,190			23,718
Losses Incurred		(8,356	)		(20,638	)		(9,083	)

Balance, End of Period	$	131,745		$	128,620		$	111,701


(1)		The provision is reported as a reduction to gain on sale of loans.

NOTE 9 — DERIVATIVE AND TRADING FINANCIAL INSTRUMENTS

The use of derivative financial instruments creates exposure to credit risk. This credit exposure relates to losses that would be recognized if the counterparties fail to perform their obligations under the contracts. To mitigate this exposure to non-performance, we deal only with counterparties of good credit standing and establish counterparty credit limits. In connection with our interest rate risk management process, we periodically enter into interest rate derivative contracts. These derivative interest rate contracts may include interest rate swaps, caps, and floors and are used to modify the repricing characteristics of specific assets and liabilities.

The following table details the interest rate swaps and their associated hedged liabilities outstanding as of March 31, 2006:


(dollars in thousands)	Hedged	Notional		Fixed			Variable
Maturity	Liability	Amounts		Interest Rates			Interest Rates
Pay Fixed Swaps
2008	Repurchase Agreements	$	75,000		6.14	%		4.71	%

Total		$	75,000


Pay Floating Swaps
2007	5.00% Subordinated Notes	$	150,000		5.00	%		7.05	%
2008	3.20% Senior Notes		350,000		3.20			4.98
2012	5.875% Subordinated Notes		350,000		5.88			7.05

Total		$	850,000

At March 31, 2006, $75 million in pay fixed swaps, designated as cash flow hedges, were outstanding. These agreements change the repricing characteristics of certain repurchase agreements, requiring us to make periodic fixed rate payments and receive periodic variable rate payments indexed to three-month LIBOR, based on a common notional amount and identical payment and maturity dates. As of March 31, 2006, these swaps had an unrealized loss of $1.3 million, which is recorded as a component of other liabilities (the net of tax amount of $0.7 million is reflected in stockholders’ equity as a component of accumulated other comprehensive loss). The use of pay fixed swaps increased interest expense by $0.3 million and $1.1 million for the three months ended March 31, 2006 and 2005, respectively. Based upon the current interest rate environment, approximately $0.4 million of the $0.7 million after tax unrealized loss is expected to be reclassified from accumulated other comprehensive loss during the next twelve months.

At March 31, 2006, $850 million of pay floating swaps, designated as fair value hedges, were outstanding. $350 million in pay floating swaps was used to convert the stated fixed rate on the 5.88% subordinated notes to variable rates indexed to three-month LIBOR. The swap term and payment dates match the related terms of the subordinated notes. $150 million in pay floating swaps were used to convert the stated fixed rate on the 5% subordinated notes to variable rates indexed to three-month LIBOR. The swap terms are for five years, matching the period of time, the subordinated notes pay a fixed rate. Beginning in the sixth year, we have the right

to redeem the fixed rate/floating rate notes at par plus accrued interest or the interest rate converts to a spread over three month LIBOR. At March 31, 2006, the fair value adjustment on these swaps resulted in a loss of $38.5 million and is reflected as a component of other liabilities. The carrying amount of the $500 million in subordinated notes was decreased by an identical amount. These swaps increased interest expense by approximately $1.5 million and reduced interest expense by $0.9 million for the months ended March 31, 2006 and 2005, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income on these transactions for all periods reported.

$350 million of pay floating swaps were used to convert the stated fixed rate on the 3.20% senior notes to variable rates indexed to three-month LIBOR. The swap term and payment dates match the related terms of the senior notes. At March 31, 2006, the fair value adjustment on these swaps resulted in a loss of $12.1 million and is reflected as a component of other liabilities. The carrying amount of the $350 million in senior notes was decreased by an identical amount. For the three months ended March 31, 2006 and 2005, these swaps increased interest expense by $0.9 million and reduced interest expense by $0.9 million, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income on these transactions for all periods reported.

As part of our mortgage banking operations, we enter into commitments to originate or purchase loans whereby the interest rate on the loan is determined prior to funding (“interest rate lock commitment”). Interest rate lock commitments on mortgage loans that we intend to sell in the secondary market are considered free-standing derivatives. These derivatives are carried at fair value with changes in fair value recorded as a component of gain on sale of loans. In accordance with Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments”, interest rate lock commitments are initially valued at zero. Changes in fair value subsequent to inception are determined based upon current secondary market prices for underlying loans with similar coupons, maturity and credit quality, subject to the anticipated probability that the loan will fund within the terms of the commitment. The initial value inherent in the loan commitments at origination is recognized through gain on sale of loans when the underlying loan is sold. Both the interest rate lock commitments and the related hedging instruments are recorded at fair value with changes in fair value recorded in current earnings as a component of gain on sale of loans.

Generally, if interest rates increase, the value of our interest rate lock commitments and funded loans decrease and loan sale margins are adversely impacted. We hedge the risk of overall changes in fair value of loans held-for-sale and interest rate lock commitments generally by entering into mandatory commitments to deliver mortgage whole loans to various investors, selling forward contracts on mortgage backed securities of Fannie Mae and Freddie Mac and, to a lesser extent, by using futures and options to economically hedge the fair value of interest rate lock commitments. In accordance with SFAS 133, certain of these positions qualify as fair value hedges against a portion of the funded held-for-sale loan portfolio and result in adjustments to the carrying value of designated loans through gain on sale based on fair value changes attributable to the hedged risk. The forward contracts, futures and options used to economically hedge the loan commitments are accounted for as economic hedges and naturally offset loan commitment mark-to-market gains and losses recognized as a component of gain on sale.

The notional amount of all forward contracts was $2.3 billion at March 31, 2006. Forward contracts designated as fair value hedges associated with mortgage loans held-for-sale had a notional value of $1.6 billion at March 31, 2006. The notional amount of forward contracts used to manage the risk associated with interest rate lock commitments on mortgage loans was $736 million at March 31, 2006.

The following table shows hedge ineffectiveness on fair value hedges included in gain on sale of loans for the three months ended March 31,:


(In thousands)	2006			2005
Loss on Hedged Mortgage Loans	$	(2,340	)	$	(6,884	)
Gain on Derivatives		2,359			6,222

Hedge Ineffectiveness	$	19		$	(662	)

Trading Instruments

Interest rate swap agreements were used to change the repricing characteristics of $245 million in Junior Subordinated Debt from their stated fixed rates to variable rates indexed to three-month LIBOR. The swaps contain payment dates, maturity dates and embedded call options held by the counterparty (exercisable in approximately two years), which are identical to the terms and call provisions contained in the Junior Subordinated Debt. Prior to March 31, 2006, we had applied a method of fair value hedge accounting (the “short-cut” method) under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” that assumed full effectiveness of the hedging transactions. However, due to the interest deferral features of the junior subordinated debt, we have concluded that the swap transactions do not qualify for the short-cut method. As a result, the cumulative change in fair value of these swaps totaling $2.2 million was recorded in Other Income with no corresponding

offset to the former hedged items. We believe that the interest rate swaps have been, and will continue to be, effective economic hedges. However, since these swaps do not qualify for the short-cut method of accounting, we have reclassified them as trading instruments effective March 31, 2006. There was no impact nor will there be any future impact on our cash flows resulting from this change. For the three months ended March 31, 2006 and 2005 these swaps reduced interest expense by $1.3 million and $2.5 million, respectively.

NOTE 10 — OTHER COMMITMENTS AND CONTINGENT LIABILITIES

Credit Related Commitments

We offer traditional off-balance sheet financial products to meet the financing needs of our customers through both our retail banking and mortgage banking segments. They include commitments to extend credit, lines of credit and letters of credit. Funded commitments are reflected in the consolidated balance sheets as loans.

Retail Banking

Our retail banking segment provides the following types of off-balance sheet financial products to customers:

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

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

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

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

The following table presents total commitments and letters of credit outstanding at March 31 , 2006:


(in thousands)	2006
Commitments to Extend Credit on Loans Held-for-Investment (1)		4,645,364
Standby Letters of Credit (2)		512,942
Commercial Letters of Credit		20,934

(1) At March 31, 2006, commitments to extend credit on loans held-for-investment with maturities of less than one year totaled $2.3 billion, while $2.3 billion mature between one and three years.

(2) Standby letters of credit are considered guarantees and are reflected in other liabilities in the accompanying Consolidated Balance Sheet at their estimated fair value of $1.9 million as of March 31, 2006. The fair value of these instruments is recognized as income over the initial term of the guarantee.

Mortgage Banking

At March 31, 2006, the pipeline of residential mortgage loans (including Home Equity Lines of Credit) was $5.7 billion and included $1.4 billion of fixed rate loans and $4.3 billion of adjustable rate loans. The pipeline represents total applications approved but not yet funded.

We are also contractually committed to fund the undrawn portion of Home Equity Lines of Credit (HELOCs), which were previously originated. This commitment extends to both HELOCs held-for-sale and those previously sold with servicing retained.

The following table presents the mortgage banking segment’s commitments and home equity lines of credit outstanding at March 31, 2006:


(In thousands)	2006
Commitments to Originate Mortgage Loans Held-for-Sale	$	5,722,902
Commitments to Fund HELOCs		162,394

NOTE 11 — RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

The components of net periodic benefit costs for pension and post-retirement benefits for the three months ended March 31,


	Pension Benefits						Post-Retirement Benefits
(in thousands)	2006			2005			2006			2005
Components of Net Periodic Benefit Cost:
Service Cost	$	3,134		$	2,563		$	492		$	513
Interest Cost		2,716			2,600			480			704
Expected Return on Plan Assets		(5,192	)		(4,974	)		(131	)		(64	)
Amortization of Prior Service Cost		67			(66	)		(20	)		(20	)
Amortization of Transition (Asset)/Obligation		—			(107	)		73			73
Recognized Actuarial Loss/(Gain)		437			273			(14	)		94

Net Periodic Benefit Cost	$	1,162		$	289		$	880		$	1,300

We do not anticipate making a contribution to either our pension plan or post-retirement benefit plan in 2006.

Bank Owned Life Insurance

At March 31, 2006 and 2005, we maintained three Bank Owned Life Insurance Trusts (commonly referred to as BOLI) on the consolidated balance sheet. The BOLI trusts were formed to offset future employee benefit costs and to provide additional benefits due to their tax exempt nature. Only officer level employees, who have consented, have been insured under the program.

The underlying structure of the initial BOLI trust formed, requires that the assets supporting the insurance policies be reported on the consolidated balance sheet, principally as a component of the available-for-sale securities portfolio and the related income to be characterized as either interest income or gain/(loss) on sale of securities. At March 31, 2006 and 2005, $224.8 million and $219.2 million, respectively were held by the trust and are principally included in the available-for-sale securities portfolio. Based on the underlying structures of the other two BOLI trusts, the cash surrender values (“CSV”) of the life insurance policies held by the trusts are required to be classified as other assets on the consolidated balance sheet and the related income/(loss) be characterized as other income. The cash surrender value of the policies held by these trusts were $211.5 million and $205.3 million at March 31, 2006 and 2005, respectively.

NOTE 12 — BUSINESS SEGMENTS

The retail banking business provides a full range of banking products and services through more than 350 branches located throughout the New York Metropolitan area. The mortgage banking segment is conducted through GreenPoint Mortgage, which originates, sells and services a wide variety of mortgages secured by 1-4 family residences and small commercial properties, on a nationwide basis.

The segment information presented in the table below is prepared according to the following methodologies:

	•		Revenues and expenses directly associated with each segment are included in determining net income.

	•		Transactions between segments are based on specific criteria or appropriate third party interest rates.

	•		Inter-company eliminations are reflected in the “Other” column.

The following tables provide information necessary for a reasonable representation of each segment’s contribution to consolidated net income for the three months ended March 31, 2006 and 2005, respectively.


	Retail		Mortgage		Segment					Consolidated
For the Three Months Ended March 31, 2006	Banking		Banking		Totals		Other			Operations
(in thousands)
Net Interest Income	$	399,230	$	18,120	$	417,350	$	127		$	417,477
Provision for Loan Losses		9,000		—		9,000		—			9,000

Net Interest Income After Provision for Loan Losses		390,230		18,120		408,350		127			408,477

Non-Interest Income:
Mortgage Banking Income		—		116,240		116,240		(20,168	)		96,072
Customer Related Fees & Service Charges		41,103		—		41,103		—			41,103
Investment Management, Commissions & Trust Fees		9,669		—		9,669		—			9,669
Other Operating Income		13,802		708		14,510		—			14,510
Securities Gains, net		6,722		—		6,722		—			6,722

Total Non-Interest Income		71,296		116,948		188,244		(20,168	)		168,076

Non-Interest Expense:
Employee Compensation & Benefits		94,032		47,279		141,311		—			141,311
Occupancy & Equipment Expense, net		40,649		10,643		51,292		—			51,292
Other Operating Expense		61,686		16,579		78,265		(12,690	)		65,575

Total Non-Interest Expense		196,367		74,501		270,868		(12,690	)		258,178

Income Before Income Taxes		265,159		60,567		325,726		(7,351	)		318,375
Provision for Income Taxes		87,600		23,735		111,335		(3,088	)		108,247

Net Income	$	177,559	$	36,832	$	214,391	$	(4,263	)	$	210,128


Total Assets	$	52,345,773	$	5,359,607	$	57,705,380		—		$	57,705,380


	Retail		Mortgage		Segment					Consolidated
Three Months Ended March 31, 2005	Banking		Banking		Totals		Other			Operations
(In thousands)
Net Interest Income	$	438,054	$	33,072	$	471,126	$	193		$	471,319
Provision for Loan Losses		9,000		—		9,000		—			9,000

Net Interest Income After Provision for Loan Losses		429,054		33,072		462,126		193			462,319

Non-Interest Income:
Mortgage Banking Income		—		132,756		132,756		(21,660	)		111,096
Customer Related Fees & Service Charges		42,006		—		42,006		—			42,006
Investment Management, Commissions & Trust Fees		11,071		—		11,071		—			11,071
Other Operating Income		12,392		1,685		14,077		—			14,077
Securities Gains, net		4,635		—		4,635		—			4,635

Total Non-Interest Income		70,104		134,441		204,545		(21,660	)		182,885

Non-Interest Expense:
Employee Compensation and Benefits		90,912		44,457		135,369		—			135,369
Occupancy and Equipment Expense, net		36,319		9,635		45,954		—			45,954
Other Operating Expenses		53,396		18,804		72,200		(6,870	)		65,330

Total Non-Interest Expense		180,627		72,896		253,523		(6,870	)		246,653

Income Before Income Taxes		318,531		94,617		413,148		(14,597	)		398,551
Provision for Income Taxes		105,907		39,739		145,646		(6,130	)		139,516

Net Income	$	212,624	$	54,878	$	267,502	$	(8,467	)	$	259,035


Total Assets	$	54,789,612	$	5,990,788	$	60,780,400	$	—		$	60,780,400

The table below presents the components of mortgage banking income for the three months ended March 31,:


(In thousands)	2006			2005
Mortgage Banking Income:
Gain on Sale of Loans Held-for-Sale(1)	$	81,749		$	105,369
Mortgage Banking Fees, net		22,230			25,716
Amortization of Mortgage Servicing Rights		(23,598	)		(19,989	)
Recovery of Temporary Impairment on Mortgage Servicing Rights		15,691			—

Total Mortgage Banking Income	$	96,072		$	111,096

(1) The gain on sale of loans for the three months ended March 31, 2005, differs from the amounts reported under U.S. generally accepted
accounting principles due to the fair value adjustment of loans held-for-sale at October 1, 2004 and sold during the first quarter of
2005, totaling $0.8 million.

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

Accounting for Servicing of Financial Assets

In March 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 156 (“SFAS No. 156”), Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS 156 is effective for an entity’s first fiscal year beginning after September 15, 2006. The Company is currently assessing the financial statement impact of implementing this pronouncement.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, many of which by their nature, are inherently uncertain and beyond our control. Forward-looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “project” or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly”.

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

	•		projections of revenues, income, earnings per share, capital expenditures, assets, liabilities, dividends, capital structure, or other financial items;

	•		statements regarding the adequacy of the allowance for loan losses, the representation and warranty reserve or other reserves;

	•		descriptions of management plans or objectives for future operations, products, or services;

	•		forecasts of future economic performance; and

	•		descriptions of assumptions underlying or relating to any of the foregoing;

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

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

	•		general business and economic conditions are less favorable than expected;

	•		worldwide political and social unrest, including acts of war and terrorism;

	•		competitive pressures among financial services companies which may increase significantly;

	•		competitive pressures in the mortgage origination business which could have an adverse effect on origination volumes and gain on sale profit margins;

	•		changes in the interest rate environment may negatively affect interest margins, mortgage loan originations and the valuation of mortgage servicing rights;

	•		changes in the securities and bond markets;

	•		changes in real estate markets, including possible erosion in values, which may negatively affect loan origination and portfolio quality;

	•		legislative or regulatory environments, requirements or changes adversely affect businesses in which we are engaged;

	•		accounting principles, policies, practices or guidelines;

	•		monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board;

	•		technological changes, including increasing dependence on the Internet

competition and its effect on pricing, spending, third-party relationships and revenues.

Other risks related to the proposed plan of merger with Capital One include, but are not limited to:

	§		the ability to obtain regulatory approvals for the contemplated transaction with Capital One on the proposed terms and schedule;

	§		the failure of Capital One or North Fork stockholders to approve the transaction;

	§		disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers;

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

Summary

Business Overview

North Fork Bancorporation, Inc. is a regional bank holding company organized under the laws of the State of Delaware and registered as a “bank holding company” under the Bank Holding Company Act of 1956, as amended. It is not a “financial holding company” as defined under the federal law. We are committed to providing superior customer service, while offering a full range of banking products and financial services, to both our consumer and commercial customers. Our primary subsidiary, North Fork Bank, operates from more than 350 retail bank branches in the New York Metropolitan area. We also operate a nationwide mortgage business, GreenPoint Mortgage Funding Inc. (“GreenPoint Mortgage” or “GPM”). Through our other non-bank subsidiaries, we offer financial products and services to our customers including asset management, securities brokerage, and the sale of alternative investment products. We also operate a second subsidiary bank, Superior Savings of New England, N.A. (“Superior”), which focuses on telephonic and media-based generation of deposits.

Proposed Plan of Merger with Capital One Financial Corporation

On March 12, 2006, North Fork announced that it had entered into an Agreement and Plan of Merger with Capital One Financial Corporation (“Capital One”) pursuant to which North Fork would merge with and into Capital One, with Capital One continuing as the surviving corporation. Capital One, headquartered in McLean, Virginia, is a financial holding company whose banking and non-banking subsidiaries market a variety of financial products and services. Its primary products and services offered through its subsidiaries include credit card products, deposit products, consumer and commercial lending, automobile and other motor vehicle financing, and a variety of other financial products and services to consumers, small business and commercial clients.

The merger is subject to certain conditions, including approval by North Fork stockholders and Capital One stockholders, receipt of regulatory approvals and other customary closing conditions, and is expected to close in the fourth quarter of 2006. On May 1, 2006, Capital One filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that included a preliminary joint proxy statement of Capital One and North Fork that also constitutes a prospectus of Capital One.

Business Segments

Our operating activities are divided into two primary business segments (Retail Banking and Mortgage Banking):

Retail Banking — Our retail banking segment is conducted principally through North Fork Bank. North Fork Bank operates over 350 branches located in the New York Metropolitan area, through which we provide a full range of banking products and services to both commercial and consumer clients. We are a significant provider of commercial and commercial real estate loans, multi-family mortgages, construction and land development loans, asset based lending services, lease financing and business credit services, including lines of credit. Our consumer lending operations emphasize indirect automobile loans. We offer our customers a complete range of deposit products through our branch network and on-line banking services. We provide our clients, both commercial and consumer, with a full complement of cash management services including on-line banking, and offer directly or through our securities and insurance affiliates a full selection of alternative investment products. We also provide trust, investment management and custodial services through North Fork Bank’s Trust Department and investment advisory services through our registered investment advisor.

Revenue from our retail banking segment, principally net interest income, is the difference between the interest income we earn on our loan and investment portfolios and the cost of funding those portfolios. Our primary source of such funds are deposits and collateralized borrowings. We also earn income from fees charged on the various deposit and loan products. Other income includes the sale of alternative investment products (mutual funds and annuities), trust services, discount brokerage and investment management. The primary delivery channel for these products is the retail bank’s branches.

We actively participate in community development lending, both through North Fork Bank and through a separate community development subsidiary.

Mortgage Banking — Our national mortgage banking segment originates, sells and services a wide variety of mortgages secured by 1-4 family residences and small commercial properties. Most loans are originated through a national wholesale loan broker and correspondent lender network. We offer a broad range of mortgage loan products, to provide maximum flexibility to borrowers, including Jumbo A, specialty, conforming agency mortgage loans, home equity loans and commercial loans. Originations are generally sold into the secondary market and from time to time securitized if market conditions warrant such execution. Certain products including commercial mortgages, are retained in the Bank’s loan portfolio. GPM has established loan distribution channels with various financial institutions including banks, investment banks, broker-dealers, and real estate investment trusts (REITs), as well as both Fannie Mae and Freddie Mac. During the first quarter of 2006, we originated $7.8 billion in loans and sold $7.1 billion at an average gain on sale totaling 115 basis points. The composition of total loan originations was: 52% Specialty, 29% Jumbo A, 13% Home Equity and 6% Agency. Option ARMS, both Alt-A and Jumbo A, accounted for 39% of originations during the first quarter of 2006. All option ARM originations are sold into the secondary market, servicing released. Mortgage originations for new purchases represented 41% of first quarter 2006 production. The weighted average FICO score for all originations was 714. We do not originate sub prime loans, nor will we sacrifice quality to drive origination volume and gain on sales.

GPM also engages in mortgage loan servicing, which includes customer service, escrow administration, default administration, payment processing, investor reporting and other ancillary services related to the general administration of mortgage loans. As of March 31, 2006, GPM’s mortgage loan servicing portfolio consisted of mortgage loans with an aggregate unpaid principal balance of $47.7 billion, of which $31.2 billion was serviced for investors other than North Fork. Loans held-for-sale totaled $4.2 billion, while the pipeline was $5.7 billion ($2.5 billion was covered under interest rate lock commitments) at March 31, 2006.

The following table sets forth a summary reconciliation of each business segment’s contribution to consolidated net income as reported:

Segment Results


Summary Consolidated Net Income	2006		Contribution %
(Dollars in thousands)
Retail Banking	$	177,559		85	%
Mortgage Banking(1)		32,569		15	%

Consolidated Net Income	$	210,128		100	%


(1)		Excludes net inter-company activity of $4.3 million.

Financial Overview

Selected financial highlights for the three months ended March 31, 2006 and 2005 are set forth in the table below. The succeeding discussion and analysis describes the changes in components of operating results.


	March 31,			March 31,
(in thousands, except ratios & per share amounts)	2006			2005
Net Income	$	210,128		$	259,035

Per Share:
Earnings Per Share — Basic	$	.46		$	.56
Earnings Per Share — Diluted		.46			.55
Cash Dividends		.25			.22
Dividend Payout Ratio		55	%		41	%
Book Value	$	19.30		$	18.89
Tangible Book Value (2)	$	6.30		$	6.25
Average Equivalent Shares — Basic		453,917			466,476
Average Equivalent Shares — Diluted		458,871			473,314
Selected Ratios:
Return on Average Total Assets		1.49	%		1.74	%
Return on Average Tangible Assets (1)		1.71			1.98
Return on Average Equity		9.50			11.65
Return on Average Tangible Equity (1)		29.77			35.94
Yield on Interest Earning Assets (3)		5.88			5.52
Cost of Funds		2.82			2.04
Net Interest Margin (3)		3.56			3.79
Efficiency Ratio (4)		43.14			35.96

This document contains certain supplemental financial information, described in the following notes, which has been determined by methods other than accounting principles generally accepted in the United States of America. (“GAAP”) that management uses in its analysis of the Company’s performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the Company, its business and performance trends and facilitates comparisons with the performance of others in the financial services industry.

(1)

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

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

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

(2)

Tangible book value is calculated by dividing period end stockholders’ equity, less period end goodwill and identifiable intangible assets, by period end shares outstanding. (See detailed schedule at exhibit 99.1).

(3)

Presented on a tax equivalent basis.

(4)

The efficiency ratio, which represents a non-GAAP measure, is defined as the ratio of non-interest expense net of amortization of identifiable intangibles and other real estate expenses to net interest income on a tax equivalent basis and other non-interest income net of securities gain/(losses), temporary impairment recovery on mortgage servicing rights.

Financial Results

Net income for the current quarter was $210.1 million or diluted earnings per share of $.46 compared to $259.0 million or $.55 diluted earnings per share in 2005. Returns on average tangible equity and average tangible assets during the first quarter were 29.8% and 1.7%, respectively, compared to 35.9% and 2.0% in 2005. Highlights for the first quarter ended March 31, 2006 when compared to the same period in 2005 include the following:

	§		Announcement of the proposed acquisition by Capital One.

	§		Robust commercial loan and total loan growth (excluding residential) of 31.2% and 25.6%, respectively.

	§		Reduced non-performing assets by $97.4 million or 55.7%, improving reserve coverage.

	§		Successful balance sheet repositioning demonstrated by a $6 billion reduction in securities and residential loans.

	§		A corresponding reduction in short-term borrowings totaling $4.1 billion, while short term rates climbed precipitously.

	§		Repurchased 20 million shares at an average cost of $26.14 during the previous twelve months.

	§		Originated $7.8 billion in loans through our mortgage banking subsidiary.

	§		Increased quarterly cash dividend by 14% or $.25 per common share.

Balance Sheet Repositioning

In response to the Federal Reserve Bank raising short-term interest rates, while long-term rates remained fairly constant, we re-evaluated our asset/liability strategy during the second quarter of 2005. To stabilize our declining net interest margin and reduce interest rate risk exposure, we liquidated lower yielding assets through portfolio sales and cash flows. The liquidity generated throughout 2005 and 2006 was utilized to repay short-term borrowings, fund higher yielding loan growth (excluding residential) and redeploy excess capital through share repurchases.

This balance sheet repositioning started in the second quarter of 2005 with the sale of $2.4 billion in securities and residential loans held-for-investment. As this interest rate environment persisted throughout the remainder of 2005 and into 2006, we continued to reduce lower yielding assets through portfolio cash flows. From March 2005 through the end of the first quarter 2006, lower yielding assets (securities and residential loans) and borrowings declined by $6 billion and $4.1 billion, respectively. During the same period, higher yielding loans (excluding residential loans) grew by $3.9 billion or 25.6%, reducing our reliance on residential mortgages which represented 43.5% of total loans at March 31, 2006, compared to 51.7% at March 31, 2005. We also repurchased 20 million shares at an average price of $26.14 during the twelve month period ended March 31, 2006. Subsequent to entering into the transaction with Capital One, we stopped repurchasing our common stock. As a result of this strategy, we have elected to reduce current earnings in exchange for a more prudent balance sheet. We anticipate this strategy will remain unchanged in the near term.

It is important to note that future net interest income, margin trends and earnings per share trends will continue to be dependent upon the magnitude of loan demand, deposit growth and the movement of market interest rates. Future operating results will also be impacted by trends in the overall economy.

Net Interest Income

Net interest income is the difference between interest income earned on assets, such as loans and securities and interest expense paid on liabilities, such as deposits and borrowings. Net interest income is affected by the level and composition of assets, liabilities and equity, as well as the general level of interest rates and changes in interest rates.

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

The following table presents an analysis of net interest income (on a tax equivalent basis) by each major category of interest-earning assets and interest-bearing liabilities for the three months ended March 31,:


	2006									2005
	Average						Average			Average					Average
(dollars in thousands )	Balance		Interest					Rate			Balance	Interest			Rate
Interest Earning Assets:
Loans Held-for-Sale (2)		4,295,898			63,692			6.01			4,990,885		66,848			5.43
Loans Held-for-Investment (2)	$	33,644,505		$	508,485			6.13	%	$	31,284,812	$	453,563			5.88	%
Securities (1)		11,114,452			139,340			5.08			15,195,094		180,687			4.82
Money Market Investments		45,410			603			5.39			86,989		747			3.48

Total Interest Earning Assets	$	49,100,265		$	712,120			5.88	%	$	51,557,780	$	701,845			5.52	%

Non-Interest Earning Assets:
Cash and Due from Banks	$	1,055,709								$	1,056,382
Other Assets (1)		7,218,877									7,592,720

Total Assets	$	57,374,851								$	60,206,882

Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits	$	21,500,679		$	117,433			2.22	%	$	21,179,399	$	69,596			1.33	%
Time Deposits		8,105,826			59,790			2.99			7,559,198		33,466			1.80

Total Savings and Time Deposits		29,606,505			177,223			2.43			28,738,597		103,062			1.45

Federal Funds Purchased & Collateralized Borrowings		9,332,211			83,474			3.63			13,371,436		99,007			3.00
Other Borrowings (4)		1,476,106			19,956			5.48			1,505,984		17,824			4.80

Total Borrowings		10,808,317			103,430			3.88			14,877,420		116,831			3.18

Total Interest Bearing Liabilities	$	40,414,822		$	280,653			2.82		$	43,616,017	$	219,893			2.04

Interest Rate Spread								3.06	%							3.48	%
Non-Interest Bearing Liabilities:
Demand Deposits	$	7,337,189								$	6,853,159
Other Liabilities		651,337									720,348

Total Liabilities		48,403,348									51,189,524
Stockholders’ Equity		8,971,503									9,017,358

Total Liabilities and Stockholders’ Equity	$	57,374,851								$	60,206,882

Net Interest Income and Net Interest Margin (3)				$	431,467			3.56	%			$	481,952			3.79	%
Less: Tax Equivalent Adjustment					(13,990	)							(10,633	)

Net Interest Income				$	417,477							$	471,319


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

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

(3)		Interest income on a tax equivalent basis includes the additional amount of income that would have been earned if investments in tax exempt money market investments and securities, state and municipal obligations, non-taxable loans, public equity and debt securities, and U.S. Treasuries had been made in securities and loans subject to Federal, State, and Local income taxes yielding the same after-tax income. The tax equivalent amount for $1.00 of those aforementioned categories was $1.78, $1.72, $1.56, $1.26, and $1.12 for the three months ended March 31, 2006; and $1.78, $1.72, $1.56, $1.26, and $1.04 for the three months ended March 31, 2005.

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

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


	Three Months Ended March 31,
	2006 vs. 2005
	Change in
	Average			Average			Net Interest
(in thousands)	Volume			Rate			Income
Interest Income from Earning Assets:
Loans Held-for-Sale	$	(9,872	)	$	6,716		$	(3,156	)
Loans-Held-for-Investment		35,144			19,778			54,922
Securities		(50,716	)		9,369			(41,347	)
Money Market Investments		(448	)		304			(144	)

Total Interest Income	$	(25,892	)	$	36,167		$	10,275


Interest Expense on Liabilities:
Savings, NOW & Money Market Deposits	$	1,072		$	46,765		$	47,837
Time Deposits		2,578			23,746			26,324
Federal Funds Purchased and Collateralized Borrowings		(33,512	)		17,979			(15,533	)
Other Borrowings		(358	)		2,490			2,132

Total Interest Expense		(30,220	)		90,980			60,760


Net Change in Net Interest Income	$	4,328		$	(54,813	)	$	(50,485	)

During the first quarter of 2006, net interest income declined $53.8 million or 11.4% to $417.5 million when compared to $471.3 million in the same period of 2005, while the net interest margin declined 23 basis points from 3.79% to 3.56%. Factors contributing to the decline in net interest income and the margin included: (a) the impact of higher short-term interest rates on funding costs (both deposits and borrowings); (b) the pressure placed on interest earning asset yields due to the flat yield curve and; (c) the impact of intense competition on deposit and loan pricing. The balance sheet repositioning strategy tempered the net interest margin decline during the second half of 2005 and first quarter of 2006 and also reduced net interest income and net income in exchange for a more prudent balance sheet.

Interest income during the first quarter of 2006 increased $6.9 million to $698.1 million compared to the same period of 2005. During this same period, the yield on average interest earning assets increased 36 basis points from 5.52% to 5.88%.

Loans held-for-sale averaged $4.3 billion for the first quarter of 2006 representing a decrease of $.7 billion from the same period of 2005, as yields increased 58 basis points to 6.01% due to changes in market interest rates. Period end loan balances totaled $4.2 billion and were funded principally with short-term borrowings. The yield and level of loans held-for-sale will fluctuate with changes in origination volumes, loan portfolio composition, market interest rates for new originations and the timing of loan sales.

Loans held-for-investment averaged $33.6 billion for 2006 representing an increase of $2.4 billion or 7.5% from 2005, while yields increased 25 basis points to 6.13%. Loan growth was experienced in all categories (excluding lower yielding residential loans), especially higher yielding commercial loans which also contributed to commercial deposit growth. As of March 31, 2006, our loans held-for-investment to deposits ratio was 91%, demonstrating our continued ability to fund loan growth with deposits. (See “Financial Condition — Loans Held-For-Investment” section for additional information).

Securities averaged $11.1 billion for the first quarter of 2006, representing a $4.1 billion decrease from the same period of 2005. This decline was due to our continued balance sheet repositioning previously discussed. Yields improved 26 basis points to 5.08% as we liquidated lower yielding securities and opportunistically reinvested a portion of the proceeds at current market interest rates.

Average interest bearing liabilities decreased $3.2 billion to $40.4 billion due to our balance sheet repositioning, while overall funding costs increased 78 basis points to 2.82% during the first quarter 2006. Funding costs rose as a direct result of increases in short-term market interest rates and intense competition for deposits in our markets.

Average demand deposits grew $.5 billion or 7.1% to $7.3 billion in the first quarter of 2006. This growth is primarily attributable to strong commercial loan activity. Total demand deposits contributed 54 basis points to our net interest margin this quarter compared to 40

basis points in 2005. At March 31, 2006, demand deposits represented 19.7% of total deposits. Average Savings, NOW and Money Market deposits (defined as “core deposits” inclusive of demand) increased $.3 billion or 1.5% to $21.5 billion, while the corresponding cost of funds rose 89 basis points to 2.22%. The modest growth in core deposits and increases in funding costs were attributable to intense competitive pressure in our market areas coupled with higher short-term interest rates. The competitive pressure for core deposits was tempered by our focused effort on expanding the existing branch network, developing long-term deposit relationships with borrowers as demonstrated by commercial loan growth, the use of incentive compensation plans, and the introduction of new cash management products and services. Core deposits have traditionally provided us with a lower cost funding source than time deposits and collateralized borrowings, benefiting our net interest margin and income. Average time deposits grew $.5 billion or 7.2% to $8.1 billion, while the corresponding cost of funds increased 119 basis points to 2.99% due to the impact of higher short-term interest rates. We have chosen to supplement a portion of our higher costing collateralized borrowings with this funding source.

Average federal funds purchased and collateralized borrowings decreased $4.0 billion to $9.3 billion due to our balance sheet repositioning strategy and declines in average loans held-for-sale, while overall funding costs increased 63 basis points to 3.63% during 2006. Funding costs rose as a direct result of increases in short-term market interest rates. A large portion of these borrowings are utilized to fund loans held-for-sale and will fluctuate with the level of these interest earning assets. The use of interest rate swaps increased interest expense by approximately $.3 million and $1.1 million in 2006 and 2005, respectively.

Average other borrowings remained relatively unchanged in the first quarter of 2006, while the cost of funds rose 68 basis points to 5.48% when compared to the comparable prior year period due to the use of interest rate swaps. Certain other borrowings were converted from fixed to floating indexed to three-month LIBOR utilizing these swaps, which increased interest expense by $1.1 million during the first three months of 2006 and reduced interest expense by $4.3 million during the same period in 2005. (See Item 1, Condensed Notes to the Consolidated Financial Statements, Note 9 — “Derivative Financial Instruments” for additional information).

Provision and Allowance for Loan Losses

The provision for loan losses totaled $9.0 million for the first quarter of 2006, unchanged when compared to the comparable prior year period. As of March 31, 2006, the ratio of the allowance for loan losses to non-performing loans held-for-investment improved to 543% as compared to 187% for the comparable prior year period. This improvement resulted from our success in significantly reducing non-performing loans, while maintaining modest net charge-off levels. Net charge-offs, as an annualized percentage of average loans held-for-investment, was 7 basis points in the 2006 first quarter compared to 6 basis points in the comparable prior year period. The allowance for loan losses to total loan held-for-investment was 65 basis points and 68 basis points, respectively for the same periods. The provisioning and resulting allowance for loan loss levels are consistent with the growth and composition of the loans held-for-investment portfolio and our provisioning policy. (See “Notes to the Consolidated Financial Statements Note 1 — Business and Summary of Significant Accounting Policies — Critical Accounting Policies” for additional information).

The following table presents the impact of allocating the allowance for loan losses for loans held-for-investment as of March 31, 2006, into the two primary portfolio segments.


				Residential &			Commercial &
(Dollars in thousands)	Total			Multi-Family			All Other Loans
Loans Held-for-Investment	$	34,202,653		$	19,727,210		$	14,475,443
Allowance for Loan Losses		221,256			64,217			157,039
Non-Performing Loans Held-for-Investment		40,771			25,059			15,712
Allowance for Loan Losses to Loans-Held-for Investment		0.65	%		0.33	%		1.08	%
Allowance for Loan Losses to Non-Performing Loans Held-for-Investment		543	%		2.56	%		999	%

As a result of the process employed and giving recognition to all attendant factors associated with the loan portfolio, the allowance for loan losses at March 31, 2006 is considered to be adequate by management.

Non-Interest Income

Non-interest income decreased $14.8 million or 8.1% to $168.1 million in the 2006 first quarter when compared to the comparable prior year period. Mortgage banking income declined $15.0 million to $96.1 million in 2006 and is comprised of: (a) a $23.6 million decrease in gain on sales of loans held-for-sale; (b) a $7.1 million decline in mortgage servicing fees, net of amortization of mortgage servicing rights; and (c) partially offset by a $15.7 million temporary impairment recovery on mortgage servicing rights. Mortgage banking income is more fully explained in the “Mortgage Banking” section of this discussion and analysis. The modest decline in the customer related fees and service charges resulted from a decrease in consumer deposit accounts during 2005. Investment management, commissions and trust fees decreased $1.4 million primarily due to a decline in customer demand for insurance products. Other operating income included a $2.2 million gain on interest rate swaps that formerly hedged the Company’s junior subordinated debt (See Item 1, Condensed Notes to the Consolidated Financial Statements, Note 9 — “Derivative Financial Instruments” for additional information) Net securities gains were $6.7 million in the first quarter of 2006 compared to $4.6 million in the same period for 2005. Securities gains were derived principally from the sale of mortgage-backed securities and certain debt and equity securities.

Non-Interest Expense

Non-interest expense was $258.2 million during the 2006 first quarter representing an increase of $11.5 million when compared to the comparable prior year period. Employee compensation and benefits increased $5.9 million to $141.3 million during the first quarter of 2006, impacted by the hiring of several senior lenders and support staff to pursue new business initiatives, new branch openings, annual merit increases, increased health insurance costs and incentive based compensation growth linked to deposit and fee income generation as well as held-for-sale originations. Increases in occupancy and equipment costs of $5.3 million are also due to the new branch openings, upgrades to existing branches and facilities, technology investments, new business initiatives and support systems, and increased fuel and maintenance costs. We have made significant investments in technology and delivery channels providing our customers with a wide array of easy to use and competitively priced products and services. Amortization of identifiable intangibles and related core deposit intangibles are related to prior acquisitions.

The efficiency ratio, which represents a non-GAAP measure, is used by the financial services industry to measure an organizations efficiency. The ratio, which is calculated by dividing non-interest expense excluding amortization of identifiable intangible assets and other real estate expenses by net interest income (on a tax equivalent basis) and non-interest income, excluding securities gains and the temporary recovery/(impairment) on mortgage servicing rights was 43.14% for the first quarter 2006. This increase was directly related to the decline in revenues (defined as net interest income plus non-interest income) rather than a significant increase in our non-interest expense.

Income Taxes

The effective tax rate for the three months ended March 31, 2006 and 2005 were 34% and 35%, respectively.

Mortgage Banking

The following table sets forth certain financial highlights for our mortgage banking segment for the periods indicated:


For the Three Months Ended March 31,
(in thousands)	2006			2005
Net Interest Income	$	18,120		$	33,072
Non-Interest Income:
Gain on Sale of Loans (1)		89,099			119,966
Mortgage Servicing Fees (1)		35,048			32,779
Amortization of Mortgage Servicing Rights		(23,598	)		(19,989	)
Temporary Recovery/(Impairment) — Mortgage Servicing Rights		15,691			—
Other Operating Income		708			1,685

Total Non-Interest Income		116,948			134,441

Non-Interest Expense:
Employee Compensation & Benefits		47,279			44,457
Occupancy & Equipment Expense, net		10,643			9,635
Other Operating Expense		16,579			18,804

Total Non-Interest Expense		74,501			72,896

Income Before Income Taxes		60,567			94,617
Provision for Income Taxes		23,735			39,739

Net Income	$	36,832		$	54,878

Total Assets	$	5,359,607		$	5,990,788


(1)		Includes $7.4 million and $14.5 million of inter-company gains on sale of loans and $12.8 million and $7.0 million of inter-company mortgage servicing fees for the three months ended March 31, 2006 and 2005, respectively.

For the three months ended March 31, 2006, the mortgage banking segment recognized net income of $36.8 million compared to $54.9 million for the same period of 2005. Net interest income for this segment declined $15.0 million to $18.1 million during 2006. Inter-company interest expense increased $11.8 million to $45.8 million from $34.0 million during 2006 and 2005, respectively, resulting from increases in short-term market interest rates. Average loans held-for-sale were $4.3 billion and $5.0 billion, yielding 6.01% and 5.43% for the quarters ended March 31, 2006 and 2005, respectively. The yield and level of loans held-for-sale will fluctuate with changes in origination volumes, loan portfolio composition, market interest rates for new originations and the timing of loan sales.

The gain on sale of loans totaled $89.1 million and $120.0 million during the first three months of 2006 and 2005, respectively (See “Gain on Sale of Loans” in this section for further details) and mortgage banking fees were $35.0 million and $32.8 million, respectively, for the same periods.

In the most recent quarter, we recovered $15.7 million of the temporary impairment charge previously recognized on mortgage servicing rights, due primarily to lower prepayment assumptions caused by increases in both the 2 year and 10 year treasury yields.

Loan originations during 2006 totaled $7.8 billion, while loans sold aggregated $7.1 billion with an average gain on sale margin of 115 basis points. The gain on sale margin was impacted by increased competition as certain of our competitors were willing to accept lower spreads in the specialty segment to maintain volume and to offset narrower spreads in their other product offerings.

The composition of loans originated during first quarter of 2006 was: 52% Specialty, 29% Jumbo A, 13% Home Equity and 6% Agency. Option ARMs, both Alt-A and Jumbo accounted for 39% of originations. All option ARM originations are sold into the secondary market, servicing released. Mortgage originations for new purchases represented 41% of production during the year. The weighted average FICO score for all originations was 714. We do not originate sub-prime loans, nor will we sacrifice quality to drive origination volume and gain on sales.

Gain on Sale of Loans

We sell whole loans or from time to time may securitize loans, which involves the private placement or public offering of pass-through asset backed securities. This approach allows us to capitalize on favorable conditions in either the securitization or whole loan sale market. During the periods presented herein, we have only executed whole loan sales. These sales are completed with no direct credit enhancements, but do include certain standard representations and warranties, which permit the purchaser to return the loan if certain deficiencies exist in the loan documentation or in the event of early payment default. Gain on sale and related margins are

affected by changes in the valuation of mortgage loans held-for-sale and interest rate lock commitments, the impact of the valuation of derivatives utilized to manage the exposure to interest rate risk associated with mortgage loan commitments and mortgage loans held-for-sale, and the impact of adjustments related to liabilities established for representations and warranties made in conjunction with the loan sale. Gain on sale and related sale margins are also impacted by pricing pressures caused by competition within the mortgage origination business.

The following tables summarizes mortgage loans originated, sold, average margins and gains for the periods indicated:


	For the Three Months Ended March 31, 2006
	Loans		Loans		Margins on			Gain on
(dollars in thousands)	Originated		Sold		Loan Sales			Sale of Loans

Loan Type:
Specialty Products	$	4,034,289	$	4,032,031		1.23	%	$	49,426
Jumbo		2,254,653		1,694,725		0.89	%		15,001
Home Equity/Seconds		1,002,615		916,017		1.69	%		15,499
Agency		480,214		494,024		0.37	%		1,823

	$	7,771,771	$	7,136,797		1.15	%	$	81,749


	For the Three Months Ended March 31, 2005
	Loans		Loans		Margins on			Gain on
(dollars in thousands)	Originated		Sold		Loan Sales			Sale of Loans (1)

Loan Type:
Specialty Products	$	4,231,111	$	4,333,784		1.45	%	$	62,750
Jumbo		3,795,191		1,968,088		0.98	%		19,183
Home Equity/Seconds		1,488,748		1,580,497		1.45	%		22,858
Agency		517,867		470,910		0.29	%		1,368

	$	10,032,917	$	8,353,279		1.27	%	$	106,159


(1)		The gain on sale of loans for the three months ended March 31, 2005, differs from the amounts reported under U.S. generally accepted accounting principles due to the fair value adjustment of loans held-for-sale at October 1, 2004 and sold during the first quarter of 2005, totaling $0.8 million.

Financial Condition

Loans Held-For-Sale

The composition of loans held-for-sale are summarized below:


	March 31,		% of			December 31,		% of			March 31,		% of
(dollars in thousands)	2006		Total			2005		Total			2005		Total
Mortgage Loans	$	3,505,357		84	%	$	3,824,547		89	%	$	4,239,366		80	%
Home Equity		647,542		16			496,656		11			1,061,352		20

Total	$	4,152,899		100	%	$	4,321,203		100	%	$	5,300,718		100	%
Deferred Origination Costs		37,566					38,064					50,105

Total Loans Held-for-Sale	$	4,190,465				$	4,359,267				$	5,350,823

Loans Held-for-Investment

The composition of loans held-for-investment are summarized below:


	March 31,		% of			December 31,		% of			March 31,		% of
(dollars in thousands)	2006		Total			2005		Total			2005		Total
Commercial Mortgages	$	6,538,810		19	%	$	6,206,416		19	%	$	5,535,281		17	%
Commercial & Industrial		5,193,904		15			4,709,440		14			3,408,006		11

Total Commercial		11,732,714		34	%		10,915,856		33	%		8,943,287		28	%
Residential Mortgages		14,861,680		44			15,068,443		45			16,445,902		51
Multi-Family Mortgages		4,827,642		14			4,821,642		15			4,328,879		14
Consumer		1,619,812		5			1,558,782		5			1,554,499		5
Construction & Land		1,122,917		3			829,273		2			541,280		2

Total Loans Held-for-Investment	$	34,164,765		100	%	$	33,193,996		100	%	$	31,813,847		100	%

Loans held-for-investment increased $2.3 billion or 7.4% to $34.2 billion during the quarter ended March 31, 2006, when compared to $31.9 billion at March 31, 2005. Consistent with our balance sheet management strategy, commercial loans and total loans (excluding residential) grew $2.8 billion or 31.2% and $3.9 billion or 25.6%, respectively from the 2005 first quarter to 2006, while residential mortgages declined $1.6 billion or 9.6% during the same period. Commercial loans as a percentage of total loans increased from 28% during 2005 to 34% during 2006, while residential loans declined from 51% to 44%. We anticipate this trend to continue in the near term.

Commercial lending activity continues to remain strong within our market area. Our pipeline of outstanding commitments remains near historical levels. We have also benefited from previous initiatives to expand our geographic presence, sales force and product offerings.

Although we have deemphasized residential loans in favor of higher yielding commercial loans, the quality of our residential mortgage portfolio remains excellent. The weighted average FICO score at March 31, 2006 was 732. Approximately 77% of the portfolio is comprised of Jumbo/Agency conforming mortgages and 93% of the total portfolio is owner occupied. Interest only loans constitute 38% of the portfolio, while the average original loan amount was $279 thousand. We do not portfolio option ARMs, negative amortization loans or home equity loans. Future decisions to retain residential loans will be impacted by mortgage origination volumes, growth in other loan categories, deposit growth and changes in market interest rates.

Multi-family loans grew $498.8 million or 11.5% during 2006, despite our decision not to compete with the more liberal underwriting terms and rate structures offered by certain competitors. Multi-family and commercial mortgage loans are primarily secured by real estate in the New York Metropolitan area and are diversified in terms of risk and repayment sources. The underlying collateral includes multi-family apartment buildings and owner occupied/non-owner occupied commercial properties. The risks inherent in these portfolios are dependent on both regional and general economic stability, which affect property values, and our borrowers’ financial well being and creditworthiness.

Consumer loan volume, principally indirect auto loans, has stabilized and balances have remained relatively flat as automobile manufacturers are no longer offering the aggressive incentives and financing programs they had in the past.

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

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

Commercial loans are made to small and medium sized businesses and include loans collateralized by security interests in lease finance receivables. The commercial mortgage and commercial loan portfolios contain no foreign loans to developing countries (“LDC”). Consumer loans consist primarily of new and used automobile loans originated through a network of automobile dealers. The credit risk in auto lending is dependent on the borrower’s creditworthiness and collateral values. The average consumer loan originated is $19,400 and has a contractual life of approximately 60 months. The consumer loan portfolio does not contain higher risk credit card or sub prime loans. Land loans are used to finance the acquisition of vacant land for future residential and commercial development. Construction loans finance the building and rehabilitation of residential and multi-family projects, and to a lesser extent, commercial developments. The construction and land development portfolios do not contain any high-risk equity participation loans (“AD&C” loans).

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

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

Securities

Securities decreased $4.4 billion or 29.1% to $10.7 billion from March 31, 2005 as part of our balance sheet management strategy. Portfolio cash flows and a portion of the proceeds generated from securities sales during the second half of 2005 and 2006 were used to fund commercial loan growth, repurchase common stock and pay down short-term borrowings. (See “Balance Sheet Repositioning” section for further details). In December 2005, approximately $570 million in securities were identified as other than temporary impaired, resulting in a realized loss of $6.0 million. These securities were sold in January 2006 with the majority of the proceeds reinvested in securities at current market interest rates.

Mortgage Backed Securities represented 78% of total securities at March 31, 2006, and included pass-through certificates guaranteed by GNMA, FHLMC or FNMA and collateralized mortgage-backed obligations (“CMOs”) backed by government agency pass-through certificates or whole loans. The pass-through certificates included both fixed and adjustable rate instruments. CMOs, by virtue of the underlying collateral or structure, are AAA rated and are either fixed rate current pay sequentials and PAC structures or adjustable rate issues. (See Item 1, Notes to the Consolidated Financial Statements Note 2, “Securities” for additional information). The adjustable rate pass-throughs and CMOs are principally Hybrid ARMs. Hybrid ARMs typically have a fixed initial rate of interest from 3 through 7 years and at the end of that term convert to a one year adjustable rate of interest indexed to short term benchmarks (i.e. LIBOR or 1 year Treasuries). Hybrid ARMs included in Pass-throughs and CMOs as of March 31, 2006 aggregated $2.6 billion.

Our goal is to maintain a securities portfolio with a short weighted average life and duration. This is accomplished using instruments with short final maturities, predictable cash flows and adjustable interest rates. These attributes allow us to proactively manage as market conditions change so that cash flows may either be reinvested in securities at current market interest rates, used to fund loan growth or pay off short-term borrowings. These characteristics have contributed to the 3.6 year weighted average life and 3.1 year duration of the MBS portfolio as of March 31, 2006.

The yield and fair value of securities, specifically the MBS portfolio, are impacted by changes in market interest rates and related prepayment activity. Given the portfolio’s composition, related prepayment activity would moderately decrease in a rising interest rate environment, extending the portfolio’s weighted average life. Conversely, the opposite would occur in a declining interest rate environment. The resultant impact of these changes would be to either extend or shorten the period over which net premiums would be amortized, thereby affecting income and yields. The impact of any changes would be minimal as net premiums totaled $30.4 million or approximately 36 basis points of outstanding MBS balances at March 31, 2006.

Municipal securities represent a combination of short-term debentures issued by local municipalities, purchased as part of a strategy to expand relationships with these governmental entities, and highly rated obligations of New York State and related authorities. Equity securities held in the available-for-sale portfolio include $297.2 million of FNMA and FHLMC (“GSE”) Preferred stock, $245.5 million in Federal Home Loan Bank common stock, and common and preferred stocks of certain publicly traded companies. Other securities held in the available-for-sale portfolio include capital securities (trust preferred securities) of certain financial institutions and corporate bonds.

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

Deposits

Total deposits increased $1.2 billion or 3.2% to $37.7 billion at March 31, 2006 while demand deposits increased $333.7 million or 4.7% to $7.4 billion. This growth was achieved despite aggressive pricing by our competitors, offering higher deposit rates and free services to attract consumers. Despite intense competitive pressure, we have chosen to remain disciplined and selective in pricing deposits, continuing to concentrate on growing our commercial customer base. Commercial accounts constituted approximately one third of total deposits at March 31, 2006. We do not anticipate any imminent strategic change from our competitors. Factors contributing to deposit growth include: (i) the continued expansion and maturation of our retail branch network, (ii) the ongoing branch upgrade and relocation program providing for greater marketplace identity, (iii) expanded branch hours providing additional

accessibility and convenience, (iv) commercial loan growth, (v) the introduction of new cash management products and services and (vi) the use of incentive based compensation linked to deposit growth.

Asset/Liability Management

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

The risk assessment program includes a coordinated approach to the management of liquidity, capital, and interest rate risk. This process is governed by policies and limits established by senior management, which are reviewed at least annually by the Board of Directors. The Asset/Liability Committee (“ALCO”) provides guidance for asset/liability activities. ALCO periodically evaluates the impact of changes in market interest rates on interest earning assets and interest bearing liabilities, net interest margin, capital and liquidity, and evaluates management’s strategic plan. The balance sheet structure is primarily short-term with most assets and liabilities repricing or maturing in less than five years. We monitor the sensitivity of net interest income by utilizing a dynamic simulation model complemented by a traditional gap analysis.

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

The Board has established certain policy limits for the potential volatility of net interest income as projected by the simulation model. Volatility is measured from a base case where rates are assumed to be flat and is expressed as the percentage change, from the base case, in net interest income over a twelve-month period. As of March 31, 2006, we were operating within policy limits.

The simulation model is kept static with respect to the composition of the balance sheet and, therefore does not reflect our ability to proactively manage in changing market conditions. We may choose to extend or shorten the maturities of our funding sources. We may also choose to redirect cash flows into assets with shorter or longer durations or repay borrowings. As part of our overall interest rate risk management strategy, we periodically use derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. This interest rate risk management strategy can involve modifying the repricing characteristics of certain assets and liabilities utilizing interest rate swaps, caps and floors.

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

	•		The balance sheet composition remains static.

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

	•		Maintaining our current asset or liability spreads to market interest rates.

	•		The model considers the magnitude and timing of the repricing of financial instruments, loans and deposit products, including the effect of changing interest rates on expected prepayments and maturities.

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

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


	Changes in Net Interest Income
(dollars in thousands)	$Change		% Change

Change in Interest Rates
+ 200 Basis Points	$	(53,300)		(3.20	)%
+ 100 Basis Points		(23,866)		(1.43	)
- 100 Basis Points		18,386		1.10

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

The following table reflects the estimated change in the market value of equity at March 31, 2006, assuming an immediate increase or decrease in interest rates.


	Market Value of Equity
(dollars in thousands)	$ Change			% Change

Change in Interest Rates
+ 200 Basis Points	$	(657,489	)		(5.2	)%
Flat Interest Rates		—			—
- 200 Basis Points	$	132,203			1.0	%
Policy Limit		N/A			(25.0	)%

As part of our overall interest rate risk management strategy, we periodically use derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The interest rate risk management strategy at times involves modifying the repricing characteristics of certain assets and liabilities utilizing interest rate swaps, caps and floors.

The credit risk associated with derivative instruments is the risk of non-performance by the counterparty to the agreements. Management does not anticipate non-performance by any of the counterparties and monitors/controls the risk through its asset/liability management procedures. (See Item I, Notes to Consolidated Financial Statements, Note 9 — ”Derivative Financial Instruments” for additional information on all derivative transactions).

Liquidity Risk Management

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

The Company’s primary funding source is dividends from North Fork Bank. There are various federal and state banking laws and guidelines limiting the extent to which a bank subsidiary can finance or otherwise supply funds to its holding company. At March 31, 2006, dividends for North Fork Bank were limited under such guidelines to $1.1 billion. From a regulatory standpoint, North Fork Bank, with its current balance sheet structure, had the ability to dividend approximately $.8 billion, while still meeting the criteria for designation as a well-capitalized institution under existing regulatory capital guidelines. Additional sources of liquidity for the Company include borrowings, the sale of available-for-sale securities, and funds available through the capital markets.

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

Our banking subsidiaries currently have the ability to borrow an additional $10.7 billion on a secured basis, utilizing mortgage related loans and securities as collateral. At March 31, 2006, our banking subsidiaries had $3.6 billion in advances and repurchase agreements outstanding with the FHLB.

We also maintain arrangements with correspondent banks to provide short-term credit for regulatory liquidity requirements. These available lines of credit aggregated $1.0 billion at March 31, 2006. We continually monitor our liquidity position as well as the liquidity positions of our bank subsidiaries and believe that sufficient liquidity exists to meet all of our operating requirements.

Capital

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

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

As of March 31, 2006, the most recent notification from the various regulators categorized the Company and its subsidiary banks as well capitalized under the regulatory framework for prompt corrective action. Under the capital adequacy guidelines require a well capitalized institution to maintain a Total Risk Adjusted Capital Ratio of at least 10%, a Tier 1 Capital Ratio of at least 6%, a Leverage Ratio of at least 5%, and not be subject to any written order, agreement or directive. Since such notification, there are no conditions or events that management believes would change this classification.

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


	March 31, 2006					March 31, 2005
(dollars in thousands)	Amount		Ratio			Amount		Ratio
Tier 1 Capital	$	3,520,542		9.92	%	$	3,511,642		10.35	%
Regulatory Requirement		1,419,003		4.00	%		1,357,456		4.00	%

Excess	$	2,101,539		5.91	%	$	2,154,186		6.35	%


Total Risk Adjusted Capital	$	4,364,123		12.30	%	$	4,379,222		12.90	%
Regulatory Requirement		2,838,005		8.00	%		2,714,912		8.00	%

Excess	$	1,526,118		4.30	%	$	1,664,310		4.90	%


Risk Weighted Assets	$	35,475,068				$	33,936,401

The Company’s Leverage Ratio at March 31, 2006 and 2005 was 6.86% and 6.48%, respectively.

The following table sets forth the capital ratios for our banking subsidiaries at March 31, 2006:


Capital Ratios:	North Fork			Superior
Tier 1 Capital		10.88	%		21.99	%
Total Risk Adjusted		11.98	%		22.51	%
Leverage Ratio		7.46	%		6.46	%

On March 28, 2006, the Board of Directors declared its regular quarterly cash dividend of $.25 per common share. The dividend will be paid on May 15, 2006 to shareholders of record at the close of business on April 28, 2006.

On January 24, 2006, the Board of Directors authorized the repurchase of an additional 12 million shares, increasing the total remaining authorized for repurchase to 14.4 million. At March 31, 2006, 9.2 million shares were available to be purchased under the program. During the first quarter of 2006, 5.1 million shares were repurchased at an average cost of $25.84 and 20 million shares were repurchased during the previous twelve month period at an average cost of $26.14 as part of our balance

sheet repositioning strategy. The current program has no fixed expiration date. Repurchases are made in the open market or through privately negotiated transactions. The Company discontinued purchasing shares since the announcement of its proposed acquisition by Capital One.

There are various federal and state banking laws and guidelines limiting the extent to which a bank subsidiary can finance or otherwise supply funds to its holding company. FRB policy provides that, as a matter of prudent banking practice, a bank holding company generally should not maintain a rate of cash dividends unless its net income available to common stockholders is sufficient to fund the dividends, and the prospective rate of earnings retention appears to be consistent with the holding company’s capital needs, asset quality and overall financial condition. In addition, among other things, dividends from a New York-chartered bank, such as North Fork Bank, are limited to the bank’s net profits for the current year plus its prior two years’ retained net profits.

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

Regulatory Matters

United States anti-money laundering (“AML”) laws, including The Bank Secrecy Act, as amended by the USA Patriot Act, and related implementing regulations, have imposed significant, additional requirements on financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) and the New York State Banking Department (“NYSBD”) have identified certain supervisory issues with respect to the Bank’s AML compliance program that require management’s attention. Management has been engaged in discussions with the FDIC and the NYSBD concerning this matter and has initiated appropriate action to address the issues raised. The Bank entered into an informal memorandum of understanding (“MOU”) with both the FDIC and the NYSBD with respect to these matters effective as of August 23, 2005. A memorandum of understanding is characterized by regulatory authorities as an informal action that is neither published nor made publicly available by agencies and is used when circumstances warrant a milder form of action than a formal supervisory action, such as a formal written agreement or cease and desist order. Management has developed a remediation plan to comply with the requirements of the MOU and continues to make progress in implementing the plan, as well as making additional enhancements to our AML compliance program.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 imposed significant new responsibilities on publicly held companies such as North Fork, particularly in the area of corporate governance. We, like other public companies, have reviewed and reinforced our internal controls and financial reporting procedures in response to the various requirements of Sarbanes-Oxley and implementing regulations issued by the Securities and Exchange Commission and the New York Stock Exchange. We have observed and will continue to observe full compliance with these new legal requirements. We have always emphasized best practices in corporate governance as the most effective way of assuring shareholders that their investment is properly managed and their interests remain paramount.

Future Legislation

Various legislation is from time to time introduced in Congress and in the legislatures of states in which we do business. Such legislation may change our operating environment and the operating environment of our subsidiaries in substantial and unpredictable ways. We cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations, would have upon our financial condition or results of operations or upon our shareholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

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

timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On March 15, 2006, a putative class action complaint was filed on behalf of the public shareholders of North Fork against North Fork and each of its directors in the Supreme Court of New York, New York County, entitled Lasker v. Kanas et al. (Index No. 06/103557). On March 16, 2006, a putative class action complaint was filed on behalf of the public shareholders of North Fork against North Fork and each of its directors in the Supreme Court of New York, Nassau County, entitled Showers v. Kanas et al. (Index No. 06-004624). Two further putative class actions on behalf of the public shareholders of North Fork were subsequently filed, one in the Supreme Court of New York, Nassau County on March 21, 2006 (entitled New Jersey Building Laborers Pension & Annuity Fund v. Kanas et al., Index No. 06-004786), and another in the Supreme Court of New York, New York County on April 12, 2006 (entitled Gold v. Kanas, et al., Index No. 06105091). These complaints allege, among other things, that the directors of North Fork breached their fiduciary duties by failing to maximize shareholder value in the transaction. Among other things, the complaints seek class action status, a court order enjoining North Fork and its directors from proceeding with or consummating the merger, and the payment of attorneys’ and experts’ fees. North Fork intends to defend these lawsuits vigorously.

On March 16, 2006, Carol Fisher, a purported shareholder of North Fork, filed a complaint in the United States District Court for the Eastern District of New York against North Fork, John A. Kanas, John Bohlsen, and Daniel M. Healy entitled Fisher v. Kanas et al., No. 06-CV-1187. As amended on April 21, 2006, the Fisher action alleges that North Fork and certain of its directors violated Section 14(a) and/or Section 20(a) of the Securities Exchange Act and breached common law fiduciary duties by failing to cause certain information relating to North Fork’s executive compensation arrangements (including certain change-in-control provisions) to be disclosed in certain public filings. Among other things, the Fisher complaint seeks an injunction against certain compensation payments and the payment of attorneys’ fees. North Fork also intends to defend this lawsuit vigorously.

Additionally, we are commonly subject to various pending and threatened legal actions relating to the conduct of our normal business activities. In management’s opinion, the ultimate aggregate liability, if any, arising out of any such pending on threatened legal actions will not be material to the Company’s consolidated financial statements or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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

Total Number of

Maximum Number of

Total Number of

Average

Shares Purchased as

Shares that May Yet

Shares Purchased

Price Paid

Part of Publicly

Be Purchased Under

Period

(1)

Per Share

Announced Program

the Program

January 1, 2006 — January 31, 2006

3,035,000

26.16

3,035,000

11,336,450 Shares

February 1, 2006 — February 28, 2006

2,066,900

25.37

2,066,900

9,269,550 Shares

March 1, 2006 — March 31, 2006

—

9,269,550 Shares


(1)		On January 24, 2006, the Board of Directors authorized the repurchase of an additional 12 million shares increasing the total authorized for repurchase to 14.4 million. The current program has no fixed expiration date. Repurchases are made in the open market or through privately negotiated transactions.


	Page
PART 1. FINANCIAL INFORMATION (unaudited)
Item 1. Financial Statements
Consolidated Balance Sheets		3
Consolidated Statements of Income		4
Consolidated Statements of Cash Flows		5
Consolidated Statements of Changes in Stockholders’ Equity		7
Consolidated Statements of Comprehensive Income		8
Condensed Notes to Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		40
Item 4. Controls and Procedures		40
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 6. Exhibits		42
EX-11: STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION
EX-99.1: SUPPLEMENTAL PERFORMANCE MEASUREMENTS


Exhibit Number		Description of Exhibit
(11)		Statement Re: Computation of Net Income Per Common and Common Equivalent Share
(31.1)		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31.2)		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32.1)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(32.2)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(99.1)		Supplemental Performance Measurements


Date: May 4, 2006	North Fork Bancorporation, Inc.
	/s/ Daniel M. Healy
	Daniel M. Healy
	Executive Vice President and Chief Financial Officer