Edgar Filing: NEW YORK COMMUNITY BANCORP INC

Form 10-Q

UNITED STATES

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 QUARTERLY PERIOD ENDED MARCH 31, 2012

Commission File Number 1-31565

NEW YORK COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

06-1377322

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

615 Merrick Avenue, Westbury, New York 11590

(Address of principal executive offices)

(Registrant’s telephone number, including area code) (516) 683-4100

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer X Accelerated Filer Non-accelerated Filer Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

439,125,183

Number of shares of common stock outstanding at

May 3, 2012

NEW YORK COMMUNITY BANCORP, INC.

FORM 10-Q

Quarter Ended March 31, 2012


INDEX		Page No.

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Condition as of March 31, 2012 (unaudited) and December 31, 2011	1

	Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2012 and 2011 (unaudited)	2

	Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2012 (unaudited)	3

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 (unaudited)	4

	Notes to the Unaudited Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	82

Item 4.	Controls and Procedures	82

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	83

Item 1A.	Risk Factors	83

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83

Item 3.	Defaults Upon Senior Securities	83

Item 4.	Mine Safety Disclosures	83

Item 5.	Other Information	83

Item 6.	Exhibits	84

Signatures		85

Exhibits

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION

(in thousands, except share data)


	March 31, 2012		December 31, 2011
	(unaudited)
Assets:
Cash and cash equivalents	$	2,355,784	$	2,001,737
Securities:
Available-for-sale ($441,263 and $590,488 pledged, respectively)		572,738		724,662
Held to maturity ($3,745,210 and $3,610,172 pledged, respectively) (fair value of $4,464,401 and $3,966,185, respectively)		4,305,071		3,815,854

Total securities		4,877,809		4,540,516

Non-covered loans held for sale		504,351		1,036,918
Non-covered loans held for investment, net of deferred loan fees and costs		26,559,599		25,532,818
Less: Allowance for losses on non-covered loans		(136,767)		(137,290)

Non-covered loans held for investment, net		26,422,832		25,395,528
Covered loans		3,643,801		3,753,031
Less: Allowance for losses on covered loans		(33,323)		(33,323)

Covered loans, net		3,610,478		3,719,708

Total loans, net		30,537,661		30,152,154
Federal Home Loan Bank stock, at cost		504,398		490,228
Premises and equipment, net		250,656		250,859
FDIC loss share receivable		658,409		695,179
Goodwill		2,436,131		2,436,131
Core deposit intangibles, net		46,508		51,668
Mortgage servicing rights		140,275		117,012
Bank-owned life insurance		771,508		768,996
Other real estate owned (includes $57,679 and $71,400, respectively, covered by loss sharing agreements)		118,569		155,967
Other assets		340,443		363,855

Total assets	$	43,038,151	$	42,024,302

Liabilities and Stockholders’ Equity:
Deposits:
NOW and money market accounts	$	8,875,585	$	8,757,198
Savings accounts		4,054,011		3,953,859
Certificates of deposit		7,499,822		7,373,263
Non-interest-bearing accounts		2,511,375		2,189,810

Total deposits		22,940,793		22,274,130
Borrowed funds:
Wholesale borrowings:
Federal Home Loan Bank advances		9,629,849		9,314,193
Repurchase agreements		4,125,000		4,125,000

Total wholesale borrowings		13,754,849		13,439,193
Junior subordinated debentures		426,982		426,936
Other borrowings		94,293		94,284

Total borrowed funds		14,276,124		13,960,413
Other liabilities		241,293		224,055

Total liabilities		37,458,210		36,458,598

Stockholders’ equity:
Preferred stock at par $0.01 (5,000,000 shares authorized; none issued)		--		--
Common stock at par $0.01 (600,000,000 shares authorized; 439,133,951 and 437,426,665 shares issued, and 439,133,548 and 437,344,796 shares outstanding, respectively)		4,391		4,374
Paid-in capital in excess of par		5,310,591		5,309,269
Retained earnings		333,666		324,967
Treasury stock, at cost (403 and 81,869 shares)		(5)		(996)
Accumulated other comprehensive loss, net of tax:
Net unrealized gain on securities available for sale, net of tax		2,969		1,321
Net unrealized loss on the non-credit portion of other-than-temporary impairment (“OTTI”) losses on securities, net of tax		(13,604)		(13,627)
Net unrealized loss on pension and post-retirement obligations, net of tax		(58,067)		(59,604)

Total accumulated other comprehensive loss, net of tax		(68,702)		(71,910)

Total stockholders’ equity		5,579,941		5,565,704

Total liabilities and stockholders’ equity	$	43,038,151	$	42,024,302

See accompanying notes to the consolidated financial statements.

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)


	For the Three Months Ended March 31,
	2012		2011
INTEREST INCOME:
Mortgage and other loans		$398,184		$415,942
Securities and money market investments		48,454		54,981

Total interest income		446,638		470,923


INTEREST EXPENSE:
NOW and money market accounts		8,733		11,154
Savings accounts		3,496		4,127
Certificates of deposit		23,720		26,974
Borrowed funds		122,275		125,416

Total interest expense		158,224		167,671

Net interest income		288,414		303,252
Provision for losses on non-covered loans		15,000		26,000

Net interest income after provision for loan losses		273,414		277,252


NON-INTEREST INCOME:
Fee income		9,758		11,899
Bank-owned life insurance		9,585		6,889
Net gain on sales of securities		718		9,992
Mortgage banking income		35,165		19,938
Other income		6,770		9,892

Total non-interest income		61,996		58,610


NON-INTEREST EXPENSE:
Operating expenses:
Compensation and benefits		73,617		72,068
Occupancy and equipment		21,884		21,940
General and administrative		49,517		45,309

Total operating expenses		145,018		139,317
Amortization of core deposit intangibles		5,159		7,385

Total non-interest expense		150,177		146,702

Income before income taxes		185,233		189,160
Income tax expense		66,980		65,984

Net income		$118,253		$123,176

Other comprehensive income (loss), net of tax:
Change in net unrealized gain/loss on securities available for sale, net of tax of $1,377 and $2,578, respectively		2,091		(3,837)
Amortization of the non-credit portion of OTTI losses recognized in other comprehensive income, net of tax of $15 and $14, respectively		23		20
Change in pension and post-retirement obligations, net of tax of $1,042 and $501, respectively		1,537		744
Less: Reclassification adjustment for sales of available for sale securities, net of tax of $275 and $1,178, respectively		(443)		(1,753)

Total other comprehensive income (loss), net of tax		3,208		(4,826)

Total comprehensive income, net of tax		$121,461		$118,350


Basic earnings per share		$0.27		$0.28

Diluted earnings per share		$0.27		$0.28

See accompanying notes to the consolidated financial statements.

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Three Months Ended March 31, 2012
Common Stock (Par Value: $0.01):
Balance at beginning of year		$	4,374
Shares issued for restricted stock awards (1,707,286 shares)			17

Balance at end of period			4,391


Paid-in Capital in Excess of Par:
Balance at beginning of year			5,309,269
Shares issued for restricted stock awards, net of forfeitures			(3,395)
Compensation expense related to restricted stock awards			5,071
Tax effect of stock plans			(354)

Balance at end of period			5,310,591


Retained Earnings:
Balance at beginning of year			324,967
Net income			118,253
Dividends paid on common stock ($0.25 per share)			(109,554)

Balance at end of period			333,666


Treasury Stock:
Balance at beginning of year			(996)
Purchase of common stock (187,609 shares)			(2,425)
Shares issued for restricted stock awards (269,075 shares)			3,416

Balance at end of period			(5)


Accumulated Other Comprehensive Loss, net of tax:
Balance at beginning of year			(71,910)
Other comprehensive income, net of tax			3,208

Balance at end of period			(68,702)

Total stockholders’ equity		$	5,579,941

See accompanying notes to the consolidated financial statements.

NEW YORK COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2012		2011
Cash Flows from Operating Activities:
Net income		$ 118,253		$ 123,176
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		15,000		26,000
Depreciation and amortization		6,005		5,891
Amortization of premiums, net		(216)		278
Amortization of core deposit intangibles		5,159		7,385
Net gain on sale of securities		(718)		(9,992)
Net gain on sale of loans		(40,014)		(15,902)
Stock plan-related compensation		5,109		3,612
Changes in assets and liabilities:
Decrease in deferred tax asset, net		9,360		16,625
Decrease in other assets		60,249		16,703
Increase (decrease) in other liabilities		19,818		(29,408)
Origination of loans held for sale		(2,487,034)		(1,500,836)
Proceeds from sale of loans originated for sale		3,030,905		2,211,232

Net cash provided by operating activities		741,876		854,764

Cash Flows from Investing Activities:
Proceeds from repayment of securities held to maturity		250,495		224,978
Proceeds from repayment of securities available for sale		154,624		51,551
Proceeds from sale of securities held to maturity		--		227,039
Proceeds from sale of securities available for sale		240,218		103,956
Purchase of securities held to maturity		(739,371)		(613,191)
Purchase of securities available for sale		(239,500)		--
Net (purchase) redemption of Federal Home Loan Bank stock		(14,170)		23,283
Net increase in loans		(904,364)		(193,966)
Purchase of premises and equipment, net		(5,802)		(19,172)

Net cash used in investing activities		(1,257,870)		(195,522)

Cash Flows from Financing Activities:
Net increase in deposits		666,663		389,095
Net increase (decrease) in short-term borrowed funds		318,000		(500,000)
Net decrease in long-term borrowed funds		(2,289)		(16,554)
Tax effect of stock plans		(354)		1,639
Cash dividends paid on common stock		(109,554)		(109,154)
Treasury stock purchases		(2,425)		(2,381)
Net cash received from stock option exercises		--		2,300

Net cash provided by (used in) financing activities		870,041		(235,055)

Net increase in cash and cash equivalents		354,047		424,187
Cash and cash equivalents at beginning of period		2,001,737		1,927,542

Cash and cash equivalents at end of period		$2,355,784		$2,351,729

Supplemental information:
Cash paid for interest		$161,951		$171,491
Cash paid for (received from) income taxes		39,746		(10,134)
Non-cash investing and financing activities:
Transfers to other real estate owned from loans		33,263		46,218

See accompanying notes to the consolidated financial statements.

NEW YORK COMMUNITY BANCORP, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Formerly known as Queens County Bancorp, Inc., New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank and New York Commercial Bank (hereinafter referred to as the “Community Bank” and the “Commercial Bank,” respectively, and collectively as the “Banks”). In addition, for the purpose of these Consolidated Financial Statements, the “Community Bank” and the “Commercial Bank” refer not only to the respective banks but also to their respective subsidiaries.

The Community Bank is the primary banking subsidiary of the Company. Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Community Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, on which date the Company completed its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share. The Commercial Bank was established on December 30, 2005.

Reflecting nine stock splits, the Company’s initial offering price adjusts to $0.93 per share. All share and per share data presented in this report have been adjusted to reflect the impact of the stock splits.

The Company changed its name to New York Community Bancorp, Inc. on November 21, 2000 in anticipation of completing the first of eight business combinations that expanded its footprint well beyond Queens County to encompass all five boroughs of New York City, Long Island, and Westchester County in New York, and seven counties in the northern and central parts of New Jersey. The Company expanded beyond this region to south Florida, northeast Ohio, and central Arizona through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of AmTrust Bank (“AmTrust”) in December 2009, and extended its Arizona franchise through its FDIC-assisted acquisition of certain assets and assumption of certain liabilities of Desert Hills Bank (“Desert Hills”) in March 2010.

Reflecting this strategy of growth through acquisitions, the Community Bank currently operates 242 branches, four of which operate directly under the Community Bank name. The remaining 238 branches operate through seven divisional banks—Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank (in New York), Garden State Community Bank in New Jersey, AmTrust Bank in Florida and Arizona, and Ohio Savings Bank in Ohio.

The Commercial Bank currently operates 34 branches in Manhattan, Queens, Brooklyn, Westchester County, and Long Island (all in New York), including 17 branches that operate under the name “Atlantic Bank.”

Basis of Presentation

The following is a description of the significant accounting and reporting policies that the Company and its wholly-owned subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowances for loan losses; the valuation of loans held for sale; the evaluation of goodwill for impairment; the evaluation of other-than-temporary impairment (“OTTI”) on securities; and the evaluation of the need for a valuation allowance on the Company’s deferred tax assets. The current economic environment has increased the degree of uncertainty inherent in these material estimates.

The unaudited consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated

in consolidation. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2011 Annual Report on Form 10-K. The Company currently has unconsolidated subsidiaries in the form of nine wholly-owned statutory business trusts, which were formed to issue guaranteed capital debentures (“capital securities”). Please see Note 6, “Borrowed Funds,” for additional information regarding these trusts.

When necessary, certain reclassifications have been made to prior-year amounts to conform to the current-year presentation.

Note 2. Computation of Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock.

Unvested stock-based compensation awards containing non-forfeitable rights to dividends are considered participating securities and therefore are included in the two-class method for calculating EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The Company grants restricted stock to certain employees under its stock-based compensation plans. Recipients receive cash dividends during the vesting periods of these awards (i.e., including on the unvested portion of such awards). Since these dividends are non-forfeitable, the unvested awards are considered participating securities and have earnings allocated to them.

The following table presents the Company’s computation of basic and diluted EPS for the periods indicated:


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2012		2011
Net income		$118,253		$123,176
Less: Dividends paid on, and earnings allocated to, participating securities		(1,089)		(890)

Earnings applicable to common stock		$117,164		$122,286


Weighted average common shares outstanding		437,467,859		435,563,415

Basic earnings per common share		$0.27		$0.28


Earnings applicable to common stock		$117,164		$122,286


Weighted average common shares outstanding		437,467,859		435,563,415
Potential dilutive common shares⁽¹⁾		5,330		849,934

Total shares for diluted earnings per share computation		437,473,189		436,413,349

Diluted earnings per common share and common share equivalents		$0.27		$0.28

(1)

Options to purchase 5,247,328 and 2,617,993 shares, respectively, of the Company’s common stock that were outstanding as of March 31, 2012 and 2011, at respective weighted average exercise prices of $15.70 and $19.29, were excluded from the respective computations of diluted EPS because their inclusion would have had an antidilutive effect.

Note 3. Securities

The following table summarizes the Company’s portfolio of securities available for sale at March 31, 2012:


	March 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE⁽¹⁾ certificates		$ 94,897		$ 5,532		$ 1		$100,428
GSE CMOs⁽²⁾		62,338		2,540		--		64,878
Private label CMOs		23,652		6		--		23,658

Total mortgage-related securities		$180,887		$ 8,078		$ 1		$188,964

Other Securities:
GSE debentures		$306,964		$ 1,102		$ 664		$307,402
State, county, and municipal		1,190		104		--		1,294
Capital trust notes		36,490		1,793		5,065		33,218
Preferred stock		--		188		--		188
Common stock		42,852		867		2,047		41,672

Total other securities		$387,496		$ 4,054		$7,776		$383,774

Total securities available for sale⁽³⁾		$568,383		$12,132		$7,777		$572,738

(1)	Government-sponsored enterprises

(2)	Collateralized mortgage obligations

(3)	The non-credit portion of OTTI recorded in Accumulated Other Comprehensive Loss (“AOCL”) was $570,000 (before taxes).

As of March 31, 2012, the fair value of marketable equity securities included common stock of $41.7 million and Freddie Mac preferred stock of $188,000. Common stock primarily consisted of an investment in a large cap equity fund and certain other funds that are Community Reinvestment Act (“CRA”) eligible. The Freddie Mac preferred stock was recognized by the Company as other-than-temporarily impaired in the fourth quarter of 2008.

The following table summarizes the Company’s portfolio of securities available for sale at December 31, 2011:


	December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE certificates		$ 97,642		$ 5,013		$ 10		$102,645
GSE CMOs		62,373		2,903		--		65,276
Private label CMOs		25,306		--		1,265		24,041

Total mortgage-related securities		$185,321		$ 7,916		$ 1,275		$191,962

Other Securities:
GSE debentures		$456,969		$ 1,797		$ --		$458,766
State, county, and municipal		1,188		97		--		1,285
Capital trust notes		36,754		141		4,692		32,203
Preferred stock		--		195		--		195
Common stock		42,863		1,604		4,216		40,251

Total other securities		$537,774		$ 3,834		$ 8,908		$532,700

Total securities available for sale⁽¹⁾		$723,095		$11,750		$10,183		$724,662

(1)	The non-credit portion of OTTI recorded in AOCL was $570,000 (before taxes).

The following tables summarize the Company’s portfolio of securities held to maturity at March 31, 2012 and December 31, 2011:


	March 31, 2012
(in thousands)	Amortized Cost		Carrying Amount		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE certificates		$ 694,550		$ 694,550		$ 49,358		$ --		$ 743,908
GSE CMOs		2,381,285		2,381,285		89,195		686		2,469,794
Other mortgage-related securities		3,341		3,341		--		--		3,341

Total mortgage-related securities		$3,079,176		$3,079,176		$138,553		$ 686		$3,217,043

Other Securities:
GSE debentures		$1,039,580		$1,039,580		$ 12,751		$ 73		$1,052,258
Corporate bonds		54,779		54,779		7,667		11		62,435
Capital trust notes		153,234		131,536		17,374		16,245		132,665

Total other securities		$1,247,593		$1,225,895		$ 37,792		$16,329		$1,247,358

Total securities held to maturity⁽¹⁾		$4,326,769		$4,305,071		$176,345		$17,015		$4,464,401

(1)	Held-to-maturity securities are reported at a carrying amount equal to amortized cost less the non-credit portion of OTTI recorded in AOCL. The non-credit portion of OTTI recorded in AOCL was $21.7 million (before taxes).


	December 31, 2011
(in thousands)	Amortized Cost		Carrying Amount		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE certificates		$ 660,945		$ 660,945		$ 47,064		$ --		$ 708,009
GSE CMOs		2,331,916		2,331,916		93,216		--		2,425,132
Other mortgage-related securities		3,379		3,379		--		--		3,379

Total mortgage-related securities		$2,996,240		$2,996,240		$140,280		$ --		$3,136,520

Other Securities:
GSE debentures		$ 633,258		$ 633,258		$ 14,878		$ 146		$ 647,990
Corporate bonds		54,759		54,759		2,826		12		57,573
Capital trust notes		153,334		131,597		12,362		19,857		124,102

Total other securities		$ 841,351		$ 819,614		$ 30,066		$20,015		$ 829,665

Total securities held to maturity⁽¹⁾		$3,837,591		$3,815,854		$170,346		$20,015		$3,966,185

(1)	The non-credit portion of OTTI recorded in AOCL was $21.7 million (before taxes).

The Company had $504.4 million and $490.2 million of Federal Home Loan Bank (“FHLB”) stock, at cost, at March 31, 2012 and December 31, 2011, respectively. The Company is required to maintain this investment in order to have access to funding resources provided by the FHLB.

The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of available-for-sale securities during the three months ended March 31, 2012 and 2011:


	For the Three Months Ended March 31,
(in thousands)	2012	2011
Gross proceeds	$240,218	$103,956
Gross realized gains	718	2,931
Gross realized losses	--	11

In addition, during the three months ended March 31, 2011, the Company sold held-to-maturity securities with gross proceeds of $227.0 million and gross realized gains of $7.1 million. These sales occurred because the Company had either collected a substantial portion (at least 85%) of the initial principal balance or because there was evidence of significant deterioration in the issuers’ creditworthiness.

The $165.9 million market value of the capital trust note portfolio at March 31, 2012 included three pooled trust preferred securities. The following table details the pooled trust preferred securities that had at least one credit rating below investment grade as of March 31, 2012:


	INCAPS Funding I			Alesco Preferred Funding VII Ltd.			Preferred Term Securities II
(dollars in thousands)	Class B-2 Notes			Class C-1 Notes			Mezzanine Notes
Book value		$14,964			$ 553			$579
Fair value		16,598			210			638
Unrealized gain (loss)		1,634			(343	)		59
Lowest credit rating assigned to security		CCC-			C			C
Number of banks/insurance companies currently performing		24			58			24
Actual deferrals and defaults as a percentage of original collateral		11	%		35	%		36	%
Expected deferrals and defaults as a percentage of remaining performing collateral		24			25			19
Expected recoveries as a percentage of remaining performing collateral		--			--			2
Excess subordination as a percentage of remaining performing collateral		12			--			--

As of March 31, 2012, after taking into account the Company’s best estimates of future deferrals, defaults, and recoveries, two of its pooled trust preferred securities had no excess subordination in the classes it owns and one had excess subordination of 12%. Excess subordination is calculated after taking into account the deferrals, defaults, and recoveries noted in the table above, and indicates whether there is sufficient additional collateral to cover the outstanding principal balance of the class owned, after taking into account these projected deferrals, defaults, and recoveries.

As the following table indicates, there was no activity from December 31, 2011 through March 31, 2012 in the credit loss component of OTTI on debt securities for which a non-credit component of OTTI was recognized in AOCL. The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to January 1, 2012. For credit-impaired debt securities, OTTI recognized in earnings after that date is presented as an addition in two components, based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment) or is not the first time a debt security was credit-impaired (subsequent credit impairment).


(in thousands)	For the Three Months Ended March 31, 2012
Beginning credit loss amount as of December 31, 2011		$219,978
Add: Initial other-than-temporary credit losses		--
Subsequent other-than-temporary credit losses		--
Amount previously recognized in AOCL		--
Less: Realized losses for securities sold		--
Securities intended or required to be sold		--
Increases in expected cash flows on debt securities		--

Ending credit loss amount as of March 31, 2012		$219,978

The following table summarizes the carrying amounts and estimated fair values of held-to-maturity debt securities, and the amortized costs and estimated fair values of available-for-sale debt securities, at March 31, 2012 by contractual maturity. Mortgage-related securities held to maturity and available for sale, all of which have prepayment provisions, are distributed to a maturity category based on the ends of the estimated average lives of such securities. Principal and amortization prepayments are not shown in maturity categories as they occur, but are considered in the determination of estimated average life.


	Carrying Amount at March 31, 2012
(dollars in thousands)	Mortgage- Related Securities		Average Yield		U.S. Treasury and GSE Obligations		Average Yield		State, County, and Municipal		Average Yield⁽¹⁾		Other Debt Securities⁽²⁾		Average Yield		Fair Value
Held-to-Maturity Securities:
Due within one year		$ --		--%		$ --		--%		$ --		--%		$ 23,992		5.80%		$ 24,301
Due from one to five years		--		--		--		--		--		--		--		--		--
Due from five to ten years		1,045,522		3.59		989,580		3.39		--		--		--		--		2,113,638
Due after ten years		2,033,654		3.81		50,000		3.00		--		--		162,323		7.00		2,326,462

Total debt securities held to maturity		$3,079,176		3.74%		$1,039,850		3.37%		$ --		--%		$186,315		6.85%		$4,464,401


Available-for-Sale Securities: ⁽³⁾
Due within one year		$ --		--%		$ --		--%		$ 125		5.63%		$ --		--%		$ 128
Due from one to five years		8,799		7.22		--		--		509		6.21		--		--		9,882
Due from five to ten years		73,306		3.55		306,380		3.35		556		6.56		--		--		385,292
Due after ten years		98,782		4.06		584		2.75		--		--		36,490		4.74		135,576

Total debt securities available for sale		$ 180,887		4.01%		$ 306,964		3.35%		$1,190		6.31%		$ 36,490		4.74%		$ 530,878

(1)	Not presented on a tax-equivalent basis.

(2)

Includes corporate bonds and capital trust notes. Included in capital trust notes are $15.5 million and $579,000 of pooled trust preferred securities available for sale and held to maturity, respectively, all of which are due after ten years. The remaining capital trust notes consist of single-issue trust preferred securities.

(3)	As equity securities have no contractual maturity, they have been excluded from this table.

At March 31, 2012, the Company had commitments to purchase $282.0 million of securities, all of which were GSE securities.

The following tables present held-to-maturity and available-for-sale securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of March 31, 2012:


At March 31, 2012	Less than Twelve Months				Twelve Months or Longer				Total
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Held-to-Maturity Debt Securities:
GSE debentures		$ 65,867		$ 73		$ --		$ --		$ 65,867		$ 73
GSE CMOs		91,737		686		--		--		91,737		686
Corporate bonds		4,989		11		--		--		4,989		11
Capital trust notes		--		--		72,086		16,245		72,086		16,245

Total temporarily impaired held-to-maturity debt securities		$162,593		$ 770		$72,086		$16,245		$234,679		$ 17,015


Temporarily Impaired Available-for-Sale Securities:
Debt Securities:
GSE certificates		$ 96		$ 1		$ --		$ --		$ 96		$ 1
GSE debentures		59,336		664		--		--		59,336		664
Capital trust notes		1,237		370		9,445		4,695		10,682		5,065

Total temporarily impaired available-for-sale debt securities		$ 60,669		$1,035		$ 9,445		$ 4,695		$ 70,114		$ 5,730
Equity securities		--		--		28,867		2,047		28,867		2,047

Total temporarily impaired available-for-sale securities		$ 60,669		$1,035		$38,312		$ 6,742		$ 98,981		$ 7,777

The twelve months or longer unrealized losses on equity securities of $2.0 million at March 31, 2012 relate to available-for-sale equity securities that primarily consisted of a large cap equity fund at that date. The twelve months or longer unrealized loss on this large cap equity fund was $1.6 million.


At December 31, 2011	Less than Twelve Months				Twelve Months or Longer				Total
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Held-to-Maturity Debt Securities:
GSE debentures		$62,601		$ 146		$ --		$ --		$ 62,601		$ 146
GSE certificates		--		--		--		--		--		--
GSE CMOs		--		--		--		--		--		--
Corporate bonds		4,987		12		--		--		4,987		12
Capital trust notes		971		43		68,570		19,814		69,541		19,857

Total temporarily impaired held-to-maturity debt securities		$68,559		$ 201		$68,570		$19,814		$137,129		$20,015


Temporarily Impaired Available-for-Sale Securities:
Debt Securities:
GSE certificates		$ 181		$ 9		$ 13		$ 1		$ 194		$ 10
Private label CMOs		24,041		1,265		--		--		24,041		1,265
Corporate bonds		--		--		--		--		--		--
State, county, and municipal		--		--		--		--		--		--
Capital trust notes		15,154		363		9,810		4,329		24,964		4,692

Total temporarily impaired available-for-sale debt securities		$39,376		$1,637		$ 9,823		$ 4,330		$ 49,199		$ 5,967
Equity securities		784		40		26,651		4,176		27,435		4,216

Total temporarily impaired available-for-sale securities		$40,160		$1,677		$36,474		$ 8,506		$ 76,634		$10,183

An OTTI loss on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security, it must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss occurs, only the amount of impairment associated with the credit loss is recognized in earnings. Amounts relating to factors other than credit losses are recorded in AOCL. Financial Accounting Standards Board (“FASB”) guidance also requires additional disclosures regarding the calculation of credit losses, as well as factors considered by the investor in reaching a conclusion that an investment is not other-than-temporarily impaired.

Available-for-sale securities in unrealized loss positions are analyzed as part of the Company’s ongoing assessment of OTTI. When the Company intends to sell such available-for-sale securities, the Company recognizes an impairment loss equal to the full difference between the amortized cost basis and the fair value of those securities. When the Company does not intend to sell available-for-sale equity or debt securities in an unrealized loss position, potential OTTI is considered based on a variety of factors, including the length of time and extent to which the fair value has been less than the cost; adverse conditions specifically related to the industry, the geographic area, or financial condition of the issuer, or the underlying collateral of a security; the payment structure of the security; changes to the rating of the security by a rating agency; the volatility of the fair value changes; and changes in fair value of the security after the balance sheet date. For debt securities, the Company estimates cash flows over the remaining life of the underlying collateral to assess whether credit losses exist and, where applicable, to determine if any adverse changes in cash flows have occurred. The Company’s cash flow estimates take into account expectations of relevant market and economic data as of the end of the reporting period. As of March 31, 2012, the Company did not intend to sell the securities with an unrealized loss position in AOCL, and it was more likely than not that the Company would not be required to sell these securities before recovery of their amortized cost basis. The Company believes that the securities with an unrealized loss position in AOCL were not other-than-temporarily impaired as of March 31, 2012.

Other factors considered in determining whether a loss is temporary include the length of time and the extent to which fair value has been below cost; the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer that may indicate adverse credit conditions; and the forecasted recovery period using current estimates of volatility in market interest rates (including liquidity and risk premiums).

Management’s assertion regarding its intent not to sell, or that it is not more likely than not that the Company will be required to sell the security before its anticipated recovery, is based on a number of factors, including a quantitative estimate of the expected recovery period (which may extend to maturity) and management’s intended strategy with respect to the identified security or portfolio. If management does have the intent to sell, or believes it is more likely than not that the Company will be required to sell the security before its anticipated recovery, the unrealized loss is charged directly to earnings in the Consolidated Statement of Income and Comprehensive Income.

The unrealized losses on the Company’s GSE debentures at March 31, 2012 were primarily caused by movements in market interest rates and spread volatility, rather than credit risk. The Company purchased these investments either at par or at a discount relative to their face amount, and the contractual cash flows of these investments are guaranteed by the GSEs. Accordingly, it is expected that these securities will not be settled at a price that is less than the amortized cost of the Company’s investment. Because the Company does not have the intent to sell the investments and it is not more likely than not that the Company will be required to sell them before anticipated recovery of fair value, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2012.

The Company reviews quarterly financial information related to its investments in capital trust notes as well as other information that is released by each financial institution to determine the continued creditworthiness of the issuer of the securities. The contractual terms of these investments do not permit settling the securities at prices that are less than the amortized costs of the investments; therefore, the Company expects that these investments will not be settled at prices that are less than their amortized costs. The Company continues to monitor these investments and currently estimates that the present value of expected cash flows is not less than the amortized cost of the securities. Because the Company does not have the intent to sell the investments, and it is not more likely than not

that the Company will be required to sell them before the anticipated recovery of fair value, which may be at maturity, it did not consider these investments to be other-than-temporarily impaired at March 31, 2012. It is possible that these securities will perform worse than is currently expected, which could lead to adverse changes in cash flows from these securities and potential OTTI losses in the future. Events that may occur in the future at the financial institutions that issued these securities could trigger material unrecoverable declines in the fair values of the Company’s investments and therefore could result in future potential OTTI losses. Such events include, but are not limited to, government intervention, deteriorating asset quality and credit metrics, significantly higher levels of default and loan loss provisions, losses in value on the underlying collateral, deteriorating credit enhancement, net operating losses, and further illiquidity in the financial markets.

At March 31, 2012, the Company’s equity securities portfolio consisted of perpetual preferred and common stock, and mutual funds. The Company considers a decline in the fair value of available-for-sale equity securities to be other than temporary if the Company does not expect to recover the entire amortized cost basis of the security. The unrealized losses on the Company’s equity securities were primarily caused by market volatility. The Company evaluated the near-term prospects of a recovery of fair value for each security in the portfolio, together with the severity and duration of impairment to date. Based on this evaluation, and the Company’s ability and intent to hold these investments for a period of time reasonably sufficient to realize a near-term forecasted recovery of fair value, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2012. Nonetheless, it is possible that these equity securities will perform worse than is currently expected, which could lead to adverse changes in their fair values, or the failure of the securities to fully recover in value as presently forecasted by management, causing the Company to potentially record OTTI losses in future periods. Events that could trigger material declines in the fair values of these securities include, but are not limited to, deterioration in the equity markets; a decline in the quality of the loan portfolios of the issuers in which the Company has invested; and the recording of higher loan loss provisions and net operating losses by such issuers.

The investment securities designated as having a continuous loss position for twelve months or more at March 31, 2012 consisted of 11 capital trust notes, and six equity securities. At December 31, 2011, the investment securities designated as having a continuous loss position for twelve months or more consisted of one mortgage-related security, eleven capital trust notes, and six equity securities. At March 31, 2012 and December 31, 2011, the combined market value of the respective securities represented unrealized losses of $23.0 million and $28.3 million. At March 31, 2012, the fair value of securities having a continuous loss position for twelve months or more was 17.3% below the collective amortized cost of $132.8 million. At December 31, 2011, the fair value of such securities was 21.2% below the collective amortized cost of $133.4 million.

Note 4. Loans

The following table sets forth the composition of the loan portfolio at March 31, 2012 and December 31, 2011:


	March 31, 2012				December 31, 2011
(dollars in thousands)	Amount		Percent of Non-Covered Loans Held for Investment		Amount		Percent of Non-Covered Loans Held for Investment
Non-Covered Loans Held for Investment:
Mortgage Loans:
Multi-family		$17,765,872		66.90%		$17,430,628		68.28%
Commercial real estate		7,577,256		28.54		6,855,244		26.85
Acquisition, development, and construction		441,753		1.66		445,671		1.75
One-to-four family		116,402		0.44		127,361		0.50

Total mortgage loans held for investment		$25,901,283		97.54		$24,858,904		97.38

Other Loans:
Commercial and industrial		592,221		2.23		599,986		2.35
Other		60,629		0.23		69,907		0.27

Total other loans held for investment		652,850		2.46		669,893		2.62

Total non-covered loans held for investment		26,554,133		100.00%		$25,528,797		100.00%

Net deferred loan origination costs		5,466				4,021
Allowance for losses on non-covered loans		(136,767)				(137,290)

Non-covered loans held for investment, net		26,422,832				$25,395,528
Covered loans		3,643,801				3,753,031
Allowance for losses on covered loans		(33,323)				(33,323)

Total covered loans, net		$ 3,610,478				$ 3,719,708
Loans held for sale		504,351				1,036,918

Total loans, net		$30,537,661				$30,152,154

Non-Covered Loans

Non-Covered Loans Held for Investment

The vast majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury apartment buildings in New York City that feature below-market rents. In addition, the Company originates commercial real estate (“CRE”) loans, most of which are collateralized by properties located in New York City and, to a lesser extent, on Long Island and in New Jersey.

To a lesser extent, the Company also originates acquisition, development, and construction (“ADC”) loans and commercial and industrial (“C&I”) loans. ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island, while C&I loans are made to small and mid-size businesses in New York City, Long Island, New Jersey, and, to a lesser extent, Arizona, on both a secured and unsecured basis, for working capital, business expansion, and the purchase of machinery and equipment.

Payments on multi-family and CRE loans generally depend on the income produced by the underlying properties which, in turn, depends on their successful operation and management. Accordingly, the ability of the Company’s borrowers to repay these loans may be impacted by adverse conditions in the local real estate market and the local economy. While the Company generally requires that such loans be qualified on the basis of the collateral property’s current cash flows, appraised value, and debt service coverage ratio, among other factors, there can be no assurance that its underwriting policies will protect the Company from credit-related losses or delinquencies.

ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. The risk of loss on an ADC loan is largely dependent upon the accuracy of the initial appraisal of the property’s value upon completion of construction or development; the estimated cost of construction, including interest; and the estimated time to complete and/or sell or lease such property. The Company seeks to minimize these risks by maintaining consistent lending policies and rigorous underwriting standards. However, if the estimate

of value proves to be inaccurate, the cost of completion is greater than expected, the length of time to complete and/or sell or lease the collateral property is greater than anticipated, or if there is a downturn in the local economy or real estate market, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in significant losses or delinquencies.

The Company seeks to minimize the risks involved in C&I lending by underwriting such loans on the basis of the cash flows produced by the business; by requiring that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and by requiring personal guarantees. However, the capacity of a borrower to repay a C&I loan is substantially dependent on the degree to which his or her business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.

The ability of the Company’s borrowers to repay their loans, and the value of the collateral securing such loans, could be adversely impacted by continued or more significant economic weakness in its local markets as a result of increased unemployment, declining real estate values, or increased residential and office vacancies. This not only could result in the Company experiencing an increase in charge-offs and/or non-performing assets, but also could necessitate an increase in the provision for loan losses. These events, if they were to occur, would have an adverse impact on the Company’s results of operations and its capital.

One-to-Four Family Loans Originated for Sale

The Community Bank’s mortgage banking subsidiary, NYCB Mortgage Company, LLC, is one of the largest aggregators of one-to-four family loans for sale to GSEs in the nation. Community banks, credit unions, mortgage companies, and mortgage brokers use the subsidiary’s proprietary web-accessible mortgage banking platform to originate and close one-to-four family loans in all 50 states. The Company sells these loans, primarily servicing retained.

Prior to December 2010, the Company would originate one-to-four family loans in its branches and on its website on a pass-through, or conduit, basis, and would sell the loans to the third-party conduit shortly after they closed. Since December 2010, the Company has been originating one-to-four family loans through several selected clients of its mortgage banking operation, rather than through the single third-party conduit with which it previously worked. The one-to-four family loans produced for the Company’s customers are aggregated with loans produced by its mortgage banking clients throughout the nation, and then sold.

The Company also services mortgage loans for various third parties. At March 31, 2012, the unpaid principal balance of serviced loans amounted to $14.7 billion. At December 31, 2011, the unpaid principal balance of loans serviced for others amounted to $13.1 billion.

Asset Quality

The following table presents information regarding the quality of the Company’s non-covered loans at March 31, 2012:


(in thousands)	30-89 Days Past Due			Non- Accrual			90 Days or More Delinquent and Still Accruing Interest			Total Past Due			Current			Total Loans Receivable
Multi-family		$	15,161		$	188,778		$	--		$	203,939		$	17,561,933		$	17,765,872
Commercial real estate			35,193			63,347			--			98,540			7,478,716			7,577,256
Acquisition, development, and construction			6,884			36,599			--			43,483			398,270			441,753
One-to-four family			2,326			9,851			--			12,177			104,225			116,402
Commercial and industrial			1,105			6,369			--			7,474			584,747			592,221
Other			233			1,180			--			1,413			59,216			60,629

Total		$	60,902		$	306,124		$	--		$	367,026		$	26,187,107		$	26,554,133

The following table presents information regarding the quality of the Company’s non-covered loans at December 31, 2011:


(in thousands)	30-89 Days Past Due		Non- Accrual		90 Days or More Delinquent and Still Accruing Interest		Total Past Due		Current		Total Loans Receivable
Multi-family		$ 46,702		$205,064		$--		$251,766		$17,178,862		$17,430,628
Commercial real estate		53,798		68,032		--		121,830		6,733,414		6,855,244
Acquisition, development, and construction		6,520		29,886		--		36,406		409,265		445,671
One-to-four family		2,712		11,907		--		14,619		112,742		127,361
Commercial and industrial		1,223		8,827		--		10,050		589,936		599,986
Other		702		2,099		--		2,801		67,106		69,907
Total		$111,657		$325,815		$--		$437,472		$25,091,325		$25,528,797

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at March 31, 2012:


(in thousands)	Multi-Family		Commercial Real Estate		Acquisition, Development, and Construction		One-to-Four Family		Total Mortgage Segment		Commercial and Industrial		Other		Total Other Loan Segment
Credit Quality Indicator:
Pass		$17,528,521		$7,454,279		$396,600		$109,377		$25,488,777		$570,942		$ 59,448		$630,390
Special mention		6,679		41,273		7,018		--		54,970		6,018		--		6,018
Substandard		230,672		81,704		38,135		7,025		357,536		15,261		1,181		16,442
Doubtful		--		--		--		--		--		--		--		--

Total		$17,765,872		$7,577,256		$441,753		$116,402		$25,901,283		$592,221		$ 60,629		$652,850

The following table summarizes the Company’s non-covered loan portfolio by credit quality indicator at December 31, 2011:


(in thousands)	Multi-Family			Commercial Real Estate			Acquisition, Development, and Construction			One-to-Four Family			Total Mortgage Segment			Commercial and Industrial			Other			Total Other Loan Segment
Credit Quality Indicator:
Pass		$	17,135,461		$	6,704,824		$	399,811		$	118,293		$	24,358,389		$	570,442		$	67,808		$	638,250
Special mention			58,134			64,802			6,489			--			129,425			13,234			--			13,234
Substandard			237,033			85,618			39,371			9,068			371,090			15,928			2,099			18,027
Doubtful			--			--			--			--			--			382			--			382

Total		$	17,430,628		$	6,855,244		$	445,671		$	127,361		$	24,858,904		$	599,986		$	69,907		$	669,893

The preceding classifications follow regulatory guidelines and can be generally described as follows: pass loans are of satisfactory quality; special mention loans have a potential weakness or risk that may result in the deterioration of future repayment; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a distinct possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family residential loans are classified utilizing an inter-regulatory agency methodology that incorporates the extent of delinquency and the loan-to-value ratios. These classifications are the most current available and have been generally updated within the last twelve months.

Troubled Debt Restructurings

In accordance with GAAP, the Company is required to account for certain loan modifications or restructurings as Troubled Debt Restructurings (“TDRs”). In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. Loans modified as TDRs are placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six months.

The following table presents information regarding the Company’s TDRs as of March 31, 2012 and December 31, 2011:


	March 31, 2012						December 31, 2011
(in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Loan Category:
Multi-family		$68,674		$151,608		$220,282		$60,454		$166,248		$226,702
Commercial real estate		2,320		40,650		42,970		3,389		39,054		42,443
Acquisition, development, and construction		--		12,992		12,992		--		15,886		15,886
Commercial and industrial		--		--		--		--		667		667
One-to-four family		--		1,126		1,126		--		1,411		1,411

Total		$70,994		$206,376		$277,370		$63,843		$223,266		$287,109

In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of March 31, 2012, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $244.3 million and loans on which forbearance agreements were reached amounted to $33.1 million.

The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each transaction, which may change from period to period, and involve judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.

As of March 31, 2012, the financial effects of TDRs granted in the three months ended at that date were as follows:


	For the Three Months Ended March 31, 2012
	Weighted Average Interest Rate
(dollars in thousands)	Number of Loans		Pre- Modification		Post- Modification		Charge-off Amount
Loan Category:
Commercial real estate		1		7.00		5.00		$	--

Total		1		7.00		5.00		$	--

As of March 31, 2012, there were no payment defaults on any loans that had been modified as TDRs during the preceding twelve months. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Covered Loans

The following table presents the balance of covered loans acquired in the AmTrust and Desert Hills acquisitions as of March 31, 2012:


(dollars in thousands)	Amount			Percent of Covered Loans
Loan Category:
One-to-four family		$	3,275,065		89.9%
All other loans			368,736		10.1

Total covered loans		$	3,643,801		100.0%

The Company refers to the loans acquired in the AmTrust and Desert Hills acquisitions as “covered loans” because the Company is being reimbursed for a substantial portion of losses on these loans under the terms of the FDIC loss sharing agreements. Covered loans are accounted for under Accounting Standards Codification (“ASC”) Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the lives of the loans. Under ASC 310-30, purchasers are permitted to aggregate acquired loans into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

At March 31, 2012 and December 31, 2011, the outstanding balances of covered loans (representing amounts owed to the Company) were $4.4 billion and $4.5 billion, respectively. The carrying values of such loans were $3.6 billion and $3.8 billion, respectively, at March 31, 2012 and December 31, 2011.

At the respective acquisition dates, the Company estimated the fair values of the AmTrust and Desert Hills loan portfolios, which represented the expected cash flows from the portfolios discounted at market-based rates. In estimating such fair value, the Company (a) calculated the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”); and (b) estimated the expected amount and timing of undiscounted principal and interest payments (the “undiscounted expected cash flows”). The amount by which the undiscounted expected cash flows exceed the estimated fair value (the “accretable yield”) is accreted into interest income over the lives of the loans. The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is referred to as the “non-accretable difference.” The non-accretable difference represents an estimate of the credit risk in the loan portfolios at the acquisition date.

The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and changes in expected principal and interest payments over the estimated lives of the loans. Changes in interest rate indices for variable rate loans increase or decrease the amount of interest income expected to be collected, depending on the direction of interest rates. Prepayments affect the estimated lives of covered loans and could change the amount of interest income and principal expected to be collected. Changes in expected principal and interest payments over the estimated lives of covered loans are driven by the credit outlook and actions that may be taken with borrowers.

The Company periodically evaluates the estimates of the cash flows it expects to collect. Expected future cash flows from interest payments are based on the variable rates at the time of the periodic evaluation. Estimates of expected cash flows that are impacted by changes in interest rate indices for variable rate loans and prepayment assumptions are treated as prospective yield adjustments and included in interest income.

Changes in the accretable yield for covered loans were as follows for the three months ended March 31, 2012:


(in thousands)	Accretable Yield
Balance at beginning of period		$1,365,978
Reclassification to non-accretable difference		(63,393)
Accretion		(45,946)

Balance at end of period		$1,256,639

The line item in the preceding table titled “reclassification to non-accretable difference” includes changes in cash flows the Company expects to collect due to changes in prepayment assumptions and changes in interest rates on variable rate loans. As of the Company’s last periodic evaluation, prepayment assumptions increased and, accordingly, future expected interest cash flows decreased. This resulted in a decrease in the accretable yield. In addition, these decreases were coupled with additional reductions in the expected cash flows from interest payments, as interest rates continued to be very low. As a result, a large percentage of the Company’s covered variable rate loans continue to reset at lower interest rates. Partially offsetting these decreases were increases in the expected principal and interest payments driven by better expectations relating to credit.

In connection with the AmTrust and Desert Hills transactions, the Company has acquired other real estate owned (“OREO”), all of which is covered under FDIC loss sharing agreements. Covered OREO is initially recorded at its estimated fair value on the acquisition date, based on independent appraisals less the estimated selling costs. Any subsequent write-downs due to declines in fair value are charged to non-interest expense, and partially offset by loss reimbursements under the FDIC loss sharing agreements. Any recoveries of previous write-downs are credited to non-interest expense and partially offset by the portion of the recovery that is due to the FDIC.

The FDIC loss share receivable represents the present value of the estimated losses on covered loans to be reimbursed by the FDIC. The estimated losses were based on the same cash flow estimates used in determining the fair value of the covered loans. The FDIC loss share receivable is reduced as losses on covered loans are recognized

and as loss sharing payments are received from the FDIC. Realized losses in excess of acquisition-date estimates will result in an increase in the FDIC loss share receivable. Conversely, if realized losses are less than the acquisition-date estimates, the FDIC loss share receivable will be reduced.

The following table presents information regarding the Company’s covered loans 90 days or more past due at March 31, 2012 and December 31, 2011:


(in thousands)	March 31, 2012		December 31, 2011
Covered Loans 90 Days or More Past Due:
One-to-four family		$314,392		$314,821
Other loans		28,751		32,621

Total covered loans 90 days or more past due		$343,143		$347,442

The following table presents information regarding the Company’s covered loans that were 30 to 89 days past due at March 31, 2012 and December 31, 2011:


(in thousands)	March 31, 2012		December 31, 2011
Covered Loans 30-89 Days Past Due:
One-to-four family		$84,080		$103,495
Other loans		7,104		8,494

Total covered loans 30-89 days past due		$91,184		$111,989

At March 31, 2012, the Company had $91.2 million of covered loans that were 30 to 89 days past due, and covered loans of $343.1 million that were 90 days or more past due but considered to be performing due to the application of the yield accretion method under ASC 310-30. The remaining portion of the Company’s covered loan portfolio totaled $3.2 billion at March 31, 2012 and was considered current as of that date. ASC 310-30 allows the Company to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Accordingly, loans that may have been classified as non-performing loans by AmTrust or Desert Hills are no longer classified as non-performing because, at the respective dates of acquisition, the Company believed that it would fully collect the new carrying value of these loans. The new carrying value represents the contractual balance, reduced by the portion that is expected to be uncollectible (referred to as the “non-accretable difference”) and by an accretable yield (discount) that is recognized as interest income. It is important to note that management’s judgment is required in reclassifying loans subject to ASC 310-30 as performing loans, and its judgment is dependent on having a reasonable expectation about the timing and amount of the cash flows to be collected, even if the loan is contractually past due.

The primary credit quality indicator for covered loans is the expectation of underlying cash flows. There was no provision for, or recovery on, losses on covered loans during the three months ended March 31, 2012. The Company determined that there was no change in the expected underlying cash flows that was attributable to credit deterioration or impairment. At December 31, 2011, the balance of pools with an adverse change in expected cash flows was $497.4 million. These pools consisted of one-to-four family loans of $184.9 million and other loans of $312.5 million.

Note 5. Allowance for Loan Losses

The following tables provide additional information regarding the Company’s allowance for loan losses, based upon the method of evaluating loan impairment:


(in thousands)	Mortgage			Other			Total
Allowance for Loan Losses at March 31, 2012:
Individually evaluated for impairment		$	1,433		$	--		$	1,433
Collectively evaluated for impairment			121,193			14,141			135,334
Loans acquired with deteriorated credit quality			14,227			19,096			33,323

Total		$	136,853		$	33,237		$	170,090


(in thousands)	Mortgage			Other			Total
Allowance for Loan Losses at December 31, 2011:
Individually evaluated for impairment		$	490		$	--		$	490
Collectively evaluated for impairment			121,505			15,295			136,800
Acquired loans with deteriorated credit quality			14,227			19,096			33,323

Total		$	136,222		$	34,391		$	170,613

The following tables provide additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:


(in thousands)	Mortgage			Other			Total
Loans Receivable at March 31, 2012:
Individually evaluated for impairment		$	331,523		$	5,445		$	336,968
Collectively evaluated for impairment			25,569,760			647,405			26,217,165
Loans acquired with deteriorated credit quality			3,275,065			368,736			3,643,801

Total		$	29,176,348		$	1,021,586		$	30,197,934


(in thousands)	Mortgage			Other			Total
Loans Receivable at December 31, 2011:
Individually evaluated for impairment		$	324,427		$	5,995		$	330,422
Collectively evaluated for impairment			24,534,477			663,898			25,198,375
Loans acquired with deteriorated credit quality			3,366,456			386,575			3,753,031

Total		$	28,225,360		$	1,056,468		$	29,281,828

Non-Covered Loans

The following table summarizes activity in the allowance for losses on non-covered loans for the three months ended March 31, 2012 and 2011:


	March 31,
	2012						2011
(in thousands)	Mortgage		Other		Total		Mortgage		Other		Total
Balance, beginning of period		$121,995		$15,295		$137,290		$140,834		$18,108		$158,942
Charge-offs		(14,531)		(2,508)		(17,039)		(34,091)		(4,845)		(38,936)
Recoveries		317		1,199		1,516		287		13		300
Provision for loan losses		14,845		155		15,000		21,287		4,713		26,000

Balance, end of period		$122,626		$14,141		$136,767		$128,317		$17,989		$146,306

Non-accrual loans amounted to $306.1 million and $325.8 million, respectively, at March 31, 2012 and December 31, 2011. There were no loans over 90 days past due and still accruing interest at either of these dates.

The following table presents additional information regarding the Company’s impaired loans at or for the three months ended March 31, 2012:


(in thousands)	Recorded Investment			Unpaid Principal Balance			Related Allowance			Average Recorded Investment			Interest Income Recognized
Impaired loans with no related allowance:
Multi-family		$	231,853		$	245,833		$	--		$	204,431		$1,263
Commercial real estate			50,227			53,843			--			49,742		211
Acquisition, development, and construction			29,361			31,891			--			28,020		236
One-to-four family			1,127			1,147			--			1,269		--
Commercial and industrial			5,445			10,120			--			5,720		--

Total impaired loans with no related allowance		$	318,013		$	342,834		$	--		$	289,182		$1,710


Impaired loans with an allowance recorded:
Multi-family		$	8,239		$	9,620		$	820		$	7,284		$ 27
Commercial real estate			5,639			5,850			79			5,644		8
Acquisition, development, and construction			5,077			5,077			534			2,539		--
One-to-four family			--			--			--			142		--
Commercial and industrial			--			--			--			--		--

Total impaired loans with an allowance recorded		$	18,955		$	20,547		$	1,433		$	15,609		$ 35


Total Impaired Loans:
Multi-family		$	240,092		$	255,453		$	820		$	211,715		$1,290
Commercial real estate			55,866			59,693			79			55,386		219
Acquisition, development, and construction			34,438			36,968			534			30,559		236
One-to-four family			1,127			1,147			--			1,411		--
Commercial and industrial			5,445			10,120			--			5,720		--

Total impaired loans		$	336,968		$	363,381		$	1,433		$	304,791		$1,745

The following table presents additional information regarding the Company’s impaired loans at December 31, 2011:


(in thousands)	Recorded Investment			Unpaid Principal Balance			Related Allowance			Average Recorded Investment			Interest Income Recognized
Impaired Loans with No Related Allowance:
Multi-family		$	235,100		$	244,684		$	--		$	321,994		$	3,435
Commercial real estate			49,258			52,152			--			63,032			1,397
Acquisition, development, and construction			26,680			27,143			--			42,600			1,141
One-to-four family			1,127			1,520			--			2,649			10
Commercial and industrial			5,995			10,240			--			6,442			60

Total impaired loans with no related allowance		$	318,160		$	335,739		$	--		$	436,717		$	6,043


Impaired Loans with An Allowance Recorded:
Multi-family		$	6,329		$	6,899		$	408		$	10,893		$	187
Commercial real estate			5,648			5,857			53			10,297			--
Acquisition, development, and construction			--			--			--			14,495			--
One-to-four family			285			373			29			71			--
Commercial and industrial			--			--			--			1,837			--

Total impaired loans with an allowance recorded		$	12,262		$	13,129		$	490		$	37,593		$	187


Total Impaired Loans:
Multi-family		$	241,429		$	251,583		$	408		$	332,887		$	3,622
Commercial real estate			54,906			58,009			53			73,329			1,397
Acquisition, development, and construction			26,680			27,143			--			57,095			1,141
One-to-four family			1,412			1,893			29			2,720			10
Commercial and industrial			5,995			10,240			--			8,279			60

Total impaired loans		$	330,422		$	348,868		$	490		$	474,310		$	6,230

The interest income recorded on these loans was not materially different from cash-basis interest income.

Covered Loans

Under the loss sharing agreements with the FDIC, covered loans are reported exclusive of the FDIC loss share receivable. The covered loans acquired in the AmTrust and Desert Hills acquisitions are, and will continue to be, reviewed for collectability based on the expectations of cash flows from these loans. Covered loans have been aggregated into pools of loans with common characteristics. In determining the allowance for losses on covered loans, the Company periodically performs an analysis to estimate the expected cash flows for each of the loan pools. The Company records a provision for loan losses on covered loans to the extent that the expected cash flows from a loan pool have decreased since the acquisition date. Accordingly, if there is a decrease in expected cash flows due to an increase in estimated credit losses compared to the estimates made at the respective acquisition dates, the decrease in the present value of expected cash flows is recorded as a provision for covered loan losses charged to earnings, and an allowance for covered loan losses is established. A related credit to non-interest income and an increase in the FDIC loss share receivable is recognized at the same time, and measured based on the loss sharing agreement percentages.

The following table summarizes activity in the allowance for losses on covered loans for the three months ended March 31, 2012 and 2011:


(in thousands)	March 31, 2012			March 31, 2011
Balance, beginning of period		$	33,323		$	11,903
Provision for loan losses			--			--

Balance, end of period		$	33,323		$	11,903

Note 6. Borrowed Funds

The following table summarizes the Company’s borrowed funds at March 31, 2012 and December 31, 2011:


(in thousands)	March 31, 2012		December 31, 2011
FHLB advances		$ 9,629,849		$ 9,314,193
Repurchase agreements		4,125,000		4,125,000
Junior subordinated debentures		426,982		426,936
Senior notes		89,993		89,984
Preferred stock of subsidiaries		4,300		4,300

Total borrowed funds		$14,276,124		$13,960,413

At March 31, 2012, the Company had $427.0 million of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by nine statutory business trusts (the “Trusts”) that issued guaranteed capital securities. The capital securities qualified as Tier 1 capital of the Company at that date. However, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) in July 2010, the qualification of capital securities as Tier 1 capital is expected to be phased out over a three-year period beginning January 1, 2013 and ending January 1, 2016.

The Trusts are accounted for as unconsolidated subsidiaries in accordance with GAAP. The proceeds of each issuance were invested in a series of junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption.

The following table provides a summary of the outstanding capital securities issued by each trust and the carrying amounts of the junior subordinated debentures issued by the Company to each trust as of March 31, 2012:

Issuer

Interest Rate of
Capital Securities
and Debentures

Junior
Subordinated

Debenture

Carrying

Amount

Capital
Securities
Amount
Outstanding

Date of

Original Issue

Stated Maturity

First Optional
Redemption Date

(dollars in thousands)

Haven Capital Trust II

10.250%

$ 23,333

$ 22,550

May 26, 1999

June 30, 2029

June 30, 2009⁽¹⁾

Queens County Capital Trust I

11.045

10,309

10,000

July 26, 2000

July 19, 2030

July 19, 2010⁽²⁾

Queens Statutory Trust I

10.600

15,464

15,000

September 7, 2000

September 7, 2030

September 7, 2010⁽¹⁾

New York Community Capital Trust V

6.000

143,846

137,495

November 4, 2002

November 1, 2051

November 4, 2007⁽²⁾

New York Community Capital Trust X

2.074

123,712

120,000

December 14, 2006

December 15, 2036

December 15, 2011⁽³⁾

LIF Statutory Trust I

10.600

7,732

7,500

September 7, 2000

September 7, 2030

September 7, 2010⁽¹⁾

PennFed Capital Trust II

10.180

12,372

12,000

March 28, 2001

June 8, 2031

June 8, 2011⁽¹⁾

PennFed Capital Trust III

3.724

30,928

30,000

June 2, 2003

June 15, 2033

June 15, 2008⁽³⁾

New York Community Capital Trust XI

2.120

59,286

57,500

April 16, 2007

June 30, 2037

June 30, 2012⁽³⁾

$426,982

$412,045

(1)	Callable at a premium from this date forward.

(2)	Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.

(3)	Callable from this date forward.

Other borrowings totaled $94.3 million at March 31, 2012, comparable to the balance at December 31, 2011. Included in the respective amounts were $90.0 million of fixed rate senior notes, due June 22, 2012, that were issued under the FDIC’s Temporary Liquidity Guarantee Program in December 2008.

Note 7. Mortgage Servicing Rights

The Company had mortgage servicing rights (“MSRs”) of $140.3 million and $117.0 million, respectively, at March 31, 2012 and December 31, 2011. The Company has two classes of MSRs for which it separately manages the economic risk: residential and securitized.

Residential MSRs are carried at fair value, with changes in fair value recorded as a component of non-interest income in each period. The Company uses various derivative instruments to mitigate the income statement-effect of changes in fair value due to changes in valuation inputs and assumptions regarding its residential MSRs. MSRs do not trade in an active open market with readily observable prices. Accordingly, the Company bases the fair value of its MSRs on the present value of estimated future net servicing income cash flows utilizing an internal valuation model. The Company estimates future net servicing income cash flows with assumptions that market participants would use to estimate fair value, including estimates of prepayment speeds, discount rates, default rates, refinance rates, servicing costs, escrow account earnings, contractual servicing fee income, and ancillary income. The Company reassesses and periodically adjusts the underlying inputs and assumptions in the model to reflect market conditions and assumptions that a market participant would consider in valuing the MSR asset.

The value of MSRs is significantly affected by mortgage interest rates then currently available in the marketplace, which influence mortgage loan prepayment speeds. During periods of declining interest rates, the value of MSRs generally declines due to increasing prepayments attributable to increased mortgage refinancing activity. Conversely, during periods of rising interest rates, the value of MSRs generally increases as mortgage refinancing activity declines.

Securitized MSRs are carried at the lower of the initial carrying value, adjusted for amortization or fair value, and are amortized in proportion to, and over the period of, estimated net servicing income. Such MSRs are periodically evaluated for impairment, based on the difference between their carrying amount and their current fair value. If it is determined that impairment exists, the resultant loss is charged against earnings.

The following table sets forth the changes in residential and securitized MSRs for the three months ended March 31, 2012 and the year ended December 31, 2011:


	For the Three Months Ended March 31, 2012		For the Year Ended December 31, 2011
(in thousands)	Residential	Securitized	Residential	Securitized
Carrying value, beginning of year	$116,416	$ 596	$106,186	$1,192
Additions	34,853	--	82,060	--
Increase (decrease) in fair value:
Due to changes in valuation assumptions	4,254	--	(24,537)	--
Due to other changes⁽¹⁾	(15,731)	--	(47,293)	--
Amortization	--	(113)	--	(596)
Carrying value, end of period	$139,792	$ 483	$116,416	$ 596

(1)	Includes net servicing cash flows and the passage of time.

The following table presents the key assumptions used in calculating the fair value of the Company’s residential MSRs at the dates indicated:


	March 31, 2012			December 31, 2011
Weighted Average Expected Life		75 months			69 months
Constant Prepayment Speed		12.9	%		14.2	%
Discount Rate		10.0			10.0
Primary Mortgage Rate to Refinance		4.1			4.1
Cost to Service (per loan per year):
Current		$ 53			$ 53
30-59 days or less delinquent		103			103
60-89 days delinquent		203			203
90-119 days delinquent		303			303
Over 120 days delinquent		553			553

As of March 31, 2012, there were no changes in assumed future servicing costs.

Note 8. Pension and Other Post-Retirement Benefits

The following tables set forth certain disclosures for the Company’s pension and post-retirement plans for the periods indicated:


	For the Three Months Ended March 31,
	2012		2011
(in thousands)	Pension Benefits	Post-Retirement Benefits	Pension Benefits	Post-Retirement Benefits
Components of net periodic expense (credit):
Interest cost	$1,471	$160	$ 1,491	$180
Service cost	--	2	--	1
Expected return on plan assets	(3,314)	--	(3,133)	--
Unrecognized past service liability	--	(62)	--	(62)
Amortization of unrecognized loss	2,434	126	1,190	103
Net periodic expense (credit)	$ 591	$226	$ (452)	$222

As discussed in the notes to the consolidated financial statements presented in the Company’s 2011 Annual Report on Form 10-K, the Company expects to contribute $1.3 million to its post-retirement plan to pay premiums and claims for the fiscal year ending December 31, 2012. The Company does not expect to contribute to its pension plan in 2012.

Note 9. Stock-Based Compensation

At March 31, 2012, the Company had 1,024,633 shares available for grant as options, restricted stock, or other forms of related rights under the New York Community Bancorp, Inc. 2006 Stock Incentive Plan (the “2006 Stock Incentive Plan”), which was approved by the Company’s shareholders at its Annual Meeting on June 7, 2006 and

reapproved at its Annual Meeting on June 2, 2011. Under the 2006 Stock Incentive Plan, the Company granted 2,040,425 shares of restricted stock in the three months ended March 31, 2012, with an average fair value of $12.78 per share on the date of grant and a vesting period of five years. Compensation and benefits expense related to restricted stock grants is recognized on a straight-line basis over the vesting period, and totaled $5.1 million and $3.6 million, respectively, in the three months ended March 31, 2012 and 2011.

A summary of activity with regard to restricted stock awards in the three months ended March 31, 2012 is presented in the following table:


	For the Three Months Ended March 31, 2012
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of year	3,429,440	$16.11
Granted	2,040,425	12.78
Vested	(542,220)	17.07
Cancelled	(49,500)	14.08
Unvested at end of period	4,878,145	14.63

As of March 31, 2012, unrecognized compensation cost relating to unvested restricted stock totaled $65.6 million. This amount will be recognized over a remaining weighted average period of 3.7 years.

In addition, the Company had eight stock option plans at March 31, 2012: the 1993 and 1997 New York Community Bancorp, Inc. Stock Option Plans; the 1993 Haven Bancorp, Inc. Stock Option Plan; the 1998 Richmond County Financial Corp. Stock Compensation Plan; the 2001 Roslyn Bancorp, Inc. Stock-based Incentive Plan; the 1998 Long Island Financial Corp. Stock Option Plan; and the 2003 and 2004 Synergy Financial Group Stock Option Plans (all eight plans collectively referred to as the “Stock Option Plans”). All stock options granted under the Stock Option Plans expire ten years from the date of grant.

The Company uses the modified prospective approach to recognize compensation costs related to share-based payments at fair value on the date of grant, and recognizes such costs in the financial statements over the vesting period during which the employee provides service in exchange for the award. As there were no unvested options at any time during the three months ended March 31, 2012 or the year ended December 31, 2011, the Company did not record any compensation and benefits expense relating to stock options during those periods.

Currently, the Company issues new shares of common stock to satisfy the exercise of options. The Company may also use common stock held in Treasury to satisfy the exercise of options. In such event, the difference between the average cost of Treasury shares and the exercise price is recorded as an adjustment to retained earnings or paid-in capital on the date of exercise. At March 31, 2012, there were 5,346,445 stock options outstanding. The number of shares available for future issuance under the Stock Option Plans was 11,040 at March 31, 2012.

The status of the Stock Option Plans at March 31, 2012 and changes that occurred during the three months ended at that date are summarized below:


	For the Three Months Ended March 31, 2012
	Number of Stock Options	Weighted Average Exercise Price
Stock options outstanding, beginning of year	9,006,944	$15.60
Exercised	--	--
Expired/forfeited	(3,660,499)	15.55
Stock options outstanding, end of period	5,346,445	15.64
Options exercisable, end of period	5,346,445	15.64

The intrinsic value of stock options outstanding and exercisable at March 31, 2012 was $243,000. There were no stock options exercised during the three months ended March 31, 2012. The intrinsic values of options exercised during the three months ended March 31, 2011 was $1.6 million.

Note 10. Fair Value Measurements

The FASB has issued guidance that, among other things, defined fair value, established a consistent framework for measuring fair value, and expanded disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. The guidance clarified that fair value is an “exit” price, representing the amount that would be received when selling an asset, or paid when transferring a liability, in an orderly transaction between market participants. Fair value is thus a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

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Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

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Level 3 – Inputs to the valuation methodology are significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants use in pricing an asset or liability.

A financial instrument’s categorization within this valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011, and that were included in the Company’s Consolidated Statements of Condition at those dates:


	Fair Value Measurements at March 31, 2012 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Netting Adjustments	Total Fair Value
Mortgage-Related Securities Available for Sale:
GSE certificates	$ --	$ 100,428	$ --	$--	$ 100,428
GSE CMOs	--	64,878	--	--	64,878
Private label CMOs	--	23,658	--	--	23,658
Total mortgage-related securities	$ --	$ 188,964	$ --	$--	$ 188,964
Other Securities Available for Sale:
GSE debentures	$ --	$ 307,402	$ --	$--	$ 307,402
State, county, and municipal	--	1,294	--	--	1,294
Capital trust notes	--	16,411	16,807	--	33,218
Preferred stock	--	188	--	--	188
Common stock	39,269	2,403	--	--	41,672
Total other securities	$39,269	$ 327,698	$ 16,807	$--	$ 383,774
Total securities available for sale	$39,269	$ 516,662	$ 16,807	$--	$ 572,738
Other Assets:
Loans held for sale	$ --	$ 504,351	$ --	$--	$ 504,351
Mortgage servicing rights	--	--	139,792	--	139,792
Derivative assets	4,752	1,636	13,548	--	19,936
Liabilities:
Derivative liabilities	$ (34)	$ (1,082)	$ --	$--	$ (1,116)


	Fair Value Measurements at December 31, 2011 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Netting Adjustments			Total Fair Value
Mortgage-Related Securities Available for Sale:
GSE certificates		$	--		$	102,645		$	--		$	--		$	102,645
GSE CMOs			--			65,276			--			--			65,276
Private label CMOs			--			24,041			--			--			24,041

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