NFB North Fork Bancorporation Ny

North Fork Bancorporation, Inc. (NYSE:NFB): Highlights in the current period include: -- Net income of $221 million and diluted earnings per share of $.48. -- A net interest margin of 3.53%, substantially unchanged from the previous quarter. -- 39% annualized growth in commercial loans and 35% annualized growth in total loans, excluding residential mortgages. -- Returns on average tangible equity and average tangible assets of 30.1% and 1.74%, respectively. -- A 15 basis point margin improvement on residential loan sales. -- Declaration of its regular quarterly cash dividend of $.25 cents per common share. -- Continued reductions in the securities portfolio and residential mortgages. -- Ongoing progress in connection with the proposed acquisition by Capital One Financial Corporation ("Capital One"). Net Earnings and Returns Net income for the quarter ended June 30, 2006 was $221 million or $.48 diluted earnings per share compared to $242 million or $.51 diluted earnings per share for the comparable period in 2005. Linked quarter net income and diluted earnings per share improved modestly. Net income for the six-month period ended June 30, 2005 was $431 million or diluted earnings per share of $.94 compared to $501 million or diluted earnings per share of $1.06. The Company's returns on average tangible equity and assets were 30.1% and 1.74%, respectively in the most recent quarter. For the quarter ended June 30, 2006, net interest income and net interest margin were $429.9 million and 3.53%, respectively compared to $417.5 million and 3.56%, respectively for the immediately preceding quarter. Net interest income and margin for the six-months ended June 30, 2006 were $847.4 million and 3.55%, respectively compared to $933.4 million and 3.69%, respectively for 2005. The year over year decline reflects the difficult banking and interest rate environment. Loans Loans held-for-investment at June 30, 2006 amounted to $35.6 billion compared to $32.5 billion in 2005. On a linked quarter basis, loans held-for-investment, excluding residential mortgages, increased by $1.7 billion, an annualized growth rate of 35%. The commercial and industrial segment increased by $613 million, an increase of 47% on an annualized basis. The Company expects the commercial loan growth momentum will continue despite intense pricing competition. As expected, non-performing assets declined linked quarter by approximately $19.8 million to $57.7 million. Charge-offs were a modest 7 basis points. Deposits Deposits at June 30, 2006 were $36.8 billion, declining slightly from the previous quarter. Business deposits remain a significant component of total deposits. "We have chosen to be prudent and not seek higher cost deposits in this marketplace," said John Adam Kanas, Chairman, President and Chief Executive Officer. Mortgage Banking Business The Company's mortgage banking subsidiary, GreenPoint Mortgage, originated $9.9 billion in the quarter, compared to $7.8 billion, linked quarter, and $12.4 billion in the second quarter of 2005. The Company anticipates that origination volume will be strong despite the challenging interest rate environment. The margin on whole loan sales was 130 basis points, a 13% increase linked quarter. Gain on sale of loans was $102.3 million in the quarter compared to $81.7 million in the prior quarter. At June 30, 2006, the mortgage loan pipeline increased to $6.2 billion linked quarter. At June 30, 2006, net mortgage servicing rights were $272 million, or 97 basis points of the unpaid principal balance of the related serviced loans. Cash Dividend On June 27, 2006, the Board declared its regular quarterly dividend of $.25 per common share. The dividend will be payable August 15, 2006, to shareholders of record at the close of business on July 28, 2006. Pending Acquisition The Company reported that it was pleased with the progress toward the pending acquisition by Capital One. The special shareholders' meeting to approve the transaction is scheduled for August 22, 2006. It is also subject to customary regulatory approvals. The transaction is expected to close in the fourth quarter of 2006. See Additional Information about the Proposed Merger with Capital One below. North Fork is a regional bank holding company headquartered in New York with approximately $59 billion in assets conducting commercial and retail banking from more than 350 branch locations in the Tri-State area, with a complementary national mortgage banking business. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about North Fork's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of North Fork's management regarding future events, many of which by their nature are inherently uncertain and beyond management's control. Actual results may differ materially from those set forth in the forward-looking statements. The following factors, among others, could cause legislative or regulatory changes, actual results to differ from those set forth in these forward-looking statements: changes in the interest rate environment; changes in the securities and real estate markets; increased competition and its effect on pricing, changes in monetary and fiscal policies of the U.S. government, changes in accounting principles, policies, practices or guidelines. Additional factors that could cause North Fork's results to differ materially from those described in the forward-looking statements can be found in the 2005 Annual Report on Form 10-K of North Fork (including under the heading "Forward-Looking Statements"), and in the Quarterly Reports on Form 10-Q of North Fork filed with the Securities and Exchange Commission ("SEC") and available at the SEC's internet site (http://www.sec.gov). Other risks include 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; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; competition and its effect on pricing, spending, third-party relationships and revenues. The forward-looking statements in this press release speak only as of the date of the press release, and North Fork assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. Additional Information about the Proposed Merger with Capital One On March 12, 2006, Capital One Financial Corporation and North Fork Bancorporation, Inc. announced a definitive agreement under which North Fork will merge with Capital One in a stock and cash transaction. Capital One and North Fork stockholders are urged to read the definitive proxy statement/prospectus regarding the proposed merger, which was first mailed to stockholders on or about July 14, 2006, because it contains important information. You may obtain a free copy of the joint proxy statement/prospectus and other related documents filed by Capital One and North Fork with the SEC at the SEC's website at www.sec.gov. The joint proxy statement/prospectus and the other documents may also be obtained for free by accessing Capital One's website at www.capitalone.com under the heading "Investors" and then under the heading "SEC & Regulatory Filings" or by accessing North Fork's website at www.northforkbank.com under the tab "Investor Relations" and then under the heading "SEC Filings". This release does not constitute an offer of securities for sale. Participants in the Proposed Merger with Capital One Capital One, North Fork and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from stockholders in favor of the proposed merger with Capital One. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders in connection with the proposed merger is set forth in the joint proxy statement/prospectus. You can find information about Capital One's executive officers and directors in Capital One's definitive proxy statement filed with the SEC on March 21, 2005. You can find information about North Fork's executive officers and directors in the definitive joint proxy statement/prospectus. You can obtain free copies of these documents from the Capital One or North Fork using the contact information above. -0- *T North Fork Bancorporation, Inc. Consolidated Statements of Income (Unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands, except per 2006 2005 2006 2005 share amounts) ------------------------------------------- Interest Income: Loans Held-for-Investment $531,756 $472,218 $1,037,492 $ 924,435 Loans Held-for-Sale 76,088 73,065 139,780 139,913 Mortgage-Backed Securities 96,437 133,375 195,952 275,382 Other Securities 29,173 30,124 57,818 59,531 Money Market Investments 570 662 1,112 1,395 ------------------------------------------- Total Interest Income 734,024 709,444 1,432,154 1,400,656 ------------------------------------------- Interest Expense: Savings, NOW & Money Market Deposits 134,731 82,455 252,164 152,051 Time Deposits 59,658 40,391 119,448 73,857 Federal Funds Purchased and Collateralized Borrowings 89,628 105,238 173,102 204,245 Other Borrowings 20,119 19,287 40,075 37,111 ------------------------------------------- Total Interest Expense 304,136 247,371 584,789 467,264 ------------------------------------------- Net Interest Income 429,888 462,073 847,365 933,392 Provision for Loan Losses 9,000 9,000 18,000 18,000 ------------------------------------------- Net Interest Income after Provision for Loan Losses 420,888 453,073 829,365 915,392 ------------------------------------------- Non-Interest Income: Mortgage Banking Income 105,769 90,680 201,841 201,775 Customer Related Fees & Service Charges 40,291 41,902 81,394 83,908 Investment Management, Commissions & Trust Fees 9,127 10,287 18,796 21,358 Other Operating Income 22,500 15,378 34,857 29,456 Securities Gains, net 4,099 10,884 10,821 15,519 Trading Losses (1) (23,223) - (21,070) - ------------------------------------------- Total Non-Interest Income 158,563 169,131 326,639 352,016 ------------------------------------------- Non-Interest Expense: Employee Compensation & Benefits 145,248 139,014 286,559 274,383 Occupancy & Equipment, net 51,254 46,949 102,546 92,903 Amortization of Identifiable Intangibles 8,859 9,133 17,718 18,266 Other Operating Expenses 55,310 54,697 112,026 110,894 Merger Related Charges - Capital One 5,233 - 5,233 - Settlement Recovery (2) (16,031) - (16,031) - ------------------------------------------- Total Non-Interest Expense 249,873 249,793 508,051 496,446 ------------------------------------------- Income Before Income Taxes 329,578 372,411 647,953 770,962 Provision for Income Taxes 108,761 130,345 217,008 269,861 ------------------------------------------- Net Income $220,817 $242,066 $ 430,945 $ 501,101 =========================================== Earnings Per Share: Basic $ 0.49 $ 0.52 $ 0.95 $ 1.07 Diluted $ 0.48 $ 0.51 $ 0.94 $ 1.06 See accompanying notes appended to the financial data and summaries. North Fork Bancorporation, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, June 30, March 31, December 31, June 30, except per share 2006 2006 2005 2005 amounts) --------------------------------------------------- Assets: Cash & Due from Banks $ 1,000,195 $ 940,045 $ 1,037,406 $ 826,921 Money Market Investments 22,295 146,962 24,843 38,023 Securities: Available-for- Sale 9,867,618 10,615,327 11,295,977 12,924,780 Held-to-Maturity 97,344 101,486 104,210 118,429 --------------------------------------------------- Total Securities 9,964,962 10,716,813 11,400,187 13,043,209 --------------------------------------------------- Loans: Loans Held-for- Sale 5,406,341 4,190,465 4,359,267 6,398,119 Loans Held-for- Investment 35,551,560 34,202,653 33,232,236 32,482,774 Less: Allowance for Loan Losses 224,571 221,256 217,939 217,872 --------------------------------------------------- Net Loans Held- for-Investment 35,326,989 33,981,397 33,014,297 32,264,902 --------------------------------------------------- Goodwill 5,918,116 5,918,116 5,918,116 5,888,195 Identifiable Intangibles 96,373 105,232 114,091 132,468 Premises & Equipment 447,633 444,546 438,040 426,099 Mortgage Servicing Rights 272,543 276,191 267,424 253,482 Accrued Income Receivable 213,492 209,458 205,892 205,678 Other Assets 712,896 776,155 837,308 908,593 --------------------------------------------------- Total Assets $59,381,835 $57,705,380 $57,616,871 $60,385,689 =================================================== Liabilities and Stockholders' Equity: Deposits: Demand $ 7,561,888 $ 7,440,561 $ 7,639,231 $ 7,586,939 Savings, NOW & Money Market 21,377,573 22,097,622 20,910,161 21,659,890 Time 7,875,144 8,155,517 8,067,181 8,219,517 --------------------------------------------------- Total Deposits 36,814,605 37,693,700 36,616,573 37,466,346 --------------------------------------------------- Federal Funds Purchased & Collateralized Borrowings 11,249,615 8,820,804 9,700,621 11,387,571 Other Borrowings 1,463,066 1,455,851 1,477,364 1,506,337 --------------------------------------------------- Total Borrowings 12,712,681 10,276,655 11,177,985 12,893,908 --------------------------------------------------- Accrued Interest Payable 135,351 128,822 102,229 81,138 Dividends Payable 116,437 115,880 116,754 105,288 Accrued Expenses & Other Liabilities 540,184 544,618 601,089 622,729 --------------------------------------------------- Total Liabilities $50,319,258 $48,759,675 $48,614,630 $51,169,409 --------------------------------------------------- Stockholders' Equity: Common Stock, par value $0.01; authorized 1,000,000,000 shares; issued 480,682,118 shares at June 30, 2006 $ 4,807 $ 4,807 $ 4,806 $ 4,792 Additional Paid in Capital 6,875,810 6,880,389 7,035,314 7,007,286 Retained Earnings 2,779,501 2,675,536 2,581,047 2,354,784 Accumulated Other Comprehensive Loss (207,161) (167,116) (108,898) (21,076) Deferred Compensation - - (154,772) (115,160) Treasury Stock at Cost, 14,934,674 shares at June 30, 2006 (390,380) (447,911) (355,256) (14,346) --------------------------------------------------- Total Stockholders' Equity 9,062,577 8,945,705 9,002,241 9,216,280 --------------------------------------------------- Total Liabilities and Stockholders' Equity $59,381,835 $57,705,380 $57,616,871 $60,385,689 =================================================== See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Selected Financial Data and Balance Sheet Components (Unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, SELECTED FINANCIAL 2006 2005 2006 2005 DATA: ------------------------------------------------ (in thousands, except ratios and per share amounts) Per Share: Net Income - Basic $0.49 $0.52 $0.95 $1.07 Net Income - Diluted $0.48 $0.51 $0.94 $1.06 Average Shares Outstanding - Basic 455,279 469,413 454,601 467,953 Average Shares Outstanding - Diluted 460,495 474,909 459,699 474,118 Cash Dividends $0.25 $0.22 $0.50 $0.44 Dividend Payout Ratio 53% 44% 54% 42% Tangible Book Value $6.54 $6.68 $6.54 $6.68 Selected Financial Data: Return on Average Total Assets 1.52% 1.58% 1.50% 1.66% Return on Average Tangible Assets (3) 1.74% 1.79% 1.72% 1.89% Return on Average Equity 9.79% 10.59% 9.65% 11.11% Return on Average Tangible Equity (3) 30.07% 31.61% 29.92% 33.71% Tangible Equity to Tangible Assets 5.71% 5.88% 5.71% 5.88% Efficiency Ratio (4) 40.69% 36.43% 43.51% 36.19% Yield on Interest Earning Assets 5.95% 5.46% 5.92% 5.49% Cost of Funds 2.96% 2.24% 2.89% 2.14% Net Interest Margin 3.53% 3.59% 3.55% 3.69% June 30, March 31, December 31, June 30, 2006 2006 2005 2005 ------------------------------------------------ Risk Based Capital: Tier 1 10.29% 10.01% 10.26% 10.50% Total 12.64% 12.40% 12.73% 13.01% Leverage Ratio 7.08% 6.86% 6.70% 6.56% June 30, March 31, December 31, June 30, 2006 2006 2005 2005 ------------------------------------------------ Quarterly Average Balance Sheet: Total Assets $58,400,693 $57,374,851 $58,232,383 $61,480,463 Securities 10,718,973 11,114,452 11,786,052 14,556,278 Loans Held-for-Sale 4,978,945 4,295,898 5,221,652 5,754,088 Loans Held-for- Investment 34,654,439 33,644,505 32,846,757 32,631,577 Goodwill & Identifiable Intangibles 6,019,964 6,028,859 6,034,399 6,024,208 Demand Deposits 7,414,598 7,337,189 7,771,142 7,290,545 Interest Bearing Deposits 29,907,110 29,606,505 29,368,629 29,670,895 Federal Funds Purchased & Collateralized Borrowings 9,845,733 9,332,211 9,740,160 13,095,195 Other Borrowings 1,454,216 1,476,106 1,484,866 1,484,336 Stockholders' Equity 9,044,461 8,971,503 9,157,876 9,170,671 Tangible Stockholders' Equity 3,024,497 2,942,644 3,123,477 3,146,463 See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Selected Financial Data and Balance Sheet Components (Unaudited) BALANCE SHEET COMPONENTS: The following table presents the composition of the securities portfolio for the periods ended: (in thousands) June 30, March 31, December 31, June 30, 2006 2006 2005 2005 ------------------------------------------------ Securities - Available-for-Sale: Collateralized Mortgage Obligations $6,215,558 $6,559,446 $6,921,074 $8,158,319 Agency Pass-Through Certificates 1,685,025 1,773,735 1,956,487 2,335,485 State & Municipal Obligations 663,997 858,651 881,238 771,349 Equity Securities 724,836 612,219 675,525 693,509 U.S. Treasury & Government Agencies 184,003 185,872 231,152 277,806 Other Securities 394,199 625,404 630,501 688,312 ------------------------------------------------ Total Securities Available-for-Sale $9,867,618 $10,615,327 $11,295,977 $12,924,780 Total Securities Held-to-Maturity 97,344 101,486 104,210 118,429 ------------------------------------------------ Total Securities $9,964,962 $10,716,813 $11,400,187 $13,043,209 ================================================ The following table presents the components of the held-for-sale and held-for-investment loan portfolios for the periods ended: (in thousands) June 30, March 31, December 31, June 30, 2006 2006 2005 2005 ------------------------------------------------ Loans Held-For-Sale: Residential Mortgages $4,319,709 $3,505,357 $3,824,547 $5,481,104 Home Equity 1,035,928 647,542 496,656 852,137 ------------------------------------------------ Total 5,355,637 4,152,899 4,321,203 6,333,241 Deferred Origination Costs 50,704 37,566 38,064 64,878 ------------------------------------------------ Total Loans Held- For-Sale $5,406,341 $4,190,465 $4,359,267 $6,398,119 ================================================ (in thousands) June 30, March 31, December 31, June 30, 2006 2006 2005 2005 ------------------------------------------------ Loans Held-For- Investment: Commercial Mortgages $7,079,501 $6,538,810 $6,206,416 $5,725,316 Commercial & Industrial 5,806,928 5,193,904 4,709,440 3,879,830 ------------------------------------------------ Total Commercial 12,886,429 11,732,714 10,915,856 9,605,146 Residential Mortgages 14,519,282 14,861,680 15,068,443 16,176,829 Multi-Family Mortgages 5,134,232 4,827,642 4,821,642 4,485,420 Consumer 1,749,383 1,619,812 1,558,782 1,521,869 Construction and Land 1,222,981 1,122,917 829,273 653,002 ------------------------------------------------ Total $35,512,307 $34,164,765 $33,193,996 $32,442,266 Deferred Origination Costs, net 39,253 37,888 38,240 40,508 ------------------------------------------------ Total Loans Held- For-Investment $35,551,560 $34,202,653 $33,232,236 $32,482,774 ================================================ See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Selected Financial Data and Balance Sheet Components (Unaudited) The following tables presents the components of non-performing assets for the periods ended: June 30, March 31, Dec. 31, June 30, (in thousands) 2006 2006 2005 2005 ------------------------------------------- Non-Performing Assets: Commercial Mortgages $ 1,833 $ 3,664 $ 498 $ 6,409 Commercial & Industrial 9,384 10,277 7,970 7,768 ------------------------------------------- Total Commercial 11,217 13,941 8,468 14,177 Residential Mortgages 14,219 24,924 19,315 63,979 Multi-Family Mortgages - 135 550 44 Consumer 1,837 1,771 2,684 2,179 Construction and Land - - - 308 ------------------------------------------- Non-Performing Loans Held-For-Investment $ 27,273 $ 40,771 $ 31,017 $ 80,687 Non-Performing Loans Held-For-Sale 27,148 31,201 13,931 45,377 Other Real Estate 3,255 5,455 4,101 14,557 ------------------------------------------- Total Non-Performing Assets $ 57,676 $ 77,427 $ 49,049 $ 140,621 =========================================== Ratios: Allowance for Loan Losses to Non-Performing Loans Held-for-Investment 823% 543% 703% 270% Allowance for Loan Losses to Total Loans Held-for- Investment 0.63% 0.65% 0.66% 0.67% Non-Performing Loans to Total Loans Held-for- Investment 0.08% 0.12% 0.09% 0.25% Non-Performing Assets to Total Assets 0.10% 0.13% 0.09% 0.23% Quarterly Net Charge-offs to Average Loans Held- for-Investment 0.07% 0.07% 0.14% 0.08% The following table presents the impact of allocating the allowance for loan losses as of June 30, 2006 into our two primary portfolio segments: June 30, 2006 -------------------------------------- Residential Commercial & & All Other (dollars in thousands) Total Multi-Family Loans -------------------------------------- Loans Held-for-Investment $35,551,560 $19,692,767 $15,858,793 Allowance for Loan Losses 224,571 61,223 163,348 Non-Performing Loans Held-for- Investment 27,273 14,219 13,054 Allowance for Loan Losses to Loans-Held-for-Investment 0.63% 0.31% 1.03% ====================================== Allowance for Loan Losses to Non-Performing Loans Held-for-Investment 823% 431% 1251% ====================================== See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Net Interest Margin Analysis (Unaudited) The following table presents on a linked quarter basis, an analysis of net interest income by each major category of interest earning assets and interest bearing liabilities: For the Three Months Ended: June 30, 2006 ------------------------------ Average Average (dollars in thousands ) Balance Interest Rate ------------------------------ Interest Earning Assets: Loans Held-for-Investment $34,654,439 $534,972 6.19% Loans Held-for-Sale 4,978,945 76,088 6.13% Securities 10,718,973 136,500 5.11% Money Market Investments 47,343 670 5.68% ---------------------- Total Interest Earning Assets 50,399,700 748,230 5.95% ---------------------- Non-Interest Earning Assets: Cash and Due from Banks $999,159 Other Assets 7,001,834 ------------ Total Assets $58,400,693 ============ Interest Bearing Liabilities: Savings, NOW & Money Market Deposits $21,707,006 $134,731 2.49% Time Deposits 8,200,104 59,658 2.92% ---------------------- Total Savings and Time Deposits 29,907,110 194,389 2.61% Fed. Funds Purchased & Collateralized Borrowings 9,845,733 89,628 3.65% Other Borrowings 1,454,216 20,119 5.55% ---------------------- Total Borrowings 11,299,949 109,747 3.90% ---------------------- Total Interest Bearing Liabilities 41,207,059 304,136 2.96% ---------------------- Interest Rate Spread 2.99% Non-Interest Bearing Liabilities: Demand Deposits $7,414,598 Other Liabilities 734,575 ------------ Total Liabilities 49,356,232 Stockholders' Equity 9,044,461 ------------ Total Liabilities and Stockholders' Equity $58,400,693 ============ Net Interest Income and Net Interest Margin $444,094 3.53% Less: Tax Equivalent Adjustment (14,206) --------- Net Interest Income $429,888 ========= For the Three Months Ended: March 31, 2006 ------------------------------ Average Average (dollars in thousands ) Balance Interest Rate ------------------------------ Interest Earning Assets: Loans Held-for-Investment $33,644,505 $508,485 6.13% Loans Held-for-Sale 4,295,898 63,692 6.01% Securities 11,114,452 139,340 5.08% Money Market Investments 45,410 603 5.39% ---------------------- Total Interest Earning Assets 49,100,265 712,120 5.88% ---------------------- Non-Interest Earning Assets: Cash and Due from Banks $1,055,709 Other Assets 7,218,877 ------------ Total Assets $57,374,851 ============ Interest Bearing Liabilities: Savings, NOW & Money Market Deposits $21,500,679 $117,433 2.22% Time Deposits 8,105,826 59,790 2.99% ---------------------- Total Savings and Time Deposits 29,606,505 177,223 2.43% Fed. Funds Purchased & Collateralized Borrowings 9,332,211 83,474 3.63% Other Borrowings 1,476,106 19,956 5.48% ---------------------- Total Borrowings 10,808,317 103,430 3.88% ---------------------- Total Interest Bearing Liabilities 40,414,822 280,653 2.82% ---------------------- Interest Rate Spread 3.06% Non-Interest Bearing Liabilities: Demand Deposits $7,337,189 Other Liabilities 651,337 ------------ Total Liabilities 48,403,348 Stockholders' Equity 8,971,503 ------------ Total Liabilities and Stockholders' Equity $57,374,851 ============ Net Interest Income and Net Interest Margin $431,467 3.56% Less: Tax Equivalent Adjustment (13,990) --------- Net Interest Income $417,477 ========= See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Mortgage Banking - Quarterly Highlights (Unaudited) The following table presents the components of the mortgage origination and sale volume for the periods indicated: Quarterly Highlights -------------------------------------- (Dollars in thousands) June 30, March 31, December 31, Comparative Mortgage Loan 2006 2006 2005 Volumes -------------------------------------- Total Applications Received $18,409,983 $15,278,074 $15,613,973 ====================================== Loans Originated: Specialty Products (a) $4,861,775 $4,034,289 $4,787,403 Home Equity 1,281,321 1,002,615 1,114,617 Jumbo/Agency 3,746,581 2,734,867 3,488,135 -------------------------------------- Total Loans Originated $9,889,677 $7,771,771 $9,390,155 ====================================== Pipeline (b) $6,246,558 $5,722,902 $5,325,629 Interest Rate Lock Commitments (c) 2,670,377 2,498,841 2,386,809 Loans Held-for-Sale 5,406,341 4,190,165 4,359,267 Loans Sales (3): Specialty Products $4,162,568 $4,032,031 $4,570,651 Home Equity 755,613 916,017 865,665 Jumbo/Agency 2,925,437 2,188,749 3,277,851 -------------------------------------- Total Loan Sales $7,843,618 $7,136,797 $8,714,167 ====================================== Average Margin on Loan Sales: Specialty Products 1.64% 1.23% 1.18% Home Equity 1.25% 1.69% 1.49% Jumbo/Agency 0.84% 0.77% 0.76% -------------------------------------- Average Margin on Loan Sales 1.30% 1.15% 1.05% ====================================== Gains on Sale of Loans: (3) Specialty Products $68,419 $49,426 $53,867 Home Equity 9,413 15,499 12,929 Jumbo/Agency 24,484 16,824 24,819 -------------------------------------- Total Gain on Sale of Loans (d) $102,316 $81,749 $91,615 ====================================== Quarterly Highlights ------------------------- (Dollars in thousands) Sept. 30, June 30, Comparative Mortgage Loan 2005 2005 Volumes ------------------------- Total Applications Received $17,254,701 $21,195,474 ========================= Loans Originated: Specialty Products (a) $4,827,831 $5,302,469 Home Equity 1,280,684 1,566,306 Jumbo/Agency 4,302,550 5,553,487 ------------------------- Total Loans Originated $10,411,065 $12,422,262 ========================= Pipeline (b) $6,376,081 $7,594,398 Interest Rate Lock Commitments (c) 2,349,097 2,891,179 Loans Held-for-Sale 4,701,550 6,398,119 Loans Sales (3): Specialty Products $5,061,097 $4,394,898 Home Equity 1,500,767 1,466,771 Jumbo/Agency 4,381,960 3,240,177 ------------------------- Total Loan Sales $10,943,824 $9,101,846 ========================= Average Margin on Loan Sales: Specialty Products 1.13% 1.35% Home Equity 1.88% 2.05% Jumbo/Agency 0.65% 0.92% ------------------------- Average Margin on Loan Sales 1.04% 1.31% ========================= Gains on Sale of Loans: (3) Specialty Products $56,956 $59,455 Home Equity 28,172 30,139 Jumbo/Agency 28,459 29,655 ------------------------- Total Gain on Sale of Loans (d) $113,587 $119,249 ========================= (a) Specialty products include: Alt A, No Doc and A minus programs. (b) The pipeline represents applications received, but not funded. (c) Represents commitments to lend where the rates are guaranteed to the borrower for specific period of time. (d) Gain on sale of loans for June 30, 2005 differed from amounts reported under generally accepted accounting principles due to a fair value adjustment on loans held-for-sale totaling $(1.3) million See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Mortgage Banking - Quarterly Highlights (Unaudited) The table below presents the components of mortgage banking income for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2006 2005 2006 2005 --------------------------------------- Gain on Sale of Loans Held- for-Sale (a) $102,316 $120,576 $184,064 $225,944 Mortgage Banking Fees, net 22,366 25,666 44,596 51,382 Amortization of Mortgage Servicing Rights (21,814) (20,591) (45,412) (40,580) Temporary (Impairment Charge)/Recovery - Mortgage Servicing Rights 2,901 (34,971) 18,593 (34,971) --------------------------------------- Total Mortgage Banking Income $105,769 $90,680 $201,841 $201,775 ======================================= (a) Gain on sale margins on loan sales include the impact of the valuation of mortgage loans held-for-sale and interest rate lock commitments, valuation of derivatives utilized to manage interest rate risk associated with mortgage loan commitments and mortgage loans held-for-sale, and adjustments related to reserves established for representations and warranties. See accompanying notes appended to the financial data and summaries North Fork Bancorporation, Inc. Notes to the Financial Data and Summaries (1) We have reviewed our accounting treatment for all derivative transactions and determined that certain transactions did not meet the strict requirements of the "short cut" method of accounting under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". As a result, hedge accounting was not appropriate for these transactions since inception and have been reclassified as trading instruments a component of other assets on the accompanying balance sheet. The cumulative market value fluctuation of these derivatives upon reclassification has been recorded as trading losses on the accompanying statement of income. (2) Represents a release of certain accrued liabilities on corporate guarantees pertaining to the discontinued manufactured housing business we acquired from GreenPoint. (3) This press release contains certain supplemental financial information, described in the following notes, which has been determined by methods other than Generally Accepted Accounting Principles ("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. 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, plus amortization of identifiable intangible assets, net of taxes by average total assets less average goodwill and average identifiable intangible assets. -- Return on average tangible equity is computed by dividing net income, plus amortization of identifiable intangible assets, net of taxes by average total stockholders' equity less average goodwill and average identifiable intangible assets. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (dollars in 2006 2005 2006 2005 thousands) --------------------------------------------------- Net Income, as Reported $220,817 $242,066 $430,945 $501,101 Add: Amortization of Identifiable Intangible Assets, Net of Taxes 5,936 5,937 11,784 11,873 --------------------------------------------------- Net Income, as Adjusted $226,753 $248,003 $442,729 $512,974 =================================================== Average Total Assets $58,400,693 $61,480,463 $57,890,605 $60,847,190 Less: Average Goodwill 5,918,116 5,886,175 5,918,116 5,883,049 Less: Average Identifiable Intangible Assets 101,848 138,033 106,271 142,789 --------------------------------------------------- Average Total Tangible Assets $52,380,729 $55,456,255 $51,866,218 $54,821,352 =================================================== Average Stockholders' Equity $9,044,461 $9,170,671 $9,008,184 $9,094,438 Less: Average Goodwill 5,918,116 5,886,175 5,918,116 5,883,049 Less: Average Identifiable Intangible Assets 101,848 138,033 106,271 142,789 --------------------------------------------------- Average Total Tangible Stockholders' Equity $3,024,497 $3,146,463 $2,983,797 $3,068,600 =================================================== Return on Average Tangible Assets 1.74% 1.79% 1.72% 1.89% Return on Average Tangible Stockholders' Equity 30.07% 31.61% 29.92% 33.71% (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, manufactured housing recourse settlement and merger expenses to net interest income on a tax equivalent basis and other non-interest income net of securities gains/(losses), (temporary impairment)/recovery on mortgage servicing rights and trading losses on derivative instruments. *T