CHARTERTable ONEof FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Contents

4 Table of Contents

6 Table of Contents

HOLDINGTable COMPANYof BUSINESS Contents

FigureTable 1of sets forth financial results and annualized performance ratios for the three and nine months ended September 30, 2003 and 2002. Contents

9 Table of Contents

Rate/VolumeTable Analysisof (Figure 3) Contents

NetTable interestof income was $879.7 million for the nine months ended September 30, 2003, up $8.5 million from the comparable period in 2002. The increase in net interest income was due to the growth in interest-earning assets, as well as benefits obtained from deposit and borrowings repricings in the past year. Net yield on average interest-earning assets during the nine months ended September 30, 2003 was 2.88%, down 36 basis points from the comparable period in 2002. The reduction in the net yield resulted from downward pressure on asset yields in the declining interest rate environment, offset in part by the benefits obtained from deposit and borrowings repricings in the past year. Contents

TheTable Company’s aircraft leasing portfolio totaled $357.5 million at September 30, 2003, or 1.26% of its total loans and leases. The aircraft leasing portfolio includes $257.4 million to domestic air carriers, with the remainder on corporate jets and cargo planes leased to corporations. The Company has no direct exposure to US Air, United Airlines, American Airlines or Air Canada. Contents

AdministrativeTable expenses were $194.8 million for the three months ended September 30, 2003, an increase of $23.5 million, or 13.7%, from the third quarter of 2002. The increase in administrative expenses was primarily attributable to increased compensation and marketing costs associated with the Company’s significant retail expansion program discussed in “Other Income” above. Our efficiency ratio was 41.84% for the three months ended September 30, 2003, compared to 39.90% for the three months ended September 30, 2002. Contents

(1)Table Includesof loans held for sale.Contents

FigureTable 9 sets forth information concerning nonperforming and underperforming assets for the periods reported. Underperforming assets consist of (1) nonperforming assets (nonaccrual loans and leases, restructured real estate mortgage loans, and real estate acquired through foreclosure and other collateral owned) and (2) accruing loans and leases delinquent more than 90 days. Contents

18 Table of Contents

20 Table of Contents

loans,Table including consumer lines of credit, are secured by equity in the borrowers’ residences. The Company does not expect all of these lines to be used by the borrowers. Outstanding letters of credit totaled $136.4 million as of September 30, 2003. Contents

QuarterlyTable Stockof Prices and Dividends (Figure 17) Contents

23 Table of Contents

TABLE OF CONTENTS

ITEM 1. Financial Statements
	CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
	CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited)
	CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
ITEM 4. Controls and Procedures
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
EX-11 Computation of Per Share Earnings
EX-31.1 Certification - CEO
EX-31.2 Certification - CFO
EX-32 Certificatoins Required by Section 1350

SECURITIES AND EXCHANGE COMMISSION ~~Washington, D.C. 20549~~

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2003~~2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-15495

CHARTER ONE FINANCIAL, INC. ~~(Exact name of registrant as specified in its charter)~~

Delaware		34-1567092
(State or other jurisdiction of incorporation		(I.R.S. Employer
or organization)		Identification No.)

(Exact name of registrant as specified in its charter)


Delaware		34-1567092
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


1215 Superior Avenue, Cleveland, Ohio		44114

(Address of principal executive offices)		(Zip Code)

(216) 566-5300 ~~(Registrant’s telephone number, including area code)~~

~~NOT APPLICABLE~~ (~~Former~~Registrant’s telephone ~~name~~number, ~~former~~including ~~address~~area ~~and former fiscal year, if changed since report~~code)

~~Indicate~~NOT 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___ APPLICABLE

~~Indicate~~(Former byname, ~~check~~former address ~~mark~~and ~~whether~~former ~~the~~fiscal ~~registrant~~year, isif anchanged ~~accelerated~~since ~~filer (as defined in Rule 12b-2 of the Exchange Act~~report)~~. Yes_X_ No___~~

~~The~~Indicate ~~number~~by ofcheck ~~shares~~mark ~~outstanding~~whether of the registrant’s ~~sole~~(1) has ~~class~~filed all reports required to be filed by Section 13 or 15(d) of ~~common~~the ~~stock as~~Securities Exchange Act of 1934 ~~October~~during the preceding 12 ~~31,~~months ~~2003~~(or for such shorter period that the registrant was ~~222~~required to file such reports),~~628,528~~ and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

~~Table~~Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of ~~Contents~~the Exchange Act). Yes [X] No [ ]

The number of shares outstanding of the registrant’s sole class of common stock as of July 31, 2004 was 225,814,336.

TABLE OF CONTENTS

Item
Number	~~PART I — FINANCIAL INFORMATION~~Page		~~Page~~
1.	Financial Statements
PART I - FINANCIAL STATEMENTS
	Consolidated Statements of Financial Condition — September 30, 2003 and December 31, 2002.		1
1. Financial Statements
	Consolidated Statements of Income — Three and nine months ended September 30, 2003 and 2002.		2
Consolidated Statements of Financial Condition — June 30, 2004 and December 31, 2003		1
	Consolidated Statements of Cash Flows — Nine months ended September 30, 2003 and 2002.		3
Consolidated Statements of Income — Three and six months ended June 30, 2004 and 2003		2
	Notes to Consolidated Financial Statements		4
Consolidated Statements of Cash Flows — Six months ended June 30, 2004 and 2003		3
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
Notes to Consolidated Financial Statements		4
3.	Quantitative and Qualitative Disclosure About Market Risk		23
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		6
4.	Controls and Procedures		23
3. Quantitative and Qualitative Disclosure About Market Risk		20
	PART II – OTHER INFORMATION
4. Controls and Procedures		20
5.	Other Information		23
PART II – OTHER INFORMATION
6.	Exhibits and Reports on Form 8-K		24
2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		21
Signatures			24
4. Submission of Matters to a Vote of Security Holders		21
Index to Exhibits			25
5. Other Information		22
6. Exhibits and Reports on Form 8-K		22
Signatures		23
Index to Exhibits		24
EX-11 COMPUTATION OF PER SHARE EARNINGS
EX-31.1 CEO CERTIFICATION
EX-31.2 CFO CERTIFICATION
EX-32 906 CERTIFICATION

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES ~~CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION~~ ~~(unaudited)~~

					9/30/03			12/31/02
					(Dollars in thousands,
					except per share data)
				ASSETS
Cash accounts					$	518,978		$	436,970
Interest-bearing deposits with banks						7,556			9,731
Federal funds sold and other						516			512
		Total cash and cash equivalents				527,050			447,213
Investment securities:
	Available for sale					270,511			210,095
	Held to maturity (fair value of $4,241 and $4,276)					3,952			3,973
Mortgage-backed securities:
	Available for sale					11,078,285			11,536,608
	Held to maturity (fair value of $304,926 and $565,072)					292,336			540,781
Loans and leases, net						27,735,087			25,852,846
Loans held for sale						296,078			351,892
Bank owned life insurance						823,676			829,043
Federal Home Loan Bank and Federal Reserve Bank stock						700,170			681,923
Premises and equipment						391,615			353,730
Accrued interest receivable						147,254			154,962
Real estate and other collateral owned						48,198			42,980
Loan servicing assets						168,697			128,564
Goodwill						415,696			386,372
Other assets						380,647			375,090
		Total assets			$	43,279,252		$	41,896,072
				LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits					$	28,046,238		$	27,527,843
Federal Home Loan Bank advances						9,820,184			9,037,925
Federal funds purchased and repurchase agreements						62,716			283,912
Other borrowings						704,629			708,853
Advance payments by borrowers for taxes and insurance						50,768			23,595
Accrued interest payable						65,075			38,372
Accrued expenses and other liabilities						1,288,801			1,191,747
		Total liabilities				40,038,411			38,812,247
Commitments and contingencies						—			—
Shareholders’ equity:
	Preferred stock — $.01 par value per share; 20,000,000 shares authorized and unissued					—			—
	Common stock — $.01 par value per share; 360,000,000 shares authorized; 229,944,441 and 227,571,468 shares issued					2,299			2,276
	Additional paid-in capital					2,274,947			2,193,095
	Retained earnings					1,098,042			824,564
	Less 6,953,759 and 2,781,151 shares of common stock held in treasury at cost					(215,085	)		(82,610	)
	Accumulated other comprehensive income					80,638			146,500
			Total shareholders’ equity			3,240,841			3,083,825
			Total liabilities and shareholders’ equity		$	43,279,252		$	41,896,072

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

~~See Notes to Consolidated Financial Statements.~~ (unaudited)


	6/30//04			12/31/03
	(Dollars in thousands,
	except per share data)
ASSETS
Cash accounts	$	580,706		$	518,976
Interest-bearing deposits with banks		10,507			8,673
Federal funds sold and other		520			517

Total cash and cash equivalents		591,733			528,166
Investment securities:
Available for sale (amortized cost of $190,924 and $260,501)		190,634			273,260
Held to maturity (fair value of $3,598 and $3,741)		3,432			3,505
Mortgage-backed securities:
Available for sale (amortized cost of $5,903,361 and $10,159,102)		5,796,777			10,193,798
Held to maturity (fair value of $192,437 and $262,155)		185,627			251,449
Loans and leases, net		32,321,116			28,130,017
Loans held for sale		284,400			120,431
Bank owned life insurance		842,075			828,678
Federal Home Loan Bank and Federal Reserve Bank stock		712,925			705,244
Premises and equipment, net		433,478			404,086
Accrued interest receivable		133,279			140,857
Real estate and other collateral owned		27,274			36,643
Mortgage servicing rights, net		188,177			177,244
Goodwill		415,696			415,696
Other assets		378,050			418,992

Total assets	$	42,504,673		$	42,628,066

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	27,228,560		$	27,203,319
Federal Home Loan Bank advances		9,970,594			9,847,293
Federal funds purchased and repurchase agreements		100,756			269,319
Other borrowings		596,260			697,753
Advance payments by borrowers for taxes and insurance		77,545			61,054
Accrued interest payable		20,218			35,944
Accrued expenses and other liabilities		1,202,749			1,237,515

Total liabilities		39,196,682			39,352,197

Commitments and contingencies		—			—
Shareholders’ equity:
Preferred stock — $.01 par value per share; 20,000,000 shares authorized and unissued		—			—
Common stock — $.01 par value per share; 360,000,000 shares authorized; 229,924,425 and 229,940,729 shares issued		2,299			2,299
Additional paid-in capital		2,299,786			2,280,335
Retained earnings		1,231,486			1,178,803
Less 5,321,530 and 6,767,285 shares of common stock held in treasury at cost		(171,409	)		(209,653	)
Accumulated other comprehensive income		(54,171	)		24,085

Total shareholders’ equity		3,307,991			3,275,869

Total liabilities and shareholders’ equity	$	42,504,673		$	42,628,066

See Notes to Consolidated Financial Statements.

~~Table of Contents~~1

			Three Months Ended						Nine Months Ended
			9/30/03			9/30/02				9/30/03			9/30/02
			(Dollars in thousands, except per share data)
Interest income:
	Loans and leases		$	368,952		$	410,237			$	1,114,278		$	1,253,132
	Mortgage-backed securities:
		Available for sale		129,695			135,099				433,496			388,000
		Held to maturity		5,326			10,695				20,453			37,756
	Investment securities:
		Available for sale		3,563			2,939				9,903			8,526
		Held to maturity		51			61				161			192
	Other interest-earning assets			7,531			9,729				22,772			27,119
		Total interest income		515,118			568,760				1,601,063			1,714,725
Interest expense:
	Deposits			115,862			160,821				376,339			500,798
	Federal Home Loan Bank advances			100,813			103,729				304,637			311,372
	Other borrowings			13,185			13,943				40,357			31,324
		Total interest expense		229,860			278,493				721,333			843,494
		Net interest income		285,258			290,267				879,730			871,231
Provision for loan and lease losses				37,663			47,695				134,494			131,689
		Net interest income after provision for loan and lease losses		247,595			242,572				745,236			739,542
Other income:
	Retail banking			94,183			84,175				275,370			241,474
	Mortgage banking			65,604			(36,961	)			41,682			(16,503	)
	Leasing operations			(4,118	)		404				(23,204	)		991
	Net gains			16,112			83,881				201,314			143,448
	Bank owned life insurance and other			8,638			7,582				25,044			26,014
		Total other income		180,419			139,081				520,206			395,424
Administrative expenses:
	Compensation and employee benefits			92,582			81,443				270,428			239,340
	Net occupancy and equipment			31,985			30,288				93,637			86,485
	Marketing expenses			22,411			11,788				56,263			30,629
	Federal deposit insurance premiums			1,118			1,104				3,385			3,421
	Other administrative expenses			46,733			46,683				149,162			142,209
		Total administrative expenses		194,829			171,306				572,875			502,084
Income before income taxes				233,185			210,347				692,567			632,882
Income taxes				74,036			66,785				219,890			200,940
		Net income	$	159,149		$	143,562			$	472,677		$	431,942
Basic earnings per share			$	.71		$	.63			$	2.11		$	1.87
Diluted earnings per share			$	.69		$	.61			$	2.05		$	1.82
Average common shares outstanding:
	Basic			224,399,805			228,765,954				224,966,297			230,549,330
	Diluted			230,661,929			235,615,457				230,739,490			237,653,561
Cash dividends declared per share			$	.26		$	.21			$	.72		$	.61

CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES

~~See~~CONSOLIDATED ~~Notes~~STATEMENTS toOF ~~Consolidated Financial Statements.~~ INCOME

2 (unaudited)


	Three Months Ended						Six Months Ended
	6/30/04			6/30/03			6/30/04			6/30/03
				(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	387,217		$	367,602		$	754,561		$	745,326
Mortgage-backed securities:
Available for sale		80,146			154,490			187,813			303,801
Held to maturity		2,823			6,858			6,194			15,127
Investment securities:
Available for sale		2,992			3,297			6,596			6,340
Held to maturity		47			56			95			110
Other interest-earning assets		7,586			7,856			15,379			15,241

Total interest income		480,811			540,159			970,638			1,085,945

Interest expense:
Deposits		90,659			126,734			186,545			260,477
Federal Home Loan Bank advances		71,036			104,025			147,283			203,824
Other borrowings		10,917			13,969			24,057			27,172

Total interest expense		172,612			244,728			357,885			491,473

Net interest income		308,199			295,431			612,753			594,472
Provision for loan and lease losses		7,160			35,360			25,776			96,831

Net interest income after provision for loan and lease losses		301,039			260,071			586,977			497,641

Other income:
Retail banking		115,197			97,087			214,810			181,187
Mortgage banking		59,343			(23,895	)		42,661			(23,922	)
Leasing operations		(597	)		(12,230	)		1,528			(19,086	)
Net gains (losses)		(14,240	)		108,549			(105,267	)		185,202
Bank owned life insurance and other		7,120			8,450			18,288			16,406

Total other income		166,823			177,961			172,020			339,787

Administrative expenses:
Compensation and employee benefits		102,109			90,790			204,077			177,846
Net occupancy and equipment		34,329			30,466			68,678			61,652
Marketing expenses		31,051			20,205			59,860			33,852
Federal deposit insurance premiums		1,052			1,125			2,135			2,267
Other administrative expenses		57,360			52,168			109,186			102,429

Total administrative expenses		225,901			194,754			443,936			378,046

Income before income taxes		241,961			243,278			315,061			459,382
Income taxes		75,615			77,241			98,459			145,854

Net income	$	166,346		$	166,037		$	216,602		$	313,528

Basic earnings per share	$	.74		$	.74		$	.96		$	1.40

Diluted earnings per share	$	.72		$	.72		$	.94		$	1.36

Average common shares outstanding:
Basic		224,089,781			225,501,687			223,811,719			225,249,543

Diluted		231,827,268			231,095,694			231,023,165			230,778,271

Cash dividends declared per share	$	.29		$	.24		$	.55		$	.46

See Notes to Consolidated Financial Statements.

~~CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES~~2 ~~CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)~~

				Nine Months Ended
				9/30/03			9/30/02
				(Dollars in thousands)
Cash flows from operating activities:
	Net income			$	472,677		$	431,942
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for loan and lease losses			134,494			131,689
		Net gains			(201,314	)		(143,448	)
		Accretion of discounts, amortization of premiums, and amortization of depreciation, net			147,373			131,768
		Origination of loans held for sale			(2,715,313	)		(1,652,269	)
		Proceeds from sale of loans held for sale			2,711,096			1,647,746
		Increase in accrued interest payable			26,703			8,489
		Other			117,679			398,568
			Net cash provided by operating activities		693,395			954,485
Cash flows from investing activities:
	Net principal disbursed on loans and leases				(7,587,052	)		(4,910,650	)
	Proceeds from principal repayments and maturities of:
		Mortgage-backed securities held to maturity			251,653			338,713
		Mortgage-backed securities available for sale			5,169,325			1,267,603
		Investment securities held to maturity			541			1,851
		Investment securities available for sale			59,305			26,618
	Proceeds from sale of:
		Mortgage-backed securities available for sale			8,268,905			9,054,320
		Investment securities available for sale			40,938			1,642
		Federal Home Loan Bank and Federal Reserve Bank stock			18,492			8,082
	Purchase of:
		Mortgage-backed securities available for sale			(6,862,003	)		(5,730,658	)
		Investment securities available for sale			(57,235	)		(76,599	)
		Federal Home Loan Bank and Federal Reserve Bank stock			(10,213	)		(42,657	)
		Loans			(47,611	)		(12,727	)
		Net cash received (paid) in connection with business combinations			77,944			(90,425	)
	Other				(150,716	)		(122,819	)
			Net cash used in investing activities		(827,727	)		(287,706	)
Cash flows from financing activities:
	Net decrease in short-term borrowings				(1,261,196	)		(1,238,785	)
	Proceeds from long-term borrowings				2,011,127			424,209
	Repayments of long-term borrowings				(265,014	)		(24,237	)
	Increase in deposits				21,421			1,722,959
	Increase (decrease) in advance payments by borrowers for taxes and insurance				27,173			(6,525	)
	Payment of dividends on common stock				(162,106	)		(141,367	)
	Proceeds from issuance of common stock				48,907			53,747
	Purchase of treasury stock				(206,143	)		(342,740	)
		Net cash provided by financing activities			214,169			447,261
Net increase in cash and cash equivalents					79,837			1,114,040
Cash and cash equivalents, beginning of the period					447,213			516,520
Cash and cash equivalents, end of period				$	527,050		$	1,630,560
Supplemental disclosure of cash flow information:
	Cash paid for interest on deposits and borrowings			$	693,117		$	977,446
	Cash paid for income taxes				127,000			4,500
Supplemental schedule of noncash activities:
	Loans exchanged for mortgage-backed securities				5,991,223			5,066,120

~~See~~CHARTER ~~Notes~~ONE toFINANCIAL, ~~Consolidated~~INC. ~~Financial~~AND ~~Statements.~~SUBSIDIARIES

3 CONSOLIDATED STATEMENTS OF CASH FLOWS

~~Table of Contents~~(unaudited)

CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


	Six Months Ended
	6/30/04			6/30/03
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	216,602		$	313,528
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses		25,776			96,831
Net (gains) losses		105,267			(185,202	)
Accretion of discounts, amortization of premiums, and amortization of depreciation, net		50,720			137,532
Origination of loans held for sale		(920,390	)		(1,648,230	)
Proceeds from sale of loans held for sale		908,195			1,646,068
Increase (decrease) in accrued interest payable		(15,726	)		8,046
Other		(112,687	)		179,197

Net cash provided by operating activities		257,757			547,770

Cash flows from investing activities:
Net principal disbursed on loans and leases		(2,929,891	)		(4,770,293	)
Proceeds from principal repayments and maturities of:
Mortgage-backed securities held to maturity		66,079			180,454
Mortgage-backed securities available for sale		1,103,003			2,544,391
Investment securities held to maturity		332			541
Investment securities available for sale		10,206			28,825
Proceeds from sale of:
Mortgage-backed securities available for sale		5,128,951			5,821,613
Investment securities available for sale		96,237			2,379
Federal Home Loan Bank and Federal Reserve Bank stock		6,202			15,107
Purchase of:
Mortgage-backed securities available for sale		(1,824,544	)		(5,108,641	)
Investment securities available for sale		(18,328	)		(57,171	)
Federal Home Loan Bank and Federal Reserve Bank stock		(516	)		(7,430	)
Loans		(1,559,178	)		(44,874	)
Net cash received in connection with business combinations		—			77,944
Other		(66,397	)		(111,290	)

Net cash provided by (used in) investing activities		12,156			(1,428,445	)

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings		1,707,437			(762,513	)
Proceeds from long-term borrowings		509,092			2,007,512
Repayments of long-term borrowings		(2,359,313	)		(9,860	)
Increase (decrease) in deposits		26,170			(85,758	)
Increase in advance payments by borrowers for taxes and insurance		16,491			34,998
Payment of dividends on common stock		(123,206	)		(103,514	)
Proceeds from issuance of common stock		79,049			31,761
Purchase of treasury stock		(62,066	)		(82,632	)

Net cash provided by (used in) financing activities		(206,346	)		1,029,994

Net increase in cash and cash equivalents		63,567			149,319
Cash and cash equivalents, beginning of the period		528,166			447,213

Cash and cash equivalents, end of period	$	591,733		$	596,532

Supplemental disclosure of cash flow information:
Cash paid for interest on deposits and borrowings	$	372,682		$	482,629
Cash paid for income taxes		—			12,000
Supplemental schedule of noncash activities:
Loans exchanged for mortgage-backed securities		124,678			5,765,725

See Notes to Consolidated Financial Statements.

1. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Charter One Financial, Inc. (the “Company” or “Charter One”) Annual Report on Form 10-K for the year ended December 31, 2002. The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. Such adjustments are of a normal recurring nature. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year. 2. Charter One has one operating segment, consumer banking, which offers an array of products and services to its customers. Pursuant to its consumer banking strategy, emphasis is placed on building relationships and identifying cross-sell opportunities with its customers, as opposed to building specific lines of business. As a result, Charter One works as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change. 3. In November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation expands the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees and requires the guarantor to recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 clarifies the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies,” relating to guarantees. In general, FIN 45 applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying that is related to an asset, liability, or equity security of the guaranteed party. Certain guarantee contracts are excluded from both the disclosure and recognition requirements of FIN 45, including, among others, guarantees relating to employee compensation, residual value guarantees under capital lease arrangements, commercial letters of credit, loan commitments, subordinated interests in a special purpose entity, and guarantees of a company’s own future performance. Other guarantees are subject to the disclosure requirements of FIN 45 but not to the recognition provisions and include, among others, a guarantee accounted for as a derivative instrument under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, a parent’s guarantee of debt owed to a third party by its subsidiary or vice versa, and a guarantee which is based on performance, not price. The disclosure requirements of FIN 45 are effective for the Company as of December 31, 2002, and require disclosure of the nature of the guarantee, the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, and the current amount of the liability, if any, for the guarantor’s obligations under the guarantee. The recognition requirements of FIN 45 are to be applied prospectively to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a material impact on the Company’s consolidated financial condition or results of operations. 4. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation -Transition and Disclosure,” an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends Accounting Principles Board (“APB”) Opinion No. 28, “Interim Financial Reporting,” to require disclosure about those effects in interim financial information. The Company has elected to continue application of APB Opinion No. 25 and related interpretations in accounting for its stock-based employee compensation plans. Accordingly, no stock-based employee compensation cost is, or is expected to be, reflected in net income, as all options granted under the Company’s stock-based employee compensation plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Had stock-based employee compensation costs of the Company’s stock option plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, as amended by SFAS No. 148, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

~~Table~~CHARTER ofONE ~~Contents~~FINANCIAL, INC. AND SUBSIDIARIES

		Three Months Ended						Nine Months Ended
		9/30/03			9/30/02			9/30/03			9/30/02
		(Dollars in thousands, except per share data)
Net income:
	As reported	$	159,149		$	143,562		$	472,677		$	431,942
	Less: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(7,136	)		(6,887	)		(22,154	)		(20,971	)
	Pro forma	$	152,013		$	136,675		$	450,523		$	410,971
Basic earnings per share:
	As reported	$	.71		$	.63		$	2.11		$	1.87
	Pro forma		.68			.60			2.00			1.79
Diluted earnings per share:
	As reported		.69			.61			2.05			1.82
	Pro forma		.66			.58			1.96			1.73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in the three and nine months ended September 30, 2003 and 2002:(unaudited)

	Three Months Ended						Nine Months Ended
	9/30/03			9/30/02			9/30/03			9/30/02
Dividend yield		3.00	%		3.00	%		3.00	%		3.00	%
Volatility		37.65-37.84	%		36.04-37.15	%		37.65-47.26	%		35.94-37.15	%
Risk-free interest rate		3.37-3.79	%		3.67-4.20	%		2.68-3.79	%		3.67-4.98	%
Life of grant	6 years			6 years			6 years			6 years

1.		These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Charter One Financial, Inc. (the “Company” or “Charter One”) Annual Report on Form 10-K for the year ended December 31, 2003. The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. Such adjustments are of a normal recurring nature. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.

2.		Charter One has one operating segment, consumer banking, which offers an array of products and services to its customers. Pursuant to its consumer banking strategy, emphasis is placed on building relationships and identifying cross-sell opportunities with its customers, as opposed to building specific lines of business. As a result, Charter One works as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change.

3.		On December 31, 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation -Transition and Disclosure,” an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends Accounting Principles Board (“APB”) Opinion No. 28, “Interim Financial Reporting,” to require disclosure about those effects in interim financial information. The Company has elected to continue application of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock-based employee compensation plans. Accordingly, no stock-based employee compensation cost is, or is expected to be, reflected in net income, as all options granted under the Company’s stock-based employee compensation plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Had stock-based employee compensation costs of the Company’s stock option plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, as amended by SFAS No. 148, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	The estimated weighted-average date of grant fair value (based on the above option-pricing model and assumptions) was $9.82 and $9.36 for stock options granted in the three months ended September 30, 2003 and 2002, respectively, and $10.93 and $8.96 for stock options granted in the nine months ended September 30, 2003 and 2002, respectively.
	Three Months Ended				Six Months Ended
5.	In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.” FIN 46 provides guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, noncontrolling interests, and results of operations of a VIE need to be included in a company’s consolidated financial statements. FIN 46 also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The provisions of the interpretation became effective upon issuance. The adoption of FIN 46 did not have a material impact on the Company’s consolidated financial condition or results of operations.
	6/30/04		6/30/03		6/30/04		6/30/03
6.	In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends SFAS No. 133 for certain decisions made by the FASB as part of the Derivatives Implementation Group (“DIG”) process. For those amendments that relate to SFAS No. 133 implementation guidance, the specific SFAS No. 133 Implementation Issue necessitating the amendment is identified. If the amendment relates to a cleared issue, the clearance date also is noted. SFAS No. 149 also amends SFAS No. 133 to incorporate clarifications of the definition of a derivative. SFAS No. 149 contains amendments relating to FASB Concepts Statement No. 7, “Using Cash Flow Information and Present Value in Accounting Measurements,” SFAS No. 65, “Accounting for Certain Mortgage Banking Activities,” SFAS No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases,” SFAS No. 95, “Statement of Cash Flows,” and SFAS No. 126, “Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities.”
	(Dollars in thousands, except per share data)
	SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. In addition, except as stated below, all provisions of SFAS No. 149 should be applied prospectively. The provisions of SFAS No. 149 that relate to SFAS No. 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, guidance related to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied
Net income:
As reported	$	166,346	$	166,037	$	216,602	$	313,528
Less: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		7,845		7,448		15,741		15,018
Pro forma	$	158,501	$	158,589	$	200,861	$	298,510
Basic earnings per share:
As reported	$	.74	$	.74	$	.96	$	1.40
Pro forma		.71		.70		.90		1.33
Diluted earnings per share:
As reported		.72		.72		.94		1.36
Pro forma		.68		.69		.86		1.29

5The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in the three and six months ended June 30, 2004 and 2003:


	Three Months Ended						Six Months Ended
	6/30/04			6/30/03			6/30/04			6/30/03
Dividend yield		3.00	%		3.00	%		3.00	%		3.00	%
Volatility		45.52	%		47.17-47.19	%		45.48-45.59	%		47.17-47.26	%
Risk-free interest rate		3.81-3.88	%		2.68-3.33	%		3.03-3.88	%		2.68-3.36	%
Life of grant	6 years			6 years			6 years			6 years

		to both existing contracts and new contracts entered into after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company’s consolidated financial condition or results of operations.
7.		In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards on how to classify and measure certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires an issuer to classify certain freestanding financial instruments as liabilities, which may have been previously classified as equity, because those instruments embody obligations of the issuer. SFAS No. 150 also requires disclosure of the nature and terms of the financial instruments and the rights and obligations embodied in those instruments. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and is otherwise effective as of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the Company’s consolidated financial condition or results of operations.
8.		On June 6, 2003, the Company completed its acquisition of Advance Bancorp (“Advance”), the holding company of Advance Bank, an Illinois state-chartered commercial bank headquartered in Lansing, Illinois. On July 11, 2003, Advance Bank was merged into Charter One Bank, N.A. On June 6, 2003, Advance had assets of $667.5 million and deposits of $482.1 million in 14 branches located in Cook County, Illinois. The Company issued 2,389,795 common shares and initially recorded $46.6 million of goodwill based on a preliminary determination of the estimated fair values of the assets and liabilities acquired as a result of this transaction. During the third quarter of 2003, the Company reduced its goodwill related to the Advance acquisition by $17.3 million to an ending balance of $29.3 million at September 30, 2003. The reduction resulted from adjustments to the fair values of certain commercial real estate and corporate banking loans acquired from Advance. The Company included the results of operations of Advance in its Consolidated Financial Statements from the effective date of the acquisition. Pro forma results of operations for this acquisition, had the acquisition occurred as of January 1, 2003, are not significant and, accordingly, are not provided.

		The estimated weighted-average date of grant fair value (based on the above option-pricing model and assumptions) was $12.47 and $10.76 for stock options granted in the three months ended June 30, 2004 and 2003, respectively, and $12.44 and $10.98 for stock options granted in the six months ended June 30, 2004 and 2003, respectively.

4.		In January 2003, the FASB issued Interpretation No. (“FIN”) 46, which provides guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, noncontrolling interests, and results of operations of a VIE are to be included in a company’s consolidated financial statements. A VIE exists when either the total equity investment at risk is not sufficient to permit the entity to finance its activities by itself, or the equity investors lack one of three characteristics associated with owning a controlling financial interest. Those characteristics include the direct or indirect ability to make decisions about an entity’s activities through voting rights or similar rights, the obligation to absorb the expected losses of an entity if they occur, or the right to receive the expected residual returns of the entity if they occur. In December 2003, the FASB reissued FIN 46 with certain modifications and clarifications. Application of this guidance was effective for interests in certain VIEs commonly referred to as special-purpose entities as of December 31, 2003. Application for all other types of entities was required for periods ending after March 15, 2004, unless previously applied. The adoption of FIN 46 did not have a material impact on the Company’s consolidated financial condition or results of operations.

5.		On May 4, 2004, Citizens Financial Group, Inc. (“Citizens”), a subsidiary of The Royal Bank of Scotland Group plc, announced it reached an agreement to acquire Charter One in a cash transaction. The cash purchase price is $44.50 per share or approximately $10.5 billion. The transaction is expected to close by the fourth quarter of 2004, subject to regulatory approval and approval by Charter One shareholders. A special shareholder meeting to vote on the transaction is scheduled for August 23, 2004. As part of this transaction, Charter One’s national bank charter will remain.

		Citizens is a $78 billion commercial bank holding company. It is headquartered in Providence, Rhode Island, and has more than 880 offices, approximately 1,650 ATMs and more than 15,500 employees in seven states. It operates as Citizens Bank in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Rhode Island. Citizens is one of the 20 largest commercial bank holding companies in the United States. Citizens is owned by The Royal Bank of Scotland Group plc.

~~ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~5

~~The~~ITEM ~~following~~2. ~~financial~~Management’s ~~review~~Discussion ~~presents an analysis of the asset~~ and ~~liability structure~~Analysis of ~~Charter One~~ Financial, ~~Inc.~~Condition and aResults ~~discussion~~ of ~~the results of operations for each of the periods presented.~~ Operations

~~General~~HOLDING COMPANY BUSINESS

~~Headquartered~~The infollowing ~~Cleveland, Ohio, Charter One Financial, Inc., hereafter referred to as “Charter One” or the “Company,” is a~~ financial ~~holding~~review ~~company. Charter~~presents ~~One~~an isanalysis ~~a Delaware corporation. As~~ of ~~September 30,~~the ~~2003,~~asset ~~the~~and ~~Company~~liability ~~owned~~structure ~~all~~ of ~~the outstanding capital stock of~~ Charter One ~~Bank~~Financial, NInc.~~A.,~~ and a ~~national~~ ~~bank.~~discussion Weof ~~sometimes refer to this financial institution in this document as~~ the ~~“Bank.”~~results ~~The Bank’s primary business is providing consumer~~of ~~banking~~operations ~~services~~for toeach ~~certain major markets in Ohio, Michigan, Illinois, New York, Vermont, and in some markets~~ of ~~Massachusetts, Indiana, Connecticut and Pennsylvania. As of September 30, 2003,~~ the ~~Bank~~periods ~~and its subsidiaries were doing business through 566 full-service branches, 27 loan production offices and 956 ATMs~~presented.

~~Discussion of Forward-Looking Statements~~General

~~This~~Headquartered ~~document,~~in ~~including information incorporated by reference~~Cleveland, ~~contains~~Ohio, ~~and future filings by~~ Charter One onFinancial, ~~Form 10-K~~Inc., ~~Form 10-Q and Form 8-K and future~~hereafter ~~oral~~referred ~~and~~to ~~written~~as ~~statements and press releases by~~ “Charter One” ~~and~~or ~~its management~~the ~~may contain~~“Company,” ~~forward-looking~~is ~~statements~~a ~~about~~financial holding company. Charter One ~~which~~is ~~we believe~~a ~~are~~Delaware ~~within~~corporation ~~the~~and ~~meaning~~owns all of the ~~Private~~outstanding ~~Securities Litigation Reform Act~~capital stock of ~~1995.~~Charter ~~These~~One ~~forward-looking~~Bank, ~~statements include~~N.A., ~~without~~which ~~limitation, statements~~we ~~with~~sometimes ~~respect~~refer to ~~anticipated~~in ~~future~~this ~~operating and financial~~document ~~performance,~~as ~~including~~the ~~revenue~~“Bank.” ~~creation,~~The ~~lending~~Bank’s ~~origination,~~primary ~~operating efficiencies,~~business ~~loan~~is ~~sales,~~providing ~~charge-offs~~consumer ~~and~~banking services ~~loan~~to ~~loss~~certain ~~provisions,~~major ~~deposits~~markets ~~and refinancing~~in ofOhio, ~~liabilities~~Michigan, ~~growth opportunities~~Illinois, ~~interest~~New ~~rates~~York, ~~acquisition~~ Vermont and ~~divestiture~~in ~~opportunities,~~some ~~and~~markets ~~synergies~~of Massachusetts, ~~efficiencies~~Indiana, ~~cost~~Connecticut ~~savings~~ and ~~funding advantages expected to be realized from prior acquisitions~~Pennsylvania. ~~These forward-looking~~As ~~statements~~of ~~are~~June 30, ~~based on currently available competitive~~2004, ~~financial~~ ~~and~~the ~~economic~~Bank ~~data~~ and ~~management’s~~its ~~views~~subsidiaries ~~and~~were ~~assumptions regarding~~doing ~~future~~business ~~events.~~through ~~These~~478 ~~forward-looking~~traditional ~~statements~~banking ~~are inherently uncertain~~centers, ~~and investors~~174 ~~must recognize that actual results may differ from those expressed or implied~~ in ~~the forward~~-~~looking~~store ~~statements.~~banking ~~Accordingly~~centers, ~~Charter One cautions~~ ~~readers~~29 ~~not~~loan toproduction ~~place~~offices ~~undue~~and ~~reliance~~1,017 ~~on any forward-looking statements~~ATMs.

~~Many of these forward-looking statements appear throughout this document.~~Acquisition ~~Words such as may, could, should, would, believe, anticipate, estimate, expect,~~ ~~intend, plan and similar expressions are intended to identify these~~ forward-looking statements. The important factors discussed below, as well as other factors discussed elsewhere in this document and factors identified in our filings with the Securities and Exchange Commission and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document. Among the factors that could cause our actual results to differ from these forward-looking statements are:

•On ~~the strength of the United States economy in general and the strength of the local economies in which we conduct our operations; general economic conditions~~May 4, ~~either nationally or regionally~~2004, ~~may~~Citizens beFinancial ~~less favorable than expected~~Group, ~~resulting~~Inc. in(“Citizens”), ~~among other things,~~ a ~~deterioration~~subsidiary ~~in the credit quality~~ of The ~~our~~Royal ~~loans~~Bank ~~and leases and other assets; • the effects~~ of, ~~and~~Scotland ~~changes~~Group inplc, ~~trade,~~announced ~~monetary~~it ~~and~~reached ~~fiscal~~an ~~policies~~agreement ~~and~~to acquire ~~laws,~~Charter ~~including~~One ~~interest~~in ~~rate~~a ~~policies~~cash oftransaction. ~~the~~The ~~Federal~~cash ~~Reserve~~purchase ~~Board;~~price •is ~~financial~~$44.50 per ~~markets,~~share ~~monetary~~or ~~and~~approximately ~~interest~~$10.5 billion. ~~rate~~The ~~fluctuations,~~transaction ~~particularly~~is ~~the~~expected ~~relative relationship of short-term interest rates~~ to ~~long-term~~close by ~~interest rates; •~~ the ~~timely~~fourth ~~development~~quarter of ~~and~~2004, ~~acceptance~~subject ofto ~~new~~regulatory ~~products~~approval and ~~services~~approval of by Charter One ~~and~~shareholders. ~~the~~A ~~perceived~~special ~~overall~~shareholder ~~value~~meeting ofto ~~these~~vote ~~products~~on ~~and~~the ~~services~~transaction byis ~~users,~~scheduled ~~including~~for ~~the~~August ~~features~~23, ~~pricing~~2004. ~~and~~As ~~quality~~part ~~compared to competitors’ products and services; • the impact~~ of ~~changes~~this ~~in financial services laws and regulations (including laws and regulations concerning taxes~~transaction, ~~accounting~~Charter ~~standards,~~One’s ~~banking,~~national bank ~~securities~~charter ~~and~~will ~~insurance); legislative or regulatory changes may adversely affect the business in which we are engaged; • the impact of technological changes;~~remain.

7Citizens is a $78 billion commercial bank holding company. It is headquartered in Providence, Rhode Island, and has more than 880 offices, approximately 1,650 ATMs and more than 15,500 employees in seven states. It operates as Citizens Bank in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Rhode Island. Citizens is one of the 20 largest commercial bank holding companies in the United States. Citizens is owned by The Royal Bank of Scotland Group plc.

~~Table~~Discussion of ~~Contents~~Forward-Looking Statements

•This ~~our~~document, ~~ability~~including toinformation ~~successfully~~incorporated ~~integrate~~by ~~acquisitions~~reference, ~~into~~contains, ~~our~~and future ~~existing~~filings ~~operations~~by Charter One on Form 10-K, Form 10-Q and Form 8-K and future oral and written statements and press releases by Charter One and its management may contain, forward-looking statements about Charter One which we believe are within the ~~availability~~meaning of ~~new~~the ~~acquisitions~~Private Securities Litigation Reform Act of 1995. These forward-looking statements include, ~~joint~~without ~~ventures~~limitation, statements with respect to anticipated future operating and ~~alliance~~financial performance, including revenue creation, lending origination, operating efficiencies, loan sales, charge-offs and loan loss provisions, deposits and refinancing of liabilities, growth opportunities, ~~that~~interest ~~build~~rates, ~~shareholder~~acquisition and ~~value;~~divestiture •opportunities, ~~changes~~and insynergies, ~~consumer~~efficiencies, ~~spending~~cost savings and funding ~~saving~~advantages ~~habits;~~expected to be realized from prior acquisitions. These forward-looking statements are based on currently available competitive, financial and •economic ~~our~~data ~~success~~and atmanagement’s ~~managing~~views ~~the~~and ~~risks~~assumptions ~~involved~~regarding future events. These forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the ~~foregoing~~forward-looking statements. Accordingly, Charter One cautions readers not to place undue reliance on any forward-looking statements.

~~Charter~~Many ~~One~~of ~~disclaims~~these ~~any~~forward-looking ~~obligation~~statements toappear ~~update~~throughout orthis ~~revise~~document. Words ~~any~~such as may, could, should, would, believe, anticipate, estimate, expect, intend, plan and similar expressions are intended to identify these forward-looking statements. ~~based~~The onimportant factors discussed below, as well as other factors discussed elsewhere in this document and factors identified in our filings with the ~~occurrence~~Securities ofand ~~future~~Exchange ~~events~~Commission and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the ~~receipt~~forward-looking ofstatements ~~new~~made ~~information,~~in orthis ~~otherwise~~document. Among the factors that could cause our actual results to differ from these forward-looking statements are:

~~RESULTS~~• OFthe ~~OPERATIONS~~ strength of the United States economy in general and the strength of the local economies in which we conduct our operations; general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in the credit quality of our loans and leases and other assets;

~~Performance Overview~~6

~~Selected~~• ~~Financial~~the ~~Results~~effects of, and ~~Ratios~~changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; • financial markets, monetary and interest rate fluctuations, particularly the relative relationship of short-term interest rates to long-term interest rates; • the timely development of and acceptance of new products and services of Charter One and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors’ products and services; • the impact of changes in financial services laws and regulations (~~Figure~~including 1laws and regulations concerning taxes, accounting standards, banking, securities and insurance) ; legislative or regulatory changes may adversely affect the business in which we are engaged; • the impact of technological changes; • our ability to successfully integrate acquisitions into our existing operations, and the availability of new acquisitions, joint ventures and alliance opportunities that build shareholder value; • changes in consumer spending and saving habits; and • our success at managing the risks involved in the foregoing.

	Three Months Ended						Nine Months Ended
	9/30/03			9/30/02			9/30/03			9/30/02
	(Dollars in thousands, except per share data)
Net income	$	159,149		$	143,562		$	472,677		$	431,942
Diluted earnings per share		.69			.61			2.05			1.82
Return on average assets		1.46	%		1.46	%		1.45	%		1.50	%
Return on average equity		20.12			18.89			19.52			19.47
Return on average tangible equity(1)		23.59			21.70			22.58			22.38
Average equity to average assets		7.25			7.72			7.41			7.68
Net interest income to administrative expenses		1.46	x		1.69	x		1.54	x		1.74	x
Administrative expenses to average assets		1.79	%		1.74	%		1.75	%		1.74	%
Efficiency ratio(2)		41.84			39.90			40.92			39.64

Charter One disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

(1)		Computed as the ratio of net income, excluding the amortization of other intangible assets, to average tangible equity.
(2)		Computed as the ratio of total administrative expenses to net interest income and total other income.

RESULTS OF OPERATIONS

~~Net~~Performance ~~Interest Income~~Overview

~~Net~~Figure ~~interest~~1 ~~income~~sets isforth ~~the~~financial ~~difference~~results ~~between~~and ~~the~~annualized ~~interest~~performance ~~and~~ratios ~~dividend~~for ~~income~~the ~~earned~~three onand ~~our~~six ~~loans~~months ~~and~~ended ~~investments~~June 30, 2004 and ~~the~~2003, ~~interest~~respectively. ~~expense~~On onJanuary 27, ~~our~~2004, ~~deposits and~~we ~~borrowings~~prepaid $2.3 billion ~~Net~~in ~~interest~~fixed ~~income~~rate isFederal ~~our~~Home ~~principal~~Loan ~~source~~Bank (“FHLB”) advances and incurred a prepayment penalty of ~~earnings~~$164.5 million ~~Net interest~~before ~~income~~tax is($113.1 million ~~affected~~after bytax). aBecause ~~number~~ of ~~factors~~the ~~including~~unusual nature of the ~~level,~~debt ~~pricing~~prepayment ~~and~~penalty, ~~maturity~~we ofbelieve ~~interest-earning~~it ~~assets~~is ~~and~~important ~~interest-bearing~~for ~~liabilities,~~comparability purposes to present ~~interest~~selected ~~rate~~financial ~~fluctuations~~results and ~~asset~~ratios ~~quality,~~for asthe ~~well~~six asmonths ~~general~~ended ~~economic~~June 30, 2004 ~~conditions~~excluding ~~and~~the ~~regulatory~~debt ~~policies~~prepayment penalty.

~~The~~Selected ~~following~~Financial ~~table~~Results ~~shows average balances, interest earned or paid,~~ and ~~average~~ ~~interest~~Ratios ~~rates~~(Figure ~~for the periods indicated. Nonaccrual loans are~~1) ~~included in the average balance of loans. The mark-to-market adjustments on~~ ~~securities available for sale are included in noninterest-earning assets.~~ ~~Noninterest-bearing demand deposit accounts are included in noninterest-bearing liabilities. The cost of liabilities includes the annualized effect of interest rate risk management instruments.~~


	Three Months Ended						Six Months Ended
	6/30/04			6/30/03			6/30/04									6/30/03
										Prepayment
							Actual			Penalty			Adjusted
	(Dollars in thousands, except per share data)
Results and ratios:
Net income	$	166,346		$	166,037		$	216,602		$	113,068		$	329,670		$	313,528
Diluted earnings per share		.72			.72			.94			.49			1.43			1.36
Return on average assets		1.56	%		1.50	%		1.02	%		1.06	%		1.54	%		1.44	%
Return on average equity		20.50			19.86			13.34			13.91			20.30			19.17
Return on average tangible equity(1)		23.82			22.74			15.51			16.14			23.59			22.02
Average equity to average assets		7.62			7.55			7.61			—			7.61			7.51
Net interest income to administrative expenses		1.36	x		1.52	x		1.38	x		—			1.38	x		1.57	x
Administrative expenses to average assets		2.12	%		1.76	%		2.08	%		—			2.08	%		1.74	%
Efficiency ratio(2)		47.56			41.14			56.57			24.41			46.77			40.46

(1)		Computed as the ratio of net income, excluding the amortization of other intangible assets, to average tangible equity.

(2)		Computed as the ratio of total administrative expenses to net interest income and total other income.

~~Average~~Net ~~Balances,~~ Interest ~~Rates and Yields/Costs (Figure 2)~~Income

									Three Months Ended
							9/30/03								9/30/02
									Avg.								Avg.
				Average					Yield/			Average					Yield/
				Balance			Interest		Cost			Balance			Interest		Cost
				(Dollars in thousands)
Interest-earning assets:
	Loans and leases			$	26,993,081		$	368,952		5.46	%	$	25,460,404		$	410,237		6.43	%
	Mortgage-backed securities:
		Available for sale			12,414,464			129,695		4.18			9,364,722			135,099		5.77
		Held to maturity			317,638			5,326		6.71			677,206			10,695		6.32
	Investment securities:
		Available for sale			282,726			3,563		5.04			181,769			2,939		6.47
		Held to maturity			3,771			51		5.37			4,480			61		5.52
	Other interest-earning assets				723,721			7,531		4.07			979,454			9,729		3.89
			Total interest-earning assets		40,735,401			515,118		5.05			36,668,035			568,760		6.19
Allowance for loan and lease losses					(379,527	)							(267,486	)
Noninterest-earning assets					3,272,787								2,968,951
			Total assets	$	43,628,661							$	39,369,500
Interest-bearing liabilities:
	Deposits:
		Checking accounts		$	6,166,100			14,960		.96		$	6,283,029			33,721		2.13
		Money market and savings accounts			8,545,286			23,765		1.10			8,378,267			44,790		2.12
		Certificates of deposit			10,708,517			77,138		2.86			9,831,050			82,310		3.32
			Total deposits		25,419,903			115,863		1.81			24,492,346			160,821		2.61
	Federal Home Loan Bank advances				10,265,634			100,812		3.89			7,944,811			103,729		5.18
	Other borrowings				871,430			13,185		6.03			929,957			13,943		5.97
			Total borrowings		11,137,064			113,997		4.06			8,874,768			117,672		5.26
			Total interest-bearing liabilities		36,556,967			229,860		2.49			33,367,114			278,493		3.31
Noninterest-bearing liabilities:
	Demand deposit accounts				2,615,262								1,789,713
	Other noninterest-bearing liabilities				1,292,960								1,173,108
		Total noninterest-bearing liabilities			3,908,222								2,962,821
			Total liabilities		40,465,189								36,329,935
Shareholders’ equity					3,163,472								3,039,565
			Total liabilities and shareholders’ equity	$	43,628,661							$	39,369,500
Net interest income							$	285,258							$	290,267
Interest rate spread										2.56								2.88
Net yield on average interest- earning assets										2.80								3.17
Average interest-earning assets to average interest-bearing liabilities										111.43	%							109.89	%

~~Table~~Net interest income is the difference between the interest and dividend income earned on our loans and investments and the interest expense on our deposits and borrowings. Net interest income is our principal source of ~~Contents~~earnings. Net interest income is affected by a number of factors including the level, pricing and maturity of interest-earning assets and interest-bearing liabilities, interest rate fluctuations and asset quality, as well as general economic conditions and regulatory policies.

				Nine Months Ended
				9/30/03								9/30/02
									Avg.								Avg.
				Average					Yield/			Average					Yield/
				Balance			Interest		Cost			Balance			Interest		Cost
				(Dollars in thousands)
Interest-earning assets:
	Loans and leases			$	26,321,364		$	1,114,278		5.65	%	$	25,296,320		$	1,253,132		6.61	%
	Mortgage-backed securities:
		Available for sale			13,026,174			433,496		4.44			8,710,523			388,000		5.94
		Held to maturity			397,442			20,453		6.86			771,416			37,756		6.53
	Investment securities:
		Available for sale			249,032			9,903		5.30			160,661			8,526		7.08
		Held to maturity			3,928			161		5.47			4,998			192		5.13
	Other interest-earning assets				775,216			22,772		3.87			952,088			27,119		3.76
			Total interest-earning assets		40,773,156			1,601,063		5.24			35,896,006			1,714,725		6.37
Allowance for loan and lease losses					(355,880	)							(260,458	)
Noninterest-earning assets					3,156,356								2,863,644
			Total assets	$	43,573,632							$	38,499,192
Interest-bearing liabilities:
	Deposits:
		Checking accounts		$	6,881,546			68,990		1.34		$	6,102,712			100,558		2.20
		Money market and savings accounts			8,271,203			85,295		1.38			7,915,705			132,271		2.23
		Certificates of deposit			10,005,413			222,054		2.97			10,107,847			267,969		3.54
			Total deposits		25,158,162			376,339		2.00			24,126,264			500,798		2.78
	Federal Home Loan Bank advances				10,690,548			304,637		3.81			7,966,061			311,372		5.22
	Other borrowings				870,680			40,357		6.17			598,769			31,324		6.96
			Total borrowings		11,561,228			344,994		3.98			8,564,830			342,696		5.35
			Total interest-bearing liabilities		36,719,390			721,333		2.62			32,691,094			843,494		3.45
Noninterest-bearing liabilities:
	Demand deposit accounts				2,315,988								1,745,700
	Other noninterest-bearing liabilities				1,309,737								1,104,913
		Total noninterest-bearing liabilities			3,625,725								2,850,613
			Total liabilities		40,345,115								35,541,707
Shareholders’ equity					3,228,517								2,957,485
			Total liabilities and shareholders’ equity	$	43,573,632							$	38,499,192
Net interest income							$	879,730							$	871,231
Interest rate spread										2.62								2.92
Net yield on average interest- earning assets										2.88								3.24
Average interest-earning assets to average interest-bearing liabilities										111.04	%							109.80	%

The following table shows average balances, interest earned or paid, and average interest rates for the periods indicated. Nonaccrual loans are included in the average balance of loans. The mark-to-market adjustments on securities available for sale are included in noninterest-earning assets. Noninterest-bearing demand deposit accounts are included in noninterest-bearing liabilities. The cost of liabilities includes the annualized effect of interest rate risk management instruments.

10Average Balances, Interest Rates and Yields/Costs (Figure 2)


	Three Months Ended
	6/30/04								6/30/03
						Avg.								Avg.
	Average					Yield/			Average					Yield/
	Balance			Interest		Cost			Balance			Interest		Cost
	(Dollars in thousands)
Interest-earning assets:
Loans and leases	$	31,454,312		$	387,217		4.93	%	$	26,101,819		$	367,602		5.64	%
Mortgage-backed securities:
Available for sale		7,422,621			80,146		4.32			14,010,057			154,490		4.41
Held to maturity		196,265			2,823		5.75			395,598			6,858		6.94
Investment securities:
Available for sale		224,495			2,992		5.33			256,677			3,297		5.14
Held to maturity		3,595			47		5.28			3,957			56		5.74
Other interest-earning assets		751,409			7,586		3.99			839,597			7,856		3.70

Total interest-earning assets		40,052,697			480,811		4.80			41,607,705			540,159		5.19

Allowance for loan and lease losses		(390,693	)							(360,448	)
Noninterest-earning assets		2,963,313								3,044,576

Total assets	$	42,625,317							$	44,291,833

Interest-bearing liabilities:
Deposits:
Checking accounts	$	4,874,822			9,730		.80		$	6,951,974			23,412		1.35
Money market and savings accounts		8,546,445			20,233		.95			8,332,278			31,204		1.50
Certificates of deposit		9,976,862			60,696		2.45			9,733,110			72,118		2.97

Total deposits		23,398,129			90,659		1.56			25,017,362			126,734		2.03

Federal Home Loan Bank advances		10,166,098			71,036		2.80			11,397,410			104,025		3.66
Other borrowings		968,900			10,917		4.50			874,062			13,969		6.38

Total borrowings		11,134,998			81,953		2.95			12,271,472			117,994		3.85

Total interest-bearing liabilities		34,533,127			172,612		2.01			37,288,834			244,728		2.63

Noninterest-bearing liabilities:
Demand deposit accounts		3,524,462								2,308,993
Other noninterest-bearing liabilities		1,321,750								1,349,173

Total noninterest-bearing liabilities		4,846,212								3,658,166

Total liabilities		39,379,339								40,947,000

Shareholders’ equity		3,245,978								3,344,833

Total liabilities and shareholders’ equity	$	42,625,317							$	44,291,833

Net interest income				$	308,199							$	295,431

Interest rate spread							2.79								2.56
Net yield on average interest- earning assets							3.08								2.84
Average interest-earning assets to average interest-bearing liabilities							115.98	%							111.58	%

~~Figure 3 shows the approximate relative contribution of changes in average~~8 interest rates and volume to changes in net interest income for the periods indicated. Changes not attributable solely to volume or rate have been allocated in proportion to the changes due to volume and rate. Amortization of net deferred loan costs and automobile dealer reserves included as a reduction in interest income was $26.9 million and $26.1 million for the three months ended September 30, 2003 and 2002, respectively, and $83.3 million and $74.2 million for the nine months ended September 30, 2003 and 2002, respectively.

					Three Months Ended September 30,									Nine Months Ended September 30,
		Six Months Ended
					2003 v. 2002									2003 v. 2002
		6/30/04									6/30/03
					Increase (decrease) due to									Increase (decrease) due to
								Avg.									Avg.
					Rate			Volume			Total			Rate			Volume			Total
		Average						Yield/			Average						Yield/
					(Dollars in thousands)
		Balance			Interest			Cost			Balance			Interest			Cost
Interest income:
		(Dollars in thousands)
	Loans and leases				$	(65,820	)	$	24,535		$	(41,285	)	$	(189,122	)	$	50,268		$	(138,854	)
Interest-earning assets:
	Mortgage-backed securities:
Loans and leases		$	30,336,896		$	754,561			4.98	%	$	25,977,336		$	745,326			5.75	%
		Available for sale				(42,830	)		37,426			(5,404	)		(114,553	)		160,049			45,496
Mortgage-backed securities:
		Held to maturity				624			(5,993	)		(5,369	)		1,852			(19,155	)		(17,303	)
Available for sale			8,477,500			187,813			4.43			13,337,098			303,801			4.56
	Investment securities:
Held to maturity			212,886			6,194			5.82			438,005			15,127			6.91
		Available for sale				(750	)		1,374			624			(2,505	)		3,882			1,377
Investment securities:
		Held to maturity				—			(10	)		(10	)		12			(43	)		(31	)
Available for sale			239,964			6,596			5.50			231,906			6,340			5.47
	Other interest-earning assets					444			(2,642	)		(2,198	)		826			(5,173	)		(4,347	)
Held to maturity			3,598			95			5.30			4,008			110			5.51
			Total			(108,332	)		54,690			(53,642	)		(303,490	)		189,828			(113,662	)
Other interest-earning assets			787,304			15,379			3.86			801,391			15,241			3.78
Interest expense:
Total interest-earning assets			40,058,148			970,638			4.85			40,789,744			1,085,945			5.33
	Checking accounts					(18,144	)		(617	)		(18,761	)		(43,166	)		11,598			(31,568	)
Allowance for loan and lease losses			(389,199	)								(343,860	)
	Money market and savings accounts					(22,080	)		1,056			(21,024	)		(54,156	)		7,179			(46,977	)
Noninterest-earning assets			3,008,141									3,097,175
	Certificates of deposit					(12,121	)		6,947			(5,174	)		(43,225	)		(2,689	)		(45,914	)
Total assets		$	42,677,090								$	43,543,059
	Federal Home Loan Bank advances					(15,308	)		12,392			(2,916	)		(73,784	)		67,049			(6,735	)
Interest-bearing liabilities:
	Other borrowings					(308	)		(450	)		(758	)		(2,693	)		11,726			9,033
Deposits:
				Total		(67,961	)		19,328			(48,633	)		(217,024	)		94,863			(122,161	)
Checking accounts		$	5,206,702			20,166			.78		$	7,245,197			54,030			1.50
Change in net interest income					$	(40,371	)	$	35,362		$	(5,009	)	$	(86,466	)	$	94,965		$	8,499
Money market and savings accounts			8,549,931			39,987			.94			8,131,890			61,530			1.53
Certificates of deposit			10,074,494			126,392			2.52			9,648,034			144,917			3.03
Total deposits			23,831,127			186,545			1.57			25,025,121			260,477			2.10
Federal Home Loan Bank advances			10,177,800			147,283			2.90			10,906,526			203,824			3.76
Other borrowings			1,035,442			24,057			4.64			870,299			27,172			6.24
Total borrowings			11,213,242			171,340			3.06			11,776,825			230,996			3.95
Total interest-bearing liabilities			35,044,369			357,885			2.05			36,801,946			491,473			2.69
Noninterest-bearing liabilities:
Demand deposit accounts			3,064,520									2,163,822
Other noninterest-bearing liabilities			1,319,588									1,306,110
Total noninterest-bearing liabilities			4,384,108									3,469,932
Total liabilities			39,428,477									40,271,878
Shareholders’ equity			3,248,613									3,271,181
Total liabilities and shareholders’ equity		$	42,677,090								$	43,543,059
Net interest income					$	612,753								$	594,472
Interest rate spread									2.80									2.64
Net yield on average interest- earning assets									3.06									2.91
Average interest-earning assets to average interest-bearing liabilities									114.31	%								110.83	%

~~Net interest income was $285.3 million for the three months ended September 30,~~9 2003, down $5.0 million, or 1.7%, from the third quarter of 2002. Net yield on average interest-earning assets during the third quarter of 2003 was 2.80%, down 37 basis points from the third quarter of 2002. The reduction in net interest income and the net yield resulted from downward pressure on asset yields in the declining interest rate environment, offset in part by the benefits obtained from deposit and borrowings repricings in the past year.

InFigure 3 shows the ~~present~~approximate ~~interest~~relative ~~rate~~contribution ~~environment,~~of ~~Charter~~changes ~~One~~in ~~expects~~average interest rates and volume to ~~limit~~changes ~~its asset~~in ~~growth~~net ~~over~~interest ~~the~~income ~~next~~for ~~few~~the ~~quarters~~periods indicated. ~~This~~Changes ~~will~~not besolely ~~accomplished~~attributable ~~through~~to volume or rate have been ~~efforts~~allocated toin ~~reduce~~proportion ~~Charter~~to ~~One’s~~the ~~combined~~changes ~~one-~~due to~~-four~~ ~~family~~volume and ~~mortgage-backed securities~~rate. ~~portfolios,~~Amortization ~~offset~~of net bydeferred anloan ~~expected~~costs ~~increase~~and inautomobile ~~non~~dealer ~~one-to-four~~reserves ~~family loans.~~included Asas a ~~result~~reduction in ofinterest ~~this~~income ~~strategy~~was $31.4 and ~~assuming~~$28.9 million nofor ~~additional~~the ~~reductions~~three inmonths ended June ~~core~~30, ~~deposit~~2004 ~~repricings~~and 2003, ~~net~~respectively, ~~interest~~and ~~income~~$63.7 ~~could~~and ~~experience~~$56.4 million ~~further~~for ~~pressure~~the six months inended ~~the~~June 30, ~~near~~2004 ~~term~~and 2003, respectively.

~~Provision~~Rate/Volume ~~for~~Analysis ~~Loan~~(Figure ~~and Lease Losses~~3)

The provision for loan and lease losses for the three months ended September 30, 2003 was $37.7 million, a decrease of $10.0 million from the three months ended September 30, 2002. The ratio of the allowance for loan and lease losses to total loans and leases before the allowance increased to 1.37% at September 30, 2003 from 1.24% at December 31, 2002 and 1.13% at September 30, 2002. The provision for loan and lease losses for the nine months


	Three Months Ended June 30,									Six Months Ended June 30,
	2004 v. 2003									2004 v. 2003
	Increase (decrease) due to									Increase (decrease) due to
	Rate			Volume			Total			Rate			Volume			Total
	(Dollars in thousands)
Interest income:
Loans and leases	$	(50,976	)	$	70,591		$	19,615		$	(108,444	)	$	117,679		$	9,235
Mortgage-backed securities:
Available for sale		(3,152	)		(71,192	)		(74,344	)		(8,115	)		(107,873	)		(115,988	)
Held to maturity		(1,019	)		(3,016	)		(4,035	)		(2,096	)		(6,837	)		(8,933	)
Investment securities:
Available for sale		120			(425	)		(305	)		35			221			256
Held to maturity		(4	)		(5	)		(9	)		(4	)		(11	)		(15	)
Other interest-earning assets		592			(862	)		(270	)		409			(271	)		138

Total		(54,439	)		(4,909	)		(59,348	)		(118,215	)		2,908			(115,307	)

Interest expense:
Checking accounts		(7,893	)		(5,789	)		(13,682	)		(21,360	)		(12,504	)		(33,864	)
Money market and savings accounts		(11,934	)		962			(10,972	)		(24,964	)		3,421			(21,543	)
Certificates of deposit		(13,187	)		1,766			(11,421	)		(24,707	)		6,182			(18,525	)
Federal Home Loan Bank advances		(18,892	)		(14,097	)		(32,989	)		(33,823	)		(22,718	)		(56,541	)
Other borrowings		(1,587	)		(1,465	)		(3,052	)		(1,265	)		(1,850	)		(3,115	)

Total		(53,493	)		(18,623	)		(72,116	)		(106,119	)		(27,469	)		(133,588	)

Change in net interest income	$	(946	)	$	13,714		$	12,768		$	(12,096	)	$	30,377		$	18,281

11Net interest income was $308.2 million for the three months ended June 30, 2004, up $12.8 million, or 4.3%, from the second quarter of 2003. Net yield on average interest-earning assets during the second quarter of 2004 was 3.08%, up 24 basis points from the second quarter of 2003. The improvement was attributable to the increase in average noninterest-bearing deposits, as well as a full quarter’s benefit from the prepayment of $2.3 billion in fixed rate FHLB advances on January 27, 2004. These FHLB advances carried a weighted average cost of 6.27% and were due to mature between June 2005 and January 2006.

~~Table~~Net interest income was $612.8 million for the six months ended June 30, 2004, up $18.3 million, or 3.1%, from the comparable period of ~~Contents~~2003. Net yield on average interest-earning assets during the six months ended June 30, 2004 was 3.06%, up 15 basis points from the six months ended June 30, 2003. The improvement was attributable to the increase in average noninterest-bearing deposits, as well as five months’ benefit from the prepayment of $2.3 billion in fixed rate FHLB advances discussed above.

~~ended~~Provision September 30, 2003 was $134.5 million, an increase of $2.8 million from the comparable period in 2002. The increased provision year over year was necessary to cover higher charge-offs and maintain the allowance for ~~loan~~Loan and ~~lease~~ ~~losses~~Lease ~~at a level considered adequate to absorb losses inherent in the~~Losses ~~loan and lease portfolio. Additionally, the provision for loan and lease~~ ~~losses was increased to reflect the continued weakening in the national economy~~ ~~in the first nine months of 2003, specifically in the airline industry.~~

AsThe ~~part~~provision offor ~~the~~loan ~~Bank’s~~and ~~conversion~~lease inlosses ~~May~~for ~~2002~~the tothree amonths ~~national~~ended ~~bank subject to~~June 30, ~~regulation~~2004 bywas ~~the~~$7.2 million, ~~Office~~a decrease of ~~the~~$28.2 million ~~Comptroller~~from of the ~~Currency~~three ~~(“OCC”),~~months ~~the~~ended ~~Company~~June 30, ~~conformed~~2003. ~~various~~Net ~~policies~~charge-offs ~~and~~totaled ~~reporting~~$17.8 million ~~practices~~for ~~associated~~the ~~with~~three months ~~asset~~ended ~~quality~~June 30, to2004, ~~more~~compared ~~closely~~to ~~compare~~$19.9 million tofor ~~those~~the ofthree ~~its~~months ~~commercial~~ended ~~bank~~June 30, ~~peers~~2003. ~~These~~ ~~changes~~The ~~neither~~ratio ~~increased~~of ~~nor decreased ultimate~~ net ~~loan and lease~~ charge-offs. ~~They~~as ~~only~~a ~~affected~~percent ~~the timing~~ of ~~recognizing~~average ~~net~~loans ~~consumer asset~~and ~~charge-offs~~leases ~~through~~decreased ~~the~~seven ~~allowance~~basis ~~for~~points ~~loan~~to ~~and~~.23% ~~lease~~(annualized) for ~~losses and~~ the ~~disclosure~~second quarter of ~~underperforming~~2004 ~~consumer~~compared ~~assets~~to .30% ~~Consumer~~(annualized) for ~~assets~~the ~~include~~second ~~single-family, retail~~quarter ~~consumer,~~of ~~automobile and consumer finance loan portfolios~~2003. ~~These changes~~The ~~had~~underlying notrends ~~impact~~in onasset ~~Charter~~classifications, ~~One’s non~~charge-~~consumer~~offs ~~loan~~and ~~portfolios,~~other ~~which include~~credit ~~commercial~~indicators ~~real~~warranted ~~estate~~a ~~and~~reduction ~~corporate~~in ~~loans~~the ~~and~~provision ~~its~~for ~~lease~~loan ~~portfolio,~~and aslease ~~these~~losses ~~portfolios~~year ~~already~~over ~~conformed with OCC-regulated banking practices~~year.

The ~~most~~provision ~~significant~~for ~~effect~~loan ~~of the change in charge-off policy was in the automobile~~ and ~~consumer~~lease ~~finance~~losses ~~portfolios.~~for ~~Prior to~~ the ~~second~~six ~~quarter~~months ~~of 2002,~~ended ~~automobile loans were charged off at the point of repossessed collateral disposition. Beginning with the second quarter of 2002~~June 30, ~~consistent with~~2004 ~~OCC-regulated~~was ~~banking practices~~$25.8 million, ~~automobile~~a ~~loans~~decrease ~~going through repossession or bankruptcies were written down to the net realizable value~~ of ~~the collateral at the time of the repossession or bankruptcy discharge~~$71.1 million ~~Any~~from ~~automobile loan that reached~~ the ~~120-day~~comparable ~~delinquency~~period ~~point was charged off completely. Charge-offs in the consumer finance portfolio were previously recognized at the point~~ of ~~foreclosure~~2003. ~~Beginning~~Net ~~with the second quarter of 2002, consistent with OCC~~charge-~~regulated~~offs ~~banking~~totaled practices, consumer finance loans, along with other loans backed by single-family residential real estate collateral, were reflected at the lower of cost or net realizable value at the earliest point of six payments past due or foreclosure. These policy changes resulted in an additional $2735.3 million offor ~~charge-offs recognized during~~ the ~~second~~six ~~quarter~~months ~~of 2002.~~ended

~~Excluding the charge-offs associated with the 2002 policy change discussed~~10 above, net charge-offs totaled $24.7 million and $78.1 million in the three and nine months ended September 30, 2003, respectively, compared to $22.1 million and $70.2 million in the three and nine months ended September 30, 2002, respectively. The $78.1 million of net charge-offs for 2003 included a $6.1 million charge-off related to the resolution of a $19.6 million airline lease in the first quarter of 2003, as well as a $2.1 million charge-off on an airline lease in the second quarter of 2003.

~~See~~June 30, ~~“Financial~~2004, ~~Condition~~compared –to ~~Asset~~$53.4 million ~~Quality”~~for the six months ended June 30, 2003. The ratio of net charge-offs as a percent of average loans and leases decreased 18 basis points to .23% (annualized) for ~~further~~the ~~information~~six ~~regarding~~months ~~our~~ended June ~~allowance~~30, 2004 compared to .41% (annualized) for ~~loan~~the ~~and~~six ~~lease~~months ~~losses~~ended June 30, 2003.

~~Other~~See ~~Income~~“Financial Condition – Asset Quality” for further information regarding our allowance for loan and lease losses.

Other ~~income for the three months ended September 30, 2003 was $180.4 million,~~Income ~~an increase of $41.3 million, or 29.7%, over the $139.1 million for the three~~ ~~months ended September 30, 2002. The increase was primarily attributable to~~ income from retail banking and mortgage banking. Retail banking income increased $10.0 million, or 11.9%, over the comparable period in 2002. The biggest driver of the increase was deposit-related revenue, which totaled $82.7 million in the third quarter of 2003, up 14.4% over the year ago quarter. Deposit-related revenue reflected the benefits of our strategy to emphasize noninterest-bearing checking account growth. Offsetting the benefits of this strategy was the impact of reduced revenue from debit card transactions that resulted from the April 27, 2003 MasterCard International, Inc. settlement of a class action lawsuit with Wal-Mart Stores, Inc. and other retailers. The settlement, which went into effect August 1, 2003, reduced third quarter revenue by approximately $2.3 million. Without that reduction, third quarter 2003 deposit–related revenue would have been up 17.5% over the third quarter of 2002. The other components of retail banking revenue include fees from retail brokerage activities ($7.6 million, down 10.7% from the year ago quarter) and other revenue related to retail operations ($3.9 million, up 15.8% from the year ago quarter).

~~With~~Other ~~respect~~income tofor ~~retail~~the ~~franchise~~three ~~development~~months ~~activities~~ended June 30, we2004 ~~are~~was ~~planning aggressive de novo expansion during 2003 and 2004~~$166.8 million, ~~The 2003 goal is to open~~a ~~approximately~~decrease ~~125~~of ~~new banking centers~~$11.1 million, ~~with~~or ~~99 in-store and 26 traditional locations~~6.3%, Wefrom ~~expect additional expansion during 2004~~$178.0 million ~~During~~for the ~~third~~three months ~~quarter~~ended ofJune 30, 2003,. weThis ~~opened~~decrease 44was ~~new~~primarily ~~banking~~attributable ~~centers,~~to ~~for~~net ~~a total of 92 new~~losses, ~~banking~~partially ~~centers~~offset ~~since~~by ~~December 31,~~an ~~2002~~increase ~~(excluding~~in 13retail banking ~~centers~~income, ~~added~~mortgage inbanking ~~the~~income ~~July~~and ~~2003~~income ~~acquisition~~from ofleasing ~~Advance Bancorp)~~operations.

12Net losses totaled $14.2 million for the second quarter of 2004, compared to net gains of $108.5 million for the second quarter of 2003. Net losses for the second quarter of 2004 included $26.0 million in net losses from the sale of $1.9 billion of mortgage-backed securities. These mortgage-backed securities were sold as part of our ongoing strategy to reduce single-family exposure and the overall duration of interest-earning assets. We did not utilize any special-purpose entities for the sale of any of our mortgage-backed securities.

~~Table~~Mortgage banking income was $59.3 million for the three months ended June 30, 2004, compared to a loss of ~~Contents~~$23.9 million for the second quarter of 2003. During the second quarter of 2004, we reduced our valuation allowance on mortgage servicing rights by $47.0 million in response to the increase in interest rates. In the year ago quarter, we increased the valuation allowance on mortgage servicing rights by $9.5 million, and recorded a permanent impairment charge of $37.2 million. Total mortgage banking income, excluding the adjustments to the valuation allowance and the permanent impairment charge discussed above, was $12.3 million and $22.8 million in the second quarters of 2004 and 2003, respectively. This reduction in year over year mortgage banking income was due primarily to the decrease in the portfolio of loans serviced for others and lower mortgage production as compared to 2003. The portfolio of loans serviced for others totaled $15.1 billion, down 10.5% since December 31, 2003 and down 20.3% since June 30, 2003. The related mortgage servicing rights totaled $188.2 million at June 30, 2004. With an average servicing spread of 35.6 basis points, that translates into a servicing asset valuation of 3.5 times the servicing spread.

~~Mortgage~~Retail banking income ~~totaled~~was $65115.62 million for the three months ended ~~September~~ June 30, ~~2003~~ 2004, an increase of $~~102~~18.61 million, ~~over~~or ~~the $37~~18.~~0 million~~7%, ~~loss recorded~~over ~~for~~ the three months ended ~~September~~ June 30, ~~2002~~2003. ~~Due~~The tobiggest ~~slower projected~~driver ~~prepayment~~of ~~speeds~~the inincrease ~~our~~was ~~loan~~deposit-related ~~servicing portfolio~~revenue, which wetotaled ~~recorded a~~ $50101.37 million ~~decrease~~for in the ~~valuation~~three ~~allowance~~months onended ~~mortgage servicing assets in the third quarter of 2003, resulting in an ending valuation allowance of $82.7~~June ~~million. Total mortgage banking income~~30, ~~excluding the $50.3 million decrease in the valuation allowance~~2004, ~~was~~up ~~$15~~19.~~4 million in the third quarter of~~8% ~~2003.~~over In the year ago quarter~~, mortgage banking income totaled $19~~.~~0 million, excluding~~ aThe ~~$56.0 million~~ increase in ~~the~~debit ~~valuation~~card ~~allowance.~~transactions ~~The portfolio~~continued ofto ~~loans~~be ~~serviced~~one ~~for~~of ~~others~~the ~~totaled~~biggest ~~$16.7 billion~~contributors atto ~~September 30,~~deposit-related ~~2003,~~revenue ~~and~~growth. The ~~carried~~dollar avolume ~~weighted~~of ~~average~~debit ~~coupon~~card oftransactions ~~6.24~~was 40%. ~~The~~higher ~~portfolio~~in ~~decreased slightly from~~ the ~~third~~second quarter of ~~2002~~2004 ~~reflecting~~than ~~prepayments~~in ~~and~~ the ~~lack~~same ~~of securitization activity during the third~~ quarter of ~~2003~~last year. The ~~related~~other ~~mortgage~~components of retail ~~servicing~~banking ~~assets~~revenue ~~were~~included ~~1.01%~~fees offrom ~~the~~retail ~~portfolio,~~brokerage oractivities ($~~168~~9.78 million, ~~at September~~ ~~30,~~up ~~2003~~16.4% ~~With~~from anthe ~~average~~year ~~servicing~~ago ~~spread~~quarter) ofand 35other ~~basis~~revenue ~~points,~~related ~~that~~to ~~translates~~retail ~~into~~operations a($3.7 million, ~~servicing~~down ~~asset valuation of 2~~3.90% ~~times~~from the ~~servicing~~year ~~spread~~ago quarter).

~~Net~~Income ~~gains~~from ~~totaled~~leasing ~~$16.1 million~~operations ~~for~~was ~~the third quarter of 2003,~~ a ~~decrease~~loss of ~~$67.8 million~~ ~~from the~~ $~~83.9 million~~597,000 ofin ~~net gains for~~ the ~~third~~second quarter of ~~2002. Net gains for the third quarter of 2003 included $28.0 million of net gains from the sale of $2.4 billion of mortgage-backed securities~~2004, ascompared ~~well~~with ~~as $4.7 million in gains on interest-rate exchange agreements that do not qualify for hedge accounting under SFAS No. 133. Offsetting the gains was~~ a loss of ~~$18.0 million~~ ~~from the termination of a~~ $~~250~~12.02 million ~~FHLB advance (with a weighted average cost of 4.99%) scheduled to mature~~ in ~~2006. Net gains for~~ the ~~third~~ second quarter of ~~2002 included $107~~2003.~~8 million of net gains from the sale of~~ ~~$4.5 billion~~Residual ofvalue ~~mortgage-backed~~adjustments ~~securities,~~reduced ~~offset~~income by a $~~22.~~1.6 million ~~unrealized~~ ~~loss~~in onthe ~~interest~~three ~~rate swaps that are accounted for at fair value~~months ~~under~~ended ~~SFAS No.~~June ~~133.~~30, ~~The~~2004, and $2212.18 million ~~unrealized loss was the result of the decline~~ in ~~interest rates during~~ the ~~third~~year ~~quarter~~ago ~~of 2002~~quarter. ~~We did not utilize~~ ~~any special-purpose entities for the sale of any of our mortgage-backed~~ ~~securities.~~

~~Leasing~~Other ~~operations~~income ~~reflected~~for athe ~~loss~~six months ended June 30, 2004 was $172.0 million, a decrease of $167.8 million, or 49.4%, from $339.18 million infor the ~~third~~six ~~quarter of~~months ended June 30, 2003. This decrease was primarily attributable to net losses, partially offset by an increase in income from leasing operations. Net losses totaled $105.3 million for the six months ended June 30, 2004, compared to ~~income~~net gains of $~~404,000~~185.2 million for the ~~third~~six ~~quarter~~months ofended ~~2002~~June 30, 2003. ~~The~~Net losses for ~~decline~~the in2004 ~~income~~period ~~resulted~~included ~~from~~a $5164.5 million indebt ~~residual~~prepayment ~~adjustments~~penalty. onAs ~~miscellaneous~~discussed ~~equipment~~in “Performance Overview” above, ~~none~~we prepaid $2.3 billion in fixed rate FHLB advances in January 2004 and incurred a debt prepayment penalty of $164.5 million ~~which~~before ~~was~~tax. ~~related~~Transactions resulting in net gains and losses are primarily undertaken in an effort to mitigate interest rate risk while still achieving targeted net interest yield by managing the ~~aircraft~~size ~~industry~~and mix of the Bank’s interest sensitive asset and liability portfolios.

~~Other~~Income ~~income~~from ~~for~~leasing ~~the~~operations ~~nine months ended September 30, 2003~~ was $~~520~~1.25 million~~, an~~ ~~increase of $124.8 million, or 31.6%, over the $395.4 million~~ for the ~~nine~~ six months ended ~~September~~ June 30, ~~2002.~~2004, ~~Retail~~compared ~~banking~~with ~~income~~a ~~increased~~loss of $3319.91 million~~, or~~ ~~14.0%,~~ for the ~~nine~~six months ended ~~September~~ June 30, 2003. ~~The~~Residual ~~reasons~~value ~~for~~adjustments ~~this increase~~reduced ~~were~~income ~~substantially~~by ~~the same as for the third quarter results discussed in the above paragraphs. Net gains totaled~~ $~~201~~21.35 million ~~for~~in the ~~nine months~~six ~~ended September 30, 2003, an increase of $57.9 million over the comparable 2002 period. Net gains for the nine~~ months ended ~~September~~June 30, 2003 ~~included $211~~.4 ~~million in net gains from the sale of $8.1 billion in mortgage-backed~~ ~~securities, as well as $7.0 million in gains on interest-rate exchange~~ agreements that do not qualify for hedge accounting under SFAS No. 133. Offsetting the gains was a loss of $18.0 million from the termination of a $250.0 million FHLB advance (with a weighted average cost of 4.99%) scheduled to mature in 2006. We did not utilize any special-purpose entities for the sale of any of our mortgage-backed securities.

~~Mortgage~~Administrative ~~banking income totaled $41.7 million for the nine months ended~~Expenses ~~September 30, 2003, compared to a loss of $16.5 million for the nine months~~ ~~ended September 30, 2002. Due to slower projected prepayments in our loan~~ servicing portfolio, we recorded a net $20.1 million decrease in the valuation allowance on mortgage servicing assets during the nine months ended September 30, 2003. However, a permanent impairment charge of $37.2 million was recorded during the second quarter of 2003.

~~Leasing~~Administrative ~~operations~~expenses ~~reflected~~were ~~a loss of~~ $23225.29 million for the ~~nine~~three months ended ~~September~~ June 30, ~~2003~~ 2004, ~~compared~~an toincrease ~~income~~ of $~~991,000 for the nine months ended September 30, 2002~~31. ~~The decline in income resulted from $21.5~~1 million, ~~in residual~~or ~~adjustments~~16.0%, ~~which~~from ~~were primarily related to~~ the ~~Company’s~~second ~~aircraft leasing~~quarter ~~portfolio~~of ~~and $5~~2003.~~5 million in residual adjustments on miscellaneous~~ ~~equipment,~~The ~~none~~increase ofin ~~which~~administrative expenses was ~~related to the aircraft industry.~~primarily

~~Administrative Expenses~~11

~~Administrative~~attributable ~~expenses~~to ~~were~~increased compensation expense and marketing costs. Compensation expense increased $~~572~~11.93 million ~~for~~and ~~the~~was ~~nine~~primarily ~~months~~due ~~ended~~to ~~September~~operating ~~30,~~more banking centers than a year ago. During 2003, we initiated an ~~increase~~aggressive de ofnovo ~~$70~~branch expansion plan.8 These efforts led to the net addition of 130 new banking centers since June ~~million~~30, ~~or 14.1%~~2003, ~~from~~including ~~the~~36 ~~2002~~net ~~period.~~new ~~The~~banking centers ~~increase~~opened in ~~administrative~~the ~~expenses~~second ~~was~~quarter ~~substantially~~of 2004. Our plan is to continue the ~~same~~expansion asin 2004 for ~~the~~a ~~third~~total of 125 additional banking centers. Marketing costs increased by $10.8 million from the year-ago quarter ~~results~~as ~~discussed~~we inprovided ~~the~~ongoing ~~above~~support ~~paragraph.~~for our retail bank expansion strategy and other franchise enhancing initiatives. Our efficiency ratio was 40 47.9256% for the ~~nine~~three months ended ~~September~~June 30, ~~2003~~2004, compared to 3941.6414% for the ~~nine~~ three months ended ~~September~~June 30, ~~2002~~2003.

13Administrative expenses were $443.9 million for the six months ended June 30, 2004, an increase of $65.9 million, or 17.4%, from the six months ended June 30, 2003. The increase in administrative expenses was substantially the same as for the second quarter results discussed in the above paragraph. Due to the penalty associated with the debt prepayment discussed in “Performance Overview” above, the efficiency ratio was 56.57% for the six months ended June 30, 2004. Excluding the $164.5 million debt prepayment penalty, the efficiency ratio was 46.77% for the six months ended June 30, 2004, compared to 40.46% for the six months ended June 30, 2003.

~~Table~~Federal ofIncome ~~Contents~~Tax

Federal ~~Income~~income ~~Tax~~tax expense for the three months ended June 30, 2004 was $75.6 million, compared to $77.2 million for the same period in 2003. The primary reason for this decrease in the provision for federal income taxes was a decrease in pre-tax income. The effective tax rate was 31.3% for the 2004 period and 31.8% for the 2003 period.

Federal income tax expense for the ~~three~~six months ended ~~September~~June 30, ~~2003~~2004 was $7498.0 5 million, compared to $66145.89 million for the same period in ~~2002~~2003. The ~~primary~~ primary reason for this ~~increase~~decrease in the provision for federal income taxes was a andecrease ~~increase~~in pre-tax income. This decrease in pre-tax income was primarily attributable to our prepayment penalty of $164.5 million on the early termination of the FHLB advances in the first quarter of 2004. The effective tax rate was 31.73% for ~~both~~ the ~~2003~~ 2004 period and ~~2002~~31.8% ~~periods~~for the 2003 period.

~~Federal~~FINANCIAL ~~income tax expense for the nine months ended September 30, 2003 was~~CONDITION ~~$219.9 million, compared to $200.9 million for the same period in 2002. The~~ ~~primary reason for this increase in the provision for federal income taxes was~~ ~~an increase in pre-tax income. The effective tax rate was 31.7% for both the 2003 and 2002 periods.~~

~~FINANCIAL CONDITION~~Overview

At ~~September~~June 30, ~~2003~~2004, total assets were $4342.35 billion, compared to total assets of $4142.96 billion at December 31, ~~2002. As illustrated in Figure 5 below, loan and lease originations totaled a record $20.0 billion in the nine months ended September 30,~~ 2003~~, compared to $14~~.~~7 billion in the nine months~~ ~~ended September 30, 2002. Non one-to-four family loan originations totaled $9.3~~ ~~billion, or 46.4% of the total. The non one-to-four family activity was led by~~ ~~$3.7 billion in consumer loans and $2.9 billion in auto finance loans.~~

AsLoans ~~discussed~~and ~~in “Results of Operations – Net Interest Income,” we intend to~~Leases ~~limit balance sheet growth in the current interest rate environment by reducing~~ ~~our one-to-four family exposure. This strategy will likely constrain the~~ growth in net interest income for the near term. At September 30, 2003, we had committed to sell $1.6 billion in mortgage-backed securities for a pre-tax gain of $41.7 million to be recognized in the fourth quarter of 2003.

Composition of Loans and Leases (Figure 4)


	6/30/04			12/31/03
	(Dollars in thousands)
One-to-four family:
Permanent:
Fixed rate	$	8,422,124		$	6,001,695
Adjustable rate		2,608,089			2,830,677
Construction		510,957			485,354

		11,541,170			9,317,726

Commercial real estate:
Multifamily		866,076			776,528
Commercial		1,276,177			1,193,377
Construction		583,999			521,680

		2,726,252			2,491,585

Consumer:
Retail		6,899,475			5,491,923
Automobile		6,245,154			6,364,703
Consumer finance		1,395,972			1,092,533

		14,540,601			12,949,159

Business:
Leasing		2,244,746			2,195,418
Corporate banking		1,926,983			1,680,293

		4,171,729			3,875,711

Loans and leases before allowance for loan and lease losses		32,979,752			28,634,181
Allowance for loan and lease losses		(374,236	)		(383,733	)

					9/30/03			12/31/02
					(Dollars in thousands)
	One-to-four family:
		Permanent:
			Fixed rate		$	6,737,463		$	5,869,554
			Adjustable rate			2,600,507			2,437,166
		Construction				451,093			427,729
						9,789,063			8,734,449
	Commercial real estate:
		Multifamily				752,006			730,263
		Commercial				1,181,362			1,024,840
		Construction				528,628			506,178
						2,461,996			2,261,281
	Consumer:
		Retail				4,999,488			5,494,453
		Automobile				6,376,830			5,606,329
		Consumer finance				1,073,054			984,772
						12,449,372			12,085,554
	Business:
		Leasing				2,166,350			2,133,468
		Corporate banking				1,553,739			1,318,003
						3,720,089			3,451,471
	Loans and leases before allowance for loan and lease losses					28,420,520			26,532,755
	Allowance for loan and lease losses					(389,355	)		(328,017	)
				Loans and leases, net(1)	$	28,031,165		$	26,204,738
Portfolio of loans serviced for others					$	16,700,490		$	16,893,609


	6/30/04		12/31/03
	(Dollars in thousands)
Loans and leases, net(1)	$	32,605,516	$	28,250,448

Portfolio of loans serviced for others	$	15,104,799	$	16,877,169

~~Table~~(1) ofIncludes ~~Contents~~loans held for sale.

Loan and Lease Activity (Figure 5)

Three Months Ended

~~Three Months Ended~~

Six Months Ended

~~Nine Months Ended~~

9/30/03

9/30/02

9/30/03

9/30/02

6/30/04

6/30/03

6/30/04

6/30/03

(Dollars in thousands)

~~(Dollars in thousands)~~

Originations:

Real estate:

Permanent:

~~Permanent:~~

One-to-four family

~~One-to-four family~~$

1,807,730

3,~~896~~555,~~869~~968

2,~~481~~969,~~022~~276

106,~~548~~651,~~555~~686

~~7,113,855~~

Multifamily

~~Multifamily~~

100,048

7557,~~185~~451

49176,~~187~~040

~~184~~108,~~076~~891

~~108,885~~

Commercial

~~Commercial~~

134,427

~~124~~60,~~806~~226

48262,~~601~~697

~~275~~150,~~245~~439

~~175,375~~

Total permanent loans

~~Total permanent loans~~2,042,205

43,~~096~~673,~~860~~645

23,~~578~~408,~~810~~013

116,~~007~~911,~~876~~016

~~7,398,115~~

Construction:

~~Construction:~~

One-to-four family

~~One-to-four family~~

68,310

6253,~~180~~537

54157,~~377~~161

~~151~~89,~~273~~093

~~27,720~~

Multifamily

~~Multifamily~~

36,545

307,~~371~~613

1367,~~950~~286

5726,~~267~~896

~~38,938~~

Commercial

~~Commercial~~

123,846

1630,~~656~~246

29241,~~385~~079

5741,~~732~~076

~~111,108~~

Total construction loans

~~Total construction loans~~228,701

~~109~~91,~~207~~396

97465,~~712~~526

~~266~~157,~~272~~065

~~177,766~~

Total real estate loans originated

2,270,906

~~Total real estate loans originated~~

43,~~206~~765,~~067~~041

23,~~676~~873,~~522~~539

117,~~274~~068,~~148~~081

~~7,575,881~~

Retail consumer

1,628,263

1,~~431~~209,~~291~~221

~~948~~2,~~632~~682,292

32,~~719~~288,~~802~~511

~~2,885,687~~

Automobile

739,204

~~909~~1,~~477~~026,245

1,~~012~~403,~~926~~840

2,~~916~~007,~~836~~359

~~2,478,734~~

Consumer finance

189,048

~~128~~122,~~536~~839

73294,~~931~~681

~~353~~224,~~302~~766

~~185,352~~

Leases

122,334

~~152~~73,~~279~~946

~~110~~277,~~428~~613

~~327~~175,~~796~~517

~~321,013~~

Corporate banking

677,889

~~443~~473,~~732~~677

~~512~~1,~~600~~193,153

1922,~~365,735~~003

~~1,265,413~~

Total loans and leases originated

~~Total loans and leases originated~~5,627,644

76,~~271~~670,~~382~~969

59,~~335~~725,~~039~~118

1912,~~957~~686,~~619~~237

~~14,712,080~~

Acquired through business combinations and purchases

1,088,706

2403,~~737~~324

21,~~637~~559,178

~~409~~407,~~826~~089

~~213,992~~

Sales and principal reductions:

Loans sold

~~Loans sold~~

605,930

1885,~~067,083~~179

~~527~~920,~~011~~390

21,~~715~~648,~~313~~230

~~1,652,269~~

Loans exchanged for mortgage backed securities

~~Loans exchanged for mortgage backed securities~~

51,929

~~225~~2,~~498~~346,609

~~809~~124,~~167~~678

5,~~991~~765,~~223~~725

~~5,066,120~~

Principal reductions

~~Principal reductions~~

3,180,918

3,~~447~~260,~~925~~094

25,~~943~~787,~~422~~110

96,~~733~~285,~~849~~924

~~8,262,966~~

Total sales and principal reductions

3,838,777

~~Total sales and principal reductions~~

46,~~740~~491,~~506~~882

46,~~279~~832,~~600~~178

1813,~~440~~699,~~385~~879

~~14,981,355~~

Increase (decrease) before net items

2,877,573

~~Increase (decrease) before net items~~

2582,~~533,613~~411

14,~~058~~452,~~076~~118

1(606,~~927,060~~553

)

~~(55,283~~

)

Investment and Mortgage-Backed Securities

Figures 6 and 7 summarize our investment and mortgage-backed securities portfolios at ~~September~~June 30, ~~2003~~2004 and December 31, ~~2002~~2003. The amounts reflected represent the fair value of securities available for sale and the amortized cost of securities held to maturity.

Investment Securities (Figure 6)

					9/30/03				12/31/02
		6/30/04				12/31/03
		(Dollars in thousands)			~~(Dollars in thousands)~~
Available for Sale
U.S. Treasury and agency securities	~~U.S. Treasury and agency securities~~	$	55,333		$	~~97,934~~$	101,406		$	~~91,462~~
Securities of U.S. states and political subdivisions	~~Securities of U.S. states and political subdivisions~~		38,131			~~40,323~~	40,180			~~1,898~~
	Corporate and other securities					132,254				116,735
Corporate capital trust			84,738				115,908
		Total investment securities available for sale				270,511				210,095
Other securities			12,432				15,766
Held to Maturity
Total investment securities available for sale			190,634				273,260
	U.S. Treasury and agency securities					262				—
Held to Maturity
Securities of U.S. states and political subdivisions	~~Securities of U.S. states and political subdivisions~~		3,407			~~3,660~~	3,480			~~3,943~~
	Corporate and other securities					30				30
Corporate capital trust and other securities			25				25
Total investment securities held to maturity		~~Total investment securities held to maturity~~	3,432			~~3,952~~	3,505			~~3,973~~
Total		$	~~Total~~194,066		$	~~274,463~~$	276,765		$	~~214,068~~
Weighted average rate	~~Weighted average rate~~		5.88	%		~~5.40~~	%5.48	%		~~5.64~~	%

1513

Mortgage-Backed Securities (Figure 7)

9/30/03

12/31/02

6/30/04

12/10/03

(Dollars in thousands)

~~(Dollars in thousands)~~

Available for Sale

Participation certificates:

~~Participation certificates:~~

U.S. government and agency issues

~~U.S. government and agency issues~~$

5,552,108

109,~~317~~670,~~012~~524

~~10,051,046~~

Collateralized mortgage obligations:

~~Collateralized mortgage obligations:~~

U.S. government and agency issues

~~U.S. government and agency issues~~

237,790

~~657~~511,~~857~~601

~~1,068,518~~

Private issues

~~Private issues~~

6,879

~~103~~11,~~416~~673

~~417,044~~

Total mortgage-backed securities available for sale

~~Total mortgage-backed securities available for sale~~5,796,777

1110,~~078~~193,~~285~~798

~~11,536,608~~

Held to Maturity

Participation certificates:

~~Participation certificates:~~

U.S. government and agency issues

~~U.S. government and agency issues~~

139,566

~~211~~186,~~148~~740

~~311,398~~

Private issues

~~Private issues~~

15,787

2620,~~151~~454

~~51,717~~

Collateralized mortgage obligations:

~~Collateralized mortgage obligations:~~

U.S. government and agency issues

~~U.S. government and agency issues~~

19,720

3325,~~016~~994

~~96,130~~

Private issues

~~Private issues~~

10,554

2218,~~021~~261

~~81,536~~

Total mortgage-backed securities held to maturity

~~Total mortgage-backed securities held to maturity~~185,627

~~292~~251,~~336~~449

~~540,781~~

Total

5,982,404

~~Total~~

1110,~~370~~445,~~621~~247

~~12,077,389~~

Weighted average rate

~~Weighted average rate~~

4.41

4.6757

~~4.95~~

Asset Quality

~~Charter~~The ~~One has a Reserve Adequacy Committee that sets target levels for the~~ allowance for loan and lease losses. ~~The~~totaled ~~Committee meets quarterly and its membership includes management as well as Directors~~$374.2 million ~~That~~at Committee considers several factors as it sets target levels of reserves that are deemed adequate to absorb losses inherent in the loan and lease portfolio. Those factors include internal measurements of asset quality (such as charge-off trendsJune 30, ~~delinquency data~~2004, ~~asset classification trends, and nonperforming and underperforming loan trends), the overall economic environment in~~ which ~~Charter One~~was ~~operates,~~1.13% ~~and the size and mix~~ of ~~the~~total ~~loan and lease portfolio. All outstanding~~ loans and leases ~~are~~at ~~considered~~June 30, ~~when~~2004, ~~evaluating the adequacy of the~~and ~~allowance~~represented ~~for loan and lease losses~~5.3 years ~~These~~coverage ~~various factors are utilized to calculate a range~~ of ~~reserves.~~annualized ~~Based~~second ~~upon~~quarter ~~the~~2004 ~~range calculated, the Committee~~net ~~then sets target levels for reserves~~charge-offs. ~~See also “Provision for Loan and Lease~~ ~~Losses” for further discussion.~~

16Analysis of the Allowance for Loan and Lease Losses (Figure 8)


	Three Months Ended						Six Months Ended
	6/30/04			6/30/03			6/30/04			6/30/03
	(Dollars in thousands)
Allowance for loan and lease losses:
Balance, beginning of period	$	384,842		$	355,926		$	383,733		$	328,017
Provision for loan and lease losses		7,160			35,360			25,776			96,831
Acquired through business combination		—			4,969			—			4,969
Loans and leases charged off:
One-to-four family		(1,763	)		(1,036	)		(2,590	)		(1,706	)
Commercial real estate		(6	)		(253	)		(878	)		(753	)
Retail consumer		(3,322	)		(2,596	)		(5,856	)		(6,074	)
Automobile		(9,698	)		(13,628	)		(23,377	)		(30,078	)
Consumer finance		(4,468	)		(3,975	)		(7,947	)		(8,512	)
Leases		—			(2,095	)		—			(8,156	)
Corporate banking		(4,979	)		(2,652	)		(7,495	)		(9,897	)

Total charge-offs		(24,236	)		(26,235	)		(48,143	)		(65,176	)

Recoveries:
One-to-four family		30			41			41			58
Commercial real estate		46			61			110			209
Retail consumer		752			548			1,386			981
Automobile		4,845			4,561			9,266			8,676
Consumer finance		370			235			598			340
Leases		—			606			433			999
Corporate banking		427			321			1,036			489

Total recoveries		6,470			6,373			12,870			11,752

Net loan and lease charge-offs		(17,766	)		(19,862	)		(35,273	)		(53,424	)

Balance, end of period	$	374,236		$	376,393		$	374,236		$	376,393

Net charge-offs to average loans and leases (annualized)		.23	%		.30	%		.23	%		.41	%

~~Analysis~~In determining the adequacy of the ~~Allowance~~allowance for ~~Loan~~loan and ~~Lease~~lease ~~Losses~~losses, management ~~(Figure~~reviews 8)and evaluates the potential credit risk inherent in the loan and lease portfolio. All outstanding loans and leases are considered in this evaluation process. The evaluation process includes such factors as historical loss experience, credit scores,

					Three Months Ended						Nine Months Ended
					9/30/03			9/30/02			9/30/03			9/30/02
					(Dollars in thousands)
Allowance for loan and lease losses:
	Balance, beginning of period				$	376,393		$	267,155		$	328,017		$	255,478
	Provision for loan and lease losses					37,663			47,695			134,494			131,689
	Acquired through business combination					—			—			4,969			3,184
	Loans and leases charged off:
		One-to-four family				(655	)		(643	)		(2,361	)		(4,675	)
		Commercial real estate				(474	)		(290	)		(1,227	)		(1,208	)
		Retail consumer				(2,819	)		(2,308	)		(8,893	)		(10,096	)
		Automobile				(15,869	)		(16,429	)		(45,947	)		(63,024	)
		Consumer finance				(4,396	)		(5,160	)		(12,908	)		(20,610	)
		Leases				—			(519	)		(8,156	)		(2,780	)
		Corporate banking				(6,610	)		(4,776	)		(16,507	)		(10,813	)
			Total charge-offs			(30,823	)		(30,125	)		(95,999	)		(113,206	)
	Recoveries:
		One-to-four family				31			881			89			915
		Commercial real estate				68			488			277			618
		Retail consumer				1,044			484			2,025			1,246
		Automobile				4,279			3,574			12,955			9,105
		Consumer finance				329			238			669			333
		Leases				228			430			1,227			430
		Corporate banking				143			1,980			632			3,008
			Total recoveries			6,122			8,075			17,874			15,655
				Net loan and lease charge-offs		(24,701	)		(22,050	)		(78,125	)		(97,551	)
	Balance, end of period				$	389,355		$	292,800		$	389,355		$	292,800
	Net charge-offs to average loans and leases (annualized)					.37	%		.35	%		.40	%		.51	%

17delinquencies, loss migration analysis, concentration of credit and the current economic environment. If this evaluation process indicates a need for either a higher or lower allowance for loan and lease losses, that increase or reduction is made via the provision for loan and lease losses. This evaluation process is performed no less than quarterly and it is applied on a consistent basis. Based upon this analysis, management believes that the allowance for loan and lease losses at June 30, 2004 was adequate to absorb losses inherent in the loan and lease portfolio.

~~Table~~Figure 9 sets forth information concerning nonperforming and underperforming assets for the periods reported. Underperforming assets consist of ~~Contents~~(1) nonperforming assets (nonaccrual loans and leases, restructured real estate mortgage loans, and real estate acquired through foreclosure and other collateral owned) and (2) accruing loans and leases delinquent more than 90 days. At June 30, 2004, underperforming assets totaled $273.7 million, up from $251.2 million at December 31, 2003. The primary driver behind the increase was a $35.0 million nonaccrual loan for a shopping center under development. We believe the loan is well collateralized, and anticipate no material loss at this time.

Nonperforming and Underperforming Assets (Figure 9)

9/30/03

12/31/02

6/30/04

12/31/03

(Dollars in thousands)

~~(Dollars in thousands)~~

Nonperforming assets:

Nonaccrual loans and leases:

~~Nonaccrual loans and leases:~~

Real estate mortgage loans:

~~Real estate mortgage loans:~~

One-to-four family

~~One-to-four family~~25,065

2223,~~784~~301

~~27,904~~

Multifamily and commercial

~~Multifamily and commercial~~37,768

1133,~~333~~692

~~5,369~~

Construction and land

~~Construction and land~~56,341

2225,~~974~~161

~~9,885~~

Total real estate mortgage loans

119,174

~~Total real estate mortgage loans~~

5782,~~091~~154

~~43,158~~

Retail consumer

~~Retail consumer~~

11,988

109,~~405~~818

~~13,937~~

Automobile

~~Automobile~~

—

Consumer finance

~~Consumer finance~~

38,667

42,~~589~~843

~~40,227~~

Leases

~~Leases~~

4,161

6,~~569~~360

~~6,211~~

Corporate banking

~~Corporate banking~~

32,992

2528,~~078~~408

~~39,098~~

Total nonaccrual loans and leases

206,982

~~Total nonaccrual loans and leases~~

~~141~~169,~~732~~583

~~142,631~~

Restructured real estate mortgage loans

481

501

Restructured loans

—

474

Total nonperforming loans and leases

206,982

~~Total nonperforming loans and leases~~

~~142~~170,~~213~~057

~~143,132~~

Real estate and other collateral owned

~~Real estate and other collateral owned~~

26,938

4735,~~249~~654

~~40,776~~

Total nonperforming assets

233,920

~~Total nonperforming assets~~

~~189~~205,~~462~~711

~~183,908~~

Ratio of:

Nonperforming loans and leases to total loans and leases

~~Nonperforming loans and leases to total loans and leases~~

.63

.5160

~~.55~~

Nonperforming assets to total assets

~~Nonperforming assets to total assets~~

.55

.4448

~~.44~~

Nonperforming assets to total loans, leases and real estate and other collateral owned

~~Nonperforming assets to total loans, leases and real estate and other collateral owned~~

.72

.6773

~~.70~~

Allowance for loan and lease losses to:

~~Allowance for loan and lease losses to:~~

Nonperforming loans and leases

~~Nonperforming loans and leases~~

180.81

~~273~~225.7865

~~229.17~~

Total loans and leases before allowance

~~Total loans and leases before allowance~~

1.13

1.3734

~~1.24~~

Accruing loans and leases delinquent more than 90 days:

Real estate mortgage loans:

~~Real estate mortgage loans:~~

One-to-four family

~~One-to-four family~~$

18,083

21,~~239~~549

~~25,643~~

Multifamily and commercial

~~Multifamily and commercial~~

—

Construction and land

~~Construction and land~~

—

Total real estate mortgage loans

~~Total real estate mortgage loans~~18,083

21,~~239~~549

~~25,643~~

Retail consumer

~~Retail consumer~~

2,815

2,~~654~~722

~~4,758~~

Automobile

~~Automobile~~

2,124

2,~~680~~771

~~3,621~~

Consumer finance

~~Consumer finance~~

16,537

2317,~~298~~839

~~26,739~~

Leases

~~Leases~~

—

—52

Corporate banking

~~Corporate banking~~

261

~~311~~522

~~1,536~~

Total accruing loans and leases delinquent more than 90 days

~~Total accruing loans and leases delinquent more than 90 days~~39,820

5045,~~182~~455

~~62,316~~

Total underperforming assets

273,740

~~239~~251,~~644~~166

~~246,224~~

Ratio of:

Underperforming assets to total assets

~~Underperforming assets to total assets~~

.64

.5559

~~.59~~

Underperforming assets to total loans, leases and real estate and other collateral owned

~~Underperforming assets to total loans, leases and real estate and other collateral owned~~

.84

.8589

~~.94~~

~~Loans and leases not reflected in the table above, but where known information~~15 about possible credit problems of borrowers causes management to have serious doubts as to the ability of the borrower to comply with present repayment terms and that may result in disclosure of such loans and leases as underperforming assets in the future, are commonly referred to as “potential problem loans and leases.” The amount included in potential problem loans and leases results from an evaluation, on a loan-by-loan basis, of loans and leases classified as “substandard.” The amount of potential problem loans and leases was $32.5 million at September 30, 2003, $25.7 million at June 30, 2003, $61.9 million at March 31, 2003 and $14.8 million at December 31, 2002. The vast majority of our potential problem loans and leases, as well as our underperforming assets, are collateralized.

~~Table~~Loans and leases not reflected in the table above, but where known information about possible credit problems of ~~Contents~~borrowers causes management to have serious doubts as to the ability of the borrower to comply with present repayment terms and that may result in disclosure of such loans and leases as underperforming assets in the future, are commonly referred to as “potential problem loans and leases.” The amount included in potential problem loans and leases results from an evaluation, on a loan-by-loan basis, of loans and leases classified as “substandard.” The amount of potential problem loans and leases was $31.4 million and $32.7 million at June 30, 2004 and December 31, 2003, respectively. The vast majority of our potential problem loans and leases, as well as our underperforming assets, are collateralized.

SOURCES OF FUNDS

Deposits

Composition of Deposits (Figure 10)

				9/30/03							12/31/02
		6/30/04							12/31/03
					Weighted			~~Weighted~~				Weighted			~~Weighted~~
					Average			~~Average~~				Average			~~Average~~
		Amount		~~Amount~~	Rate			~~Rate~~	Amount		~~Amount~~	Rate			~~Rate~~
		(Dollars in thousands)		~~(Dollars in thousands)~~
Checking accounts:
Interest-bearing	~~Interest-bearing~~	$	4,632,750	$	~~5,810,478~~	.73	%		~~.93~~$	%5,666,346	$	~~7,460,530~~	.85	%		~~1.80~~	%
Noninterest-bearing	~~Noninterest-bearing~~		3,549,865		~~2,760,848~~	—			—	2,532,616		~~2,189,903~~	—			—
Total checking accounts		~~Total checking accounts~~	8,182,615		~~8,571,326~~	.41			~~.63~~	8,198,962		~~9,650,433~~	.59			~~1.39~~
Money market and savings accounts			9,032,492		~~8,686,491~~	1.09			~~1.01~~	8,686,356		~~8,157,534~~	.97			~~1.51~~
Total transactions accounts		~~Total transactions accounts~~	17,215,107		~~17,257,817~~	.77			~~.82~~	16,885,318		~~17,807,967~~	.78			~~1.45~~
Certificates of deposit			10,013,453		~~10,788,421~~	2.85			~~3.13~~	10,318,001		~~9,719,876~~	2.97			~~3.61~~
Total deposits, net		$	~~Total deposits~~27, ~~net~~228,560	$	~~28,046,238~~	1.53			~~1.71~~$	27,203,319	$	~~27,527,843~~	1.61			~~2.21~~
Including the effect of interest rate swaps						1.39	%		~~1.60~~	%			1.49	%		~~2.06~~	%

Investment securities and mortgage-backed securities with a par value of $~~578~~576.8 million at ~~September~~June 30, ~~2003~~2004 and $~~489~~637.09 million at December 31, ~~2002~~2003, were ~~pledged~~ pledged to secure public deposits and for other purposes required or permitted by law.

Borrowings

At ~~September~~June 30, ~~2003~~2004, borrowings consisted primarily of ~~Federal Home Loan Bank (“~~FHLB”) advances. These positions were secured by our investment in the stock of the FHLB, as well as $1115.40 billion in certain real estate loans and $41.4 9 billion in mortgage-backed securities.

FHLB Advances (Figure 11)

				9/30/03								12/31/02
		6/30/04								12/31/03
						Weighted		~~Weighted~~						Weighted		~~Weighted~~
						Average		~~Average~~						Average		~~Average~~
		Amount		~~Amount~~		Rate		~~Rate~~		Amount		~~Amount~~		Rate		~~Rate~~
		(Dollars in thousands)		~~(Dollars in thousands)~~
Short-term		$	3,824,100	$	~~1,686,800~~		1.40	%	~~1.44~~	%$	1,719,800	$	~~2,595,000~~		1.43	%	~~1.34~~	%
Long-term:
	Fixed-rate advances				5,711,606				5.67				6,024,560				5.68
Fixed rate advances			3,227,269				5.39				5,706,614				5.70
	Variable-rate advances				2,409,605				1.14				409,605				1.23
Variable rate advances			2,909,605				1.21				2,409,604				1.19
Total advances			9,960,974		~~9,808,011~~		2.64		~~3.83~~		9,836,018		~~9,029,165~~		3.85		~~4.23~~
Plus unamortized premium on advances			9,620		~~12,173~~		—		—		11,275		~~8,760~~		—		—
Total advances, net		~~Total advances, net~~$	9,970,594	$	~~9,820,184~~		2.61		~~3.79~~	$	9,847,293	$	~~9,037,925~~		3.81		~~4.18~~
Including the effect of interest rate swaps							2.98	%	~~3.88~~	%					3.89	%	~~4.26~~	%

~~Interest~~On ~~Rate~~January 27, ~~Swaps~~2004, we prepaid $2.3 billion in fixed rate FHLB advances with a weighted average cost of 6.27%, and incurred a prepayment penalty of $164.5 million before tax. These FHLB advances were due to mature between June 2005 and January 2006.

WeInterest ~~use~~Rate ~~interest rate swaps as one of the tools to manage our interest rate risk~~Swaps ~~profile (defined as the sensitivity of our earnings and economic value to~~ ~~changes in interest rates). We utilize fixed receipt callable interest rate~~ swaps to convert certain longer-term callable certificates of deposit into short-term and medium-term variable instruments. Under certain agreements totaling $135.0 million in notional principal amount, we have agreed to receive interest from the counterparty on a notional amount at a fixed rate defined in the agreement and to pay interest at a floating rate indexed to LIBOR during the entire term of the interest rate swap. In other agreements totaling $1.8 billion in notional principal amount, we have agreed to receive interest from the counterparty on a notional amount at a fixed rate defined in the agreement, and to pay interest at a fixed rate, converting to floating rate indexed to LIBOR after the first two years of the interest rate swap term. Such interest rate swaps are designated and qualify as fair value hedges under SFAS No. 133. We have assumed no ineffectiveness in the respective hedging relationships. Any gain or loss on the interest rate swap was offset by a gain or loss on the certificates of deposit during the period of change in fair values.

We ~~utilize~~use ~~fixed payment~~ interest rate swaps toas ~~convert~~one ~~certain~~of ~~floating-rate FHLB~~the ~~advances~~tools ~~into~~to ~~fixed-rate~~manage ~~instruments.~~our ~~Under~~interest ~~these~~rate ~~agreements totaling~~risk ~~$409.6 million~~profile in(defined ~~notional~~as ~~principal~~the ~~amount,~~sensitivity weof ~~have~~our ~~agreed~~earnings toand ~~pay~~economic ~~interest~~value to ~~the~~changes ~~counterparty~~in oninterest arates). ~~notional~~We ~~principal~~utilize ~~amount at a~~ fixed ~~rate~~receipt ~~defined~~callable ~~in the agreement and receive~~ interest ~~at a floating~~ rate swaps ~~indexed~~ to ~~LIBOR.~~convert ~~The amounts~~certain oflonger-term ~~interest~~callable ~~exchanged~~certificates ~~are~~of ~~calculated~~deposit oninto short-term ~~the~~and ~~basis~~medium-term ofvariable instruments.

1916

Under certain of these agreements totaling $280.0 million in notional principal amount, ~~amounts~~we have agreed to receive interest from the counterparty on a notional amount at a fixed rate defined in the agreement and to pay interest at a floating rate indexed to LIBOR during the entire term of the interest rate swap. In other agreements totaling $2.4 billion in notional principal amount, we have agreed to receive interest from the counterparty on a notional amount at a fixed rate defined in the agreement, and to pay interest at a fixed rate, converting to floating rate indexed to LIBOR after the first two years of the interest rate swap term. Such interest rate swaps are designated and ~~qualify~~ qualify as ~~cash~~fair ~~flow~~value hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. We have assumed no ineffectiveness in the respective hedging relationships. Any gain or loss on the interest rate ~~swaps~~ swap was offset by ~~the~~a ~~expected~~gain ~~future~~or ~~cash~~loss ~~flows~~ on the ~~FHLB~~ ~~advances~~certificates of deposit during the period of change in fair values.

We ~~utilized~~utilize a fixed ~~receipt~~payment interest rate ~~swap~~swaps to convert ~~our~~certain ~~$400.0 million~~floating ofrate ~~subordinated~~FHLB ~~notes~~advances into afixed ~~variable~~rate ~~instrument~~instruments. Under ~~this~~these ~~agreement~~agreements totaling $1.9 billion in notional principal amount, we have agreed to ~~receive~~pay interest ~~from~~ to the counterparty on a notional principal amount at a fixed rate defined in the agreement and toreceive ~~pay~~ interest at a floating rate indexed to LIBOR. The amounts of interest exchanged are calculated on the basis of notional principal amounts. Such interest rate ~~swap~~swaps isare designated and ~~qualifies~~qualify as acash flow ~~fair~~hedges ~~value hedge~~ under SFAS No. 133. We have assumed no ineffectiveness in the respective hedging ~~relationship~~relationships. Any gain or loss on the interest rate ~~swap~~ swaps was offset by a ~~gain~~the orexpected ~~loss~~future cash flows on the ~~subordinated~~FHLB ~~notes~~advances during the period of change in fair values.

InWe ~~May~~utilized ~~2002,~~a wefixed ~~entered~~receipt ~~into~~interest rate swap to convert our $~~575~~400.0 million of subordinated ~~fixed~~notes ~~payment~~into ~~and~~a variable instrument. Under this agreement, we have ~~receipt~~agreed to receive interest from the counterparty on a notional amount at a fixed rate ~~swaps~~defined ~~related~~in the agreement and to ~~the~~pay ~~issuance~~interest ofat ~~the~~a ~~Bank’s~~floating ~~subordinated~~rate ~~notes.~~indexed ~~However,~~to ~~these~~LIBOR. Such interest rate ~~swaps~~swap ~~did~~is ~~not~~designated ~~qualify~~and ~~for~~qualifies ~~hedge~~as ~~accounting~~a fair value hedge under SFAS No. 133. ~~For~~We ~~the~~have ~~nine~~assumed ~~months~~no ~~ended~~ineffectiveness ~~September 30,~~in ~~2003,~~ the ~~net~~ ~~unrealized~~hedging ~~loss attributed to these interest rate swaps decreased $7~~relationship.~~0 million to~~ anAny ~~ending~~gain ~~balance~~or ofloss ~~$18.9 million.~~on ~~The~~the ~~corresponding~~ interest rate swap ~~liabilities~~ ~~were~~was ~~recognized~~offset inby a ~~our~~gain ~~Consolidated~~or ~~Statements~~loss ofon ~~Financial Condition~~the atsubordinated ~~September 30,~~notes ~~2003~~during ~~under~~ the ~~caption~~period ~~“Accrued~~of ~~expenses~~change ~~and~~in ~~other~~fair ~~liabilities~~values.”

~~Information~~Additionally, onin 2002, we entered into $575.0 million of fixed payment and variable receipt interest rate swaps related to the issuance of the subordinated notes discussed above. However, these interest rate swaps did not qualify for hedge accounting under SFAS No. 133. For the three months ended June 30, by2004, ~~maturity~~the ~~date~~net unrealized loss attributed to these interest rate swaps decreased $6.5 million to an ending balance of $6.2 million. The corresponding interest rate swap liabilities were recognized in our Consolidated Statement of Financial Condition at June 30, is2004 asunder ~~follows:~~the caption “Accrued expenses and other liabilities.” On May 15, 2004, $375.0 million of these interest rate swaps matured.

~~Interest~~Information ~~Rate~~on ~~Swaps~~the ~~(Figure~~interest ~~12)~~rate swaps, by maturity date, is as follows:

			9/30/03								12/31/02
			Notional		Receiving			Paying			Notional		Receiving			Paying
			Principal		Interest			Interest			Principal		Interest			Interest
			Amount		Rate			Rate			Amount		Rate			Rate
			(Dollars in thousands)
Fixed Payment and Fixed Receipt(1)
	2007		$	1,005,000		4.31	%		2.75	%	$	1,005,000		4.31	%		2.75	%
	2008			760,000		3.59			1.95			—		—			—
		Total	$	1,765,000		4.00	%		2.40	%	$	1,005,000		4.31	%		2.75	%
Fixed Payment and Variable Receipt
	2003		$	206,638		1.12	%		3.58	%	$	409,605		1.42	%		3.55	%
	2004			375,000		1.13			3.66			375,000		1.40			3.66
	2006			402,967		1.12			3.84			200,000		1.40			4.69
		Total	$	984,605		1.13	%(2)		3.71	%	$	984,605		1.41	%(2)		3.82	%
Variable Payment and Fixed Receipt
	2004		$	—		—	%		—	%	$	315,000		2.80	%		1.57	%
	2005			135,000		2.18			1.13			—		—			—
	2007			—		—			—			555,000		5.51			1.55
	2012			400,000		5.76			1.13			400,000		5.76			1.75
		Total	$	535,000		4.86	%		1.13	%(2)	$	1,270,000		4.92	%		1.62	%(2)

Interest Rate Swaps (Figure 12)

(1)	Converts to variable payment indexed to LIBOR after the first two years of the interest rate swap agreement.
	6/30/04								12/31/03
(2)	Rates are based upon LIBOR.
	Notional		Receiving			Paying			Notional		Receiving			Paying
	Principal		Interest			Interest			Principal		Interest			Interest
	Amount		Rate			Rate			Amount		Rate			Rate
	(Dollars in thousands)
Fixed Payment and Fixed Receipt(1)
2007	$	825,000		4.14	%		2.58	%	$	1,005,000		4.31	%		2.75	%
2008		940,000		3.65			1.99			940,000		3.65			1.99
2009		585,000		4.02			2.39			—		—			—
Total	$	2,350,000		3.92	%		2.30	%	$	1,945,000		3.99	%		2.38	%
Fixed Payment and Variable Receipt
2004	$	—		—	%		—	%	$	375,000		1.18	%		3.66	%
2006		1,609,605		1.20			3.08			609,605		1.16			3.57
2007		500,000		1.18			2.95			—		—			—
Total	$	2,109,605		1.20	%(2)		3.05	%	$	984,605		1.17	%(2)		3.60	%
Variable Payment and Fixed Receipt
2005	$	80,000		2.27	%		1.46	%	$	230,000		2.29	%		1.17	%
2006		200,000		2.51			1.28			—		—			—
2012		400,000		5.76			1.25			400,000		5.76			1.18
Total	$	680,000		4.39	%		1.28	%(2)	$	630,000		4.49	%		1.18	%(2)

Additionally, we have entered into forward fixed payment and variable receipt interest rate swaps totaling $3.7 billion in notional principal amount that are not reflected in Figure 12 above. Under these agreements, we have agreed to pay interest to the counterparty on a notional principal amount at a fixed rate defined in the agreement and receive interest at a floating rate indexed to LIBOR. These forward interest rate swaps become effective between October 2003 and August 2004. The forward interest rate swaps mature between January 2006 and August 2007. The weighted average fixed payment rate on these forward interest rate swaps is 2.85%. The forward interest rate swaps will convert certain floating-rate FHLB advances into fixed-rate instruments. Such interest rate swaps are designated and qualify as cash flow hedges under SFAS No. 133.

(1)		Converts to variable payment indexed to LIBOR after the first two years of the interest rate swap agreement.

(2)		Rates are based upon LIBOR.

~~Information on these forward interest rate swaps, by effective date, is as~~17 ~~follows:~~

~~Table~~Additionally, as of ~~Contents~~June 30, 2004, we have entered into forward fixed payment and variable receipt interest rate swaps totaling $2.0 billion in notional principal amount that are not reflected in the table above. Under these agreements, we have agreed to pay interest to the counterparty on a notional principal amount at a fixed rate defined in the agreement and receive interest at a floating rate indexed to LIBOR. Settlements under these forward interest rate swaps begin between August 2004 and January 2005. The forward interest rate swaps mature between January 2007 and August 2007. The weighted average fixed payment rate on these forward interest rate swaps is 3.18%. The forward interest rate swaps will convert certain floating rate FHLB advances into fixed rate instruments. Such interest rate swaps are designated and qualify as cash flow hedges under SFAS No. 133.

~~Forward~~Information ~~Interest~~on ~~Rate~~these ~~Swaps~~forward ~~(Figure~~interest ~~13)~~rate swaps, by effective date, is as follows:

					Paying
			Notional		Interest
			Amount		Rate
			(Dollars in thousands)
Fixed Payment and Variable Receipt Forward Interest Rate Swaps Effective Date:
	Fourth quarter 2003		$	206,638		3.05	%
	First quarter 2004			1,000,000		2.87
	Second quarter 2004			1,500,000		2.84
	Third quarter 2004			1,000,000		2.79
		Total	$	3,706,638		2.85	%

Forward Interest Rate Swaps (Figure 13)

The fair value of the Company’s interest rate swap contracts is estimated as the difference in the present value of future cash flows between the Company’s existing agreements and current market rate agreements of the same duration. Information on the fair values of the interest rate swaps is as follows:


			Paying
	Notional		Interest
	Amount		Rate
	(Dollars in thousands)
Fixed Payment and Variable Receipt Forward
Interest Rate Swaps Effective Date:
Third quarter 2004	$	1,000,000		2.79	%
First quarter 2005		1,000,000		3.57	%

Total	$	2,000,000		3.18	%

~~Fair~~In ~~Value~~January 2004, we terminated $1.0 billion of ~~Interest~~our ~~Rate~~forward ~~Swaps~~interest ~~(Figure~~rate ~~14)~~swaps. A deferred after-tax loss of $8.4 million was included in other comprehensive income and will be amortized over the next 24 months as the related interest expense on FHLB advances is recognized.

			9/30/03			12/31/02
			(Dollars in thousands)
Unrealized gain (loss):
	Fair value hedges		$	63,316		$	84,341
	Cash flow hedges			(29,031	)		(10,152	)
	Unhedged interest rate swaps			(18,879	)		(25,905	)
		Total fair value	$	15,406		$	48,284

The fair value of our interest rate swap contracts is estimated as the difference in the present value of future cash flows between our existing agreements and current market rate agreements of the same duration. Information on the fair values of the interest rate swaps is as follows:

~~The~~Fair ~~net~~Value ~~benefit~~ of ~~interest~~Interest ~~rate~~Rate ~~swaps~~Swaps ~~included~~(Figure ~~in interest expense is as~~14) ~~follows:~~

Net Benefit of Interest Risk Management (Figure 15)


	6/30/04			12/31/03
	(Dollars in thousands)
Unrealized gain (loss):
Fair value hedges	$	11,194		$	44,750
Cash flow hedges		33,180			(10,495	)
Unhedged interest rate swaps		(6,154	)		(14,151	)

Total fair value	$	38,220		$	20,104

			Three Months Ended						Nine Months Ended
			9/30/03			9/30/02			9/30/03			9/30/02
			(Dollars in thousands)
Interest expense (income):
	Deposits		$	(7,136	)	$	(11,003	)	$	(24,326	)	$	(34,386	)
	FHLB advances			2,508			1,808			7,087			5,294
	Subordinated notes			(4,528	)		(3,898	)		(13,353	)		(5,635	)
	Unhedged interest rate swaps			3,996			3,089			11,654			4,441
		Total net benefit	$	(5,160	)	$	(10,004	)	$	(18,938	)	$	(30,286	)

The net benefit of interest rate swaps included in interest expense is as follows:

~~Liquidity~~Net Benefit of Interest Risk Management (Figure 15)

Our principal sources of funds are deposits, advances from the FHLB of Cincinnati, federal funds purchased and repurchase agreements, repayments and maturities of loans and securities, proceeds from the sale of loans and securities and funds provided by operations. While scheduled loan, security and interest-bearing deposit amortization and maturity are relatively predictable sources of funds, deposit flows and loan and mortgage-backed securities repayments are greatly influenced by economic conditions, the general level of interest rates and competition. We utilize particular sources of funds based on comparative costs and availability. We generally manage the pricing of deposits to maintain a steady deposit balance, but from time to time may decide to supplement deposits with longer term and/or lower cost alternative sources of funds such as FHLB advances and federal funds purchased and repurchase agreements. We may, from time to time, decide to price deposits aggressively for strategic reasons which may result in significant deposit inflows.


	Three Months Ended						Six Months Ended
	6/30/04			6/30/03			6/30/04			6/30/03
				(Dollars in thousands)
Interest expense (income):
Deposits	$	(10,168	)	$	(7,408	)	$	(19,116	)	$	(17,190	)
FHLB advances		7,009			2,335			10,043			4,579
Subordinated notes		(4,566	)		(4,434	)		(9,165	)		(8,825	)
Unhedged interest rate swaps		2,884			3,860			6,982			7,658

Total net benefit	$	(4,841	)	$	(5,647	)	$	(11,256	)	$	(13,778	)

~~In the ordinary course of business, we enter into off-balance-sheet financial~~Liquidity ~~instruments consisting of commitments to extend credit, commercial letters of~~ ~~credit, standby letters of credit and commitments to purchase or sell assets.~~ Such financial instruments are recorded in the financial statements when they are funded or the related fees are incurred or received. We anticipate that we will have sufficient funds available to meet our commitments. As of September 30, 2003, there were outstanding commitments to originate $2.1 billion of mortgage loans and other loans and leases, all at market rates. Terms of the commitments extend up to nine months, but are generally less than two months. Additionally, there were outstanding unfunded consumer lines of credit of $5.1 billion and corporate banking lines of credit of $371.4 million as of September 30, 2003. Substantially all of the consumer

21Our principal sources of funds are deposits, advances from the FHLB of Cincinnati, federal funds purchased and repurchase agreements, repayments and maturities of loans and securities, proceeds from the sale of loans and securities and funds provided by operations. While scheduled loan, security and interest-bearing deposit amortization and maturity are relatively predictable sources of funds, deposit flows and loan and mortgage-backed securities repayments are greatly influenced by economic conditions, the general level of interest rates and competition. We utilize particular sources of funds based on comparative costs and availability. We generally

~~Table of Contents~~18

~~Capital~~manage the pricing of deposits to maintain a steady deposit balance, but from time to time may decide to supplement deposits with longer term and/or ~~Dividends~~lower cost alternative sources of funds such as FHLB advances and federal funds purchased and repurchase agreements. We may, from time to time, decide to price deposits aggressively for strategic reasons which may result in significant deposit inflows.

OnContractual ~~April 23, 2002, the Company’s Board of Directors authorized management to~~Obligations ~~repurchase up to 10% of the Company’s outstanding common stock, or~~ ~~approximately 22 million shares, under a program of open market purchases or~~ privately negotiated transactions. This program replaced the repurchase program that had been in effect since July 18, 2000 and under which the Company repurchased approximately 15.0 million shares for a total cost of $394.8 million. The Company repurchased 6.6 million shares under the new authorization during the nine months ended September 30, 2003 at an average cost of $31.00 per share. This brought the total number of shares repurchased under this program to 14.6 million shares at an average cost of $30.99 per share.

~~Charter~~A ~~One,~~comprehensive atable ~~financial holding company, is subject to regulation by the Federal Reserve Board (“FRB”) under the Bank Holding Company Act~~ of ~~1956~~significant ~~as amended,~~fixed and ~~the~~determinable ~~regulations of the FRB, including various capital~~contractual ~~requirements.~~obligations ~~The Bank is subject~~ to ~~various~~third ~~regulatory~~parties ~~capital requirements administered~~ by ~~the~~payment ~~OCC.~~date ~~Failure~~was todisclosed ~~meet~~in ~~minimum~~our ~~capital~~Annual ~~requirements can~~Report ~~initiate~~on ~~certain~~Form ~~mandatory,~~10-K ~~and~~for ~~possibly~~the ~~discretionary,~~year ~~actions~~ended ~~by each regulator that~~December 31, if2003. ~~undertaken,~~There ~~could~~ have abeen ~~direct~~no material ~~effect on our~~ ~~financial~~changes ~~statements.~~to ~~Under~~that ~~capital adequacy guidelines~~disclosure, ~~specific~~except ~~capital guidelines~~for ~~must~~our beprepayment ~~met that involve quantitative measures~~ of ~~assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices~~$2.3 billion ~~The~~in ~~institution’s capital classification is also subject~~fixed torate ~~qualitative~~FHLB ~~judgments~~advances byon ~~the~~January 27, ~~regulators~~2004. ~~about~~See ~~components,~~“Borrowings” ~~risk~~above ~~weightings, and~~for ~~other factors~~further discussion.

Quantitative measures established by regulation to ensure capital adequacy require Charter One and the Bank to individually maintain minimum amounts and ratios (set forth in the table below) of total and tier 1 capital to riskOff-~~weighted~~Balance ~~assets,~~Sheet ~~and of tier 1 capital to average assets. The actual~~Arrangements ~~regulatory capital ratios calculated for Charter One and the Bank, along with~~ ~~the capital amounts and ratios for capital adequacy purposes and the amounts~~ ~~required to be categorized as “well capitalized,” are as follows:~~

~~Regulatory~~In ~~Capital~~the ~~(Figure~~ordinary ~~16)~~course of business, we enter into off-balance-sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, standby letters of credit and commitments to purchase or sell assets. Such financial instruments are recorded in the financial statements when they are funded or the related fees are incurred or received. We anticipate that we will have sufficient funds available to meet our commitments. As of June 30, 2004, there were outstanding commitments to originate $2.1 billion of mortgage loans and other loans and leases, all at market rates. Terms of the commitments extend up to nine months, but are generally less than two months. Additionally, there were outstanding unfunded consumer lines of credit of $5.5 billion and corporate banking lines of credit of $403.4 million as of June 30, 2004. Substantially all of the consumer loans, including consumer lines of credit, are secured by equity in the borrowers’ residences. We do not expect all of these lines to be used by the borrowers. Outstanding letters of credit totaled $149.1 million as of June 30, 2004.

		9/30/03
								For Capital
		Actual						Adequacy Purposes						To Be "Well Capitalized"
		Amount			Ratio			Amount			Ratio				Amount		Ratio
		(Dollars in thousands)
Charter One:
	Total capital to risk-weighted assets		$	3,449,929		11.42	%		$	2,417,224	>	8.00	%		$	3,021,530	>	10.00	%
	Tier 1 capital to risk-weighted assets			2,673,060		8.85				1,208,612	>	4.00				1,812,918	>	6.00
	Tier 1 capital to average assets			2,673,060		6.18				1,729,630	>	4.00				N/A		N/A
Charter One Bank, N.A.:
	Total capital to risk-weighted assets			3,481,323		11.53				2,415,181	>	8.00				3,018,976	>	10.00
	Tier 1 capital to risk-weighted assets			2,371,535		7.86				1,207,590	>	4.00				1,811,386	>	6.00
	Tier 1 capital to average assets			2,371,535		5.51				1,720,835	>	4.00				2,151,044	>	5.00

Capital and Dividends

		12/31/02
							For Capital
		Actual					Adequacy Purposes					To Be "Well Capitalized"
		Amount		Ratio			Amount		Ratio			Amount		Ratio
		(Dollars in thousands)
Charter One:
	Total capital to risk-weighted assets	$	3,239,604		11.67	%	$	2,220,734	>	8.00	%	$	2,775,917	>	10.00	%
	Tier 1 capital to risk-weighted assets		2,513,577		9.05			1,110,367	>	4.00			1,665,550	>	6.00
	Tier 1 capital to average assets		2,513,577		6.10			1,648,861	>	4.00			N/A		N/A
Charter One Bank, N.A.:
	Total capital to risk-weighted assets		3,150,686		11.36			2,219,719	>	8.00			2,774,649	>	10.00
	Tier 1 capital to risk-weighted assets		2,091,615		7.54			1,109,860	>	4.00			1,664,789	>	6.00
	Tier 1 capital to average assets		2,091,615		5.11			1,636,187	>	4.00			2,045,234	>	5.00

Charter One, a financial holding company, is subject to regulation by the Federal Reserve Board (“FRB”) under the Bank Holding Company Act of 1956 as amended, and the regulations of the FRB, including various capital requirements. The Bank is subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by each regulator that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines, specific capital guidelines must be met that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The institution’s capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

~~Management~~Quantitative ~~believes~~measures ~~that,~~established asby ofregulation ~~September 30,~~to ~~2003,~~ensure capital adequacy require Charter One and the Bank to individually ~~met~~maintain minimum amounts and ratios (set forth in the ~~capital~~table ~~adequacy~~below) ~~requirements~~of tototal ~~which~~and ~~they~~tier ~~were~~1 ~~subject.~~capital to ~~Events~~risk-weighted ~~beyond~~assets, ~~management’s~~and ~~control,~~of ~~such~~tier as1 ~~fluctuations~~capital into ~~interest~~average ~~rates~~assets. orThe aactual ~~downturn~~regulatory incapital ~~the~~ratios ~~economy~~calculated infor ~~areas~~Charter inOne ~~which~~and the ~~institution’s~~Bank, ~~loans~~along with the capital amounts and ratios for capital adequacy purposes and the amounts ~~securities~~required to be categorized as “well capitalized,” are ~~concentrated~~as follows:

22Regulatory Capital (Figure 16)


	6/30/04
											To Be “Well Capitalized”
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Charter One:
Total capital to risk-weighted assets	$	3,670,891		11.28	%	$	2,603,789		³8.00	%	$	3,254,737		³10.00	%
Tier 1 capital to risk-weighted assets		2,898,327		8.90			1,301,895		³4.00			1,952,842		³6.00
Tier 1 capital to average assets		2,898,327		6.86			1,689,577		³4.00			N/A		N/A
Charter One Bank:
Total capital to risk-weighted assets		3,603,196		11.08			2,602,760		³8.00			3,253,450		³10.00
Tier 1 capital to risk-weighted assets		2,638,076		8.11			1,301,380		³4.00			1,952,070		³ 6.00
Tier 1 capital to average assets		2,638,076		6.24			1,690,404		³4.00			2,113,005		³5.00

~~could adversely affect future earnings and, consequently, the institution’s~~19 ~~ability to meet its future capital requirements.~~

						Three Months Ended
		12/31/03
			9/30/03			6/30/03			3/31/03			12/31/02			9/30/02
													To Be “Well Capitalized”
Market price of common stock (NYSE: CF):
								For Capital					Under Prompt Corrective
	High		$	33.20		$	32.59		$	30.74		$	31.48		$	33.42
		Actual						Adequacy Purposes					Action Provisions
	Low			30.10			27.24			27.05			23.89			25.81
		Amount			Ratio			Amount			Ratio		Amount			Ratio
	Close			30.60			31.18			27.66			28.73			29.72
		(Dollars in thousands)
Dividends declared and paid				.26			.24			.22			.22			.21
Charter One:
Total capital to risk-weighted assets		$	3,573,655			11.68	%	$	2,448,394		³8.00%		$	3,060,493		³ 10.00%
Tier 1 capital to risk-weighted assets			2,790,462			9.12			1,224,197		³4.00			1,836,296		³ 6.00
Tier 1 capital to average assets			2,790,462			6.50			1,716,047		³4.00			N/A		N/A
Charter One Bank:
Total capital to risk-weighted assets			3,525,567			11.52			2,447,262		³8.00			3,059,077		³ 10.00
Tier 1 capital to risk-weighted assets			2,409,716			7.88			1,223,631		³4.00			1,835,446		³ 6.00
Tier 1 capital to average assets			2,409,716			5.65			1,706,068		³4.00			2,132,585		³ 5.00

~~ITEM~~Management 3believes that, as of June 30, 2004, Charter One and the Bank individually met the capital adequacy requirements to which they were subject. Events ~~Quantitative~~beyond management’s control, such as fluctuations in interest rates or a downturn in the economy in areas in which the institution’s loans and securities ~~Qualitative~~are ~~Disclosure~~concentrated ~~About~~could ~~Market~~adversely ~~Risk~~affect future earnings and, consequently, the institution’s ability to meet its future capital requirements.

AtQuarterly ~~September 30,~~Stock ~~2003,~~Prices ~~our~~and ~~one-year~~Dividends ~~gap~~(Figure ~~was 6.57% of total interest-earning~~17) ~~assets.~~

A comprehensive qualitative and quantitative analysis regarding market risk was disclosed in our December 31, 2002 Form 10-K. The assumptions used in our model have been updated as of September 30, 2003. The table below indicates the estimated impact on net interest income under the various interest rate scenarios as a percentage of base case net interest income projections.


	Three Months Ended
	6/30/04		3/31/04		12/31/03		9/30/03		6/30/03
Market price of common stock (NYSE: CF)
High	$	44.82	$	37.96	$	34.87	$	33.20	$	32.59
Low		33.10		32.91		30.31		30.10		27.24
Close		44.19		35.36		34.55		30.60		31.18
Dividends declared and paid		.29		.26		.26		.26		.24

Changes in	Estimated Percentage Change
Interest Rates	in Future Net Interest Income
(basis points)(1)	12 Months
+200 over one year		(7.81	)%
+100 over one year		(3.98	)
-100 over one year		2.88

ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

~~(1)~~Management Inconsiders ~~general,~~our ~~short and long~~interest-~~term~~sensitivity ~~rates~~profile ~~are~~when ~~assumed~~deciding toon ~~increase~~sources of orfunds. ~~decrease~~At June 30, ~~in parallel fashion~~2004, ~~across~~our ~~all~~one-year ~~four~~gap ~~quarters~~was ~~and~~a ~~then~~negative ~~remain unchanged~~5.32% ~~However, the rates paid on core deposits are assumed to reprice at only half the increment in the case~~ of ~~the~~total interest-earning ~~up and down 100 basis points scenarios and up 200 basis points scenario~~assets.

~~Actual~~A ~~results~~comprehensive ~~will~~qualitative ~~differ~~and ~~from~~quantitative ~~simulated~~analysis ~~results~~regarding ~~due~~market torisk ~~timing~~was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2003. ~~magnitude~~The assumptions used in our model have been updated as of June 30, ~~and~~2004. ~~frequency~~The oftable below indicates the estimated impact on net interest income under the various interest rate ~~changes,~~scenarios as ~~well~~a aspercentage ~~changes~~of inbase ~~market~~case ~~conditions~~net ~~and~~interest ~~management~~income ~~strategies~~projections.

ITEM 4. Controls and Procedures


Changes in	Estimated Percentage Change
Interest Rates	in Future Net Interest Income
(basis points) (1)	12 Months
+200 over one year		(1.38	)%
+100 over one year		(.24	)
- 100 over one year		(.48	)

~~An evaluation of the Company’s disclosure controls and procedures~~ (~~as defined in Rule 13a-15(e~~1) ofIn ~~the Securities Exchange Act of 1934 (the “Act”)) as of September 30~~general, ~~2003~~short ~~was carried out under the supervision~~ and ~~with~~long-term ~~the participation~~rates of the Company’s Chief Executive Officer, Chief Financial Officer and several other members of the Company’s senior management. The Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as currently in effect are ~~effective~~ inassumed ~~ensuring that the information required~~ to beincrease ~~disclosed by the Company in the reports it files~~ or ~~submits~~decrease, ~~under the Act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer)~~ in aparallel ~~timely manner~~fashion, ~~and~~across ~~(ii) recorded,~~all ~~processed, summarized~~four quarters and ~~reported~~then ~~within~~remain ~~the time periods specified in the SEC’s rules and forms~~unchanged. ~~There~~However, ~~have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of~~ the ~~Act)~~rates ~~that~~paid ~~occurred~~on ~~during~~core ~~the quarter~~deposits ~~ended~~are ~~September 30,~~assumed ~~2003, that has materially affected, or is reasonably likely~~ to ~~materially~~reprice ~~affect,~~at ~~our~~only ~~internal~~half ~~control~~the ~~over financial reporting~~increment.

~~The~~Actual ~~Company~~results ~~intends~~will todiffer ~~continually~~from ~~review~~simulated ~~and~~results ~~evaluate~~due ~~the design and effectiveness of its disclosure controls and procedures and~~ to ~~improve~~timing, ~~its controls~~magnitude, and ~~procedures over time and to correct any deficiencies that it may~~ ~~discover~~frequency in the future. The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company’s business. While the Company believes the present design of ~~its~~interest ~~disclosure~~rate ~~controls and procedures is effective to achieve its goal~~changes, ~~future~~as ~~events~~well ~~affecting~~as ~~its~~changes ~~business~~in ~~may~~market ~~cause~~conditions ~~the Company to modify its~~and ~~disclosure~~management ~~controls and procedures~~strategies.

~~PART~~ITEM II4. –Controls ~~OTHER~~and ~~INFORMATION~~ Procedures

~~ITEM~~An 5evaluation of the Company’s disclosure controls and procedures (as defined in Section 13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of June 30, 2004 was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and several other members of the Company’s senior management. ~~Other~~The ~~Information~~Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods

~~Cash Dividend – On October 22, 2003, the Company’s Board of Directors declared a regular quarterly cash dividend of $.26 per share. The cash dividend is payable November~~ 20~~, 2003 to shareholders of record on~~

CHARTER ONE FINANCIAL, INC.

November 10, 2003

/s/ Charles John Koch

Charles John Koch Chairman of the Board, President and Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

November 10, 2003

/s/ Richard W. Neu

Richard W. Neu Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

~~Table~~specified in the SEC’s rules and forms. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of ~~Contents~~the Act) that occurred during the quarter ended June 30, 2004, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~November 6,~~The ~~2003.~~Company ~~This~~intends ~~quarterly~~to ~~payout~~continually ~~will~~review ~~bring~~and evaluate the ~~cash~~design ~~dividend~~and effectiveness of its disclosure controls and procedures and to $improve its controls and procedures over time and to correct any deficiencies that it may discover in the future.98 The goal is to ensure that senior management has ~~per~~timely ~~share~~access ~~for~~to all material financial and non-financial information concerning the ~~full~~Company’s ~~year~~business. While the Company believes the present design of ~~2003~~its disclosure controls and procedures is effective to achieve its goal, upfuture ~~18.1%~~events ~~from~~affecting ~~the~~its ~~$.83~~business ~~per~~may ~~share~~cause ~~paid~~the inCompany to modify its ~~2002~~disclosure controls and procedures.

~~ITEM~~PART 6.II ~~Exhibits~~– ~~and~~OTHER ~~Reports on Form 8-K~~INFORMATION

~~(a) Exhibits:~~ITEM ~~See~~2. ~~Index~~Changes toin ~~Exhibits.~~ Securities, Use of Proceeds and Issuer Purchases of Equity Securities

~~(b) Reports~~On onApril 23, ~~Form~~2002, the Company’s Board of Directors authorized management to repurchase up to 10% of the Company’s outstanding common stock, or approximately 22 ~~8-K:~~million ~~None~~shares, under a program of open market purchases or privately negotiated transactions. The plan does not have an expiration date. Information on the shares purchased during the first and second quarters of 2004 is as follows.

~~SIGNATURES~~Quarterly Stock Repurchase Activity (Figure 18)

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


					Total Number of		Maximum Number of
					Shares Purchased		Shares that May Yet
	Total Number of		Average Price		As Part of Publicly		Be Purchased
	Shares Purchased		Per Share		Announced Plan		Under the Plan
January 1, 2004 – January 31, 2004		—		—		—		6,424,163	(1)
February 1, 2004 – February 29, 2004		1,715,900	$	35.72		1,715,900		4,708,263
March 1, 2004 – March 31, 2004		21,200		36.41		21,200		4,687,063

First quarter 2004		1,737,100		35.73		1,737,100

April 1, 2004 – April 30, 2004		—		—		—		4,687,063
May 1, 2004 – May 31, 2004		—		—		—		4,687,063
June 1, 2004 – June 30, 2004		—		—		—		4,687,063

Second quarter 2004		—		—		—

Total		1,737,100	$	35.73		1,737,100

(1)

Amount represents the number of shares available to be repurchased under the plan as of December 31, 2003.

24 ITEM 4. Submission of Matters to a Vote of Security Holders

~~Table~~(a) (b) (c) The Company held its annual meeting of ~~Contents~~shareholders on April 21, 2004. The following matters were voted on at the meeting:

INDEX TO EXHIBITS


	For		Withheld
1. The election of six directors, set forth below, with terms ending in 2007:
Patrick J. Agnew		181,975,886		9,270,513
Denise Marie Fugo		182,529,324		8,717,074
Charles J. Koch		187,292,843		3,953,556
Ronald F. Poe		176,666,837		14,579,562
Jerome L. Schostak		179,696,126		11,550,272
Mark Shaevsky		176,721,167		14,525,232

EXHIBIT NUMBER		DESCRIPTION
3.1		Registrant’s Second Restated Certificate of Incorporation, as amended and currently in effect, filed as Exhibit 3.1 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-15495), is incorporated herein by reference.
3.2		Registrant’s Bylaws, as amended and restated and currently in effect, filed as Exhibit 3.2 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 001-15495), is incorporated herein by reference.
4.1		Form of Certificate of Common Stock, as currently in effect, filed as Exhibit 4.1 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-15495), is incorporated herein by reference.
4.2		Amended and Restated Stockholder Protection Rights Agreement, dated October 20, 1999, between the Company and Fleet National Bank (f/k/a BankBoston, N.A.), as rights agent, filed as Exhibit 2 to the Company’s Registration Statement on Form 8-A/A filed on October 30, 1999 (File No. 001-15495), is incorporated herein by reference.
4.3		The Registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, with copies of all instruments defining rights of holders of long-term debt of Charter One and its consolidated subsidiaries.
10.1		Registrant’s Long-Term Stock Incentive Plan, filed on January 22, 1988 as Exhibit 10.1 to Registrant’s Registration Statement on Form S-1 (File No. 33-16207), is incorporated herein by reference.
10.2		Registrant’s Directors’ Stock Option Plan, filed on January 22, 1988 as Exhibit 10.2 to Registrant’s Registration Statement on Form S-1 (File No. 33-16207), is incorporated herein by reference.
10.3		Charter One Bank, F.S.B. Executive Incentive Goal Achievement Plan, filed as Exhibit 10.8 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 000-16311) is incorporated herein by reference.
10.4		First American Savings Bank, F.S.B. Nonqualified Retirement Plan and First Amendment thereto, filed as Exhibit 10.17 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 000-16311), are incorporated herein by reference.
10.5		FirstFed Michigan Corporation 1991 Stock Option Plan, filed on November 1, 1995 as an exhibit to Registrant’s Registration Statement on Form S-8 (File No. 33-61273), is incorporated herein by reference.
10.6		Amendment 1, dated May 3, 1996, to Forms of Supplemental Retirement Agreements, dated October 31, 1995, between Charter One and Charles John Koch, Richard W. Neu, John David Koch, Mark D. Grossi, and Robert J. Vana filed as Exhibit 10.7 to the Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference. The Agreements, originally filed on July 25, 1995 as Exhibits 10.4 and 10.5 to Registrant’s Registration Statement on Form S-4 (File No. 33-61273), are incorporated herein by reference.
10.7		Amended and Restated Employment Agreements, effective August 1, 1999, between Charter One Financial, Inc. and Charles John Koch, Richard W. Neu, John D. Koch, Mark D. Grossi, and Robert J. Vana filed as Exhibit 10.8 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 000-16311), is incorporated herein by reference.
10.8		Alliance Bancorp 1997 Long-Term Incentive Stock Benefit Plan, filed as an attachment to the proxy statement for the annual meeting of stockholders of Alliance held on May 28, 1997 (File No. 000-20082), is incorporated herein by reference.
10.9		Hinsdale Financial Corporation 1994 Incentive Stock Option Plan, filed as an attachment to the proxy

The following are the names of the directors (and remaining terms) whose terms continued after the meeting:

25Phillip Wm. Fisher (term ending 2006) Mark D. Grossi (term ending 2006) Karen R. Hitchcock (term ending 2006) John D. Koch (term ending 2006) Michael P. Morley (term ending 2006) Joseph C. Scully (term ending 2006) John P. Tierney (term ending 2006) Herbert G. Chorbajian (term ending 2005)

~~Table of Contents~~21

		statement for the annual meeting of stockholders of Alliance held on February 8, 1995 (File No. 000-20082), is incorporated herein by reference.
10.10		Hinsdale Financial Corporation 1992 Stock Option Plan for Outside Directors and the Hinsdale Financial Corporation 1992 Incentive Stock Option Plan, filed as attachments to the proxy statement for the annual meeting of stockholders of Alliance held on February 10, 1993 (File No. 000-20082) is incorporated herein by reference.
10.11		Charter One Financial, Inc. 1997 Stock Option and Incentive Plan, as amended and restated, filed as Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File No. 001-15495), is incorporated herein by reference.
10.12		1992 Stock-Based Compensation Plan of RCSB Financial, Inc., filed on October 8, 1997, as an exhibit to Post-Effective Amendment Number One on Form S-8 to Form S-4 (File No. 333-33259), is incorporated herein by reference.
10.13		Home Federal Savings Bank Stock Compensation Program, filed on September 29, 1997 as an exhibit to Post-Effective Amendment Number One on Form S-8 to Form S-4 (File No. 333-33169), is incorporated herein by reference.
10.14		The RCSB Financial, Inc. Non-Employee Director Deferred Compensation Plan, as amended and restated on December 1, 1998, filed as Exhibit 10.16 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference.
10.15		ALBANK Financial Corporation 1992 Stock Incentive Plan for Key Employees, as amended and restated as of December 18, 1995, filed as Exhibit 10.11 to ALBANK’s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 000-19843), is incorporated herein by reference.
10.16		ALBANK Financial Corporation 1995 Stock Incentive Plan for Outside Directors, filed as Exhibit 10.12.1 to ALBANK’s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 000-19843), is incorporated herein by reference.
10.17		ALBANK Financial Corporation 1992 Stock Incentive Plan for Outside Directors, filed as an appendix to the Proxy Statement for the 1992 Annual Meeting of the Stockholders of ALBANK held on October 26, 1992 (File No. 001-19843), is incorporated herein by reference.
10.18		Employment Agreement, dated November 30, 1998, between Charter One Financial, Inc. and Herbert G. Chorbajian, filed as Exhibit 10.20 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference.
10.19		Charter One Financial, Inc. Top Executive Incentive Goal Achievement Plan, filed on October 1, 1998 as Annex E to the Prospectus contained in the Registrant’s Registration Statement on Form S-4 (File No. 333-65137), is incorporated herein by reference.
10.20		Charter One Bank, N.A.’s Director Non-Stock Deferred Compensation Plan, filed as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.
10.21		Charter One Bank, N.A.’s Non-Stock Deferred Compensation Plan, filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.
10.22		Charter One Bank, N.A.’s Stock Deferred Compensation Plan, filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.
10.23		Master Trust Agreement for Charter One Financial, Inc. Deferred Compensation Plans, filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.
10.24		Amendment No. 1 to the amended and restated Charter One Financial, Inc. 1997 Stock Option and Incentive Plan, filed as Exhibit 10.24 to the Registrant’’ Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.

26Barbara J. Mahone (term ending 2005) Richard W. Neu (term ending 2005) Victor A. Ptak (term ending 2005) Melvin J. Rachal (term ending 2005) Leonard S. Simon (term ending 2005)


							Broker
	For		Against		Abstain		Non-Votes
2. Approval of the proposed amendments to the Charter One Financial, Inc. 1997 Stock Option and Incentive Plan.		135,827,157		16,021,098		2,984,746		36,413,396
3. Ratification of the appointment of Deloitte & Touche LLP as Charter One Financial, Inc.’s independent auditors for the year ending December 31, 2004.		173,595,381		15,267,702		2,383,315		—

11		Statement Regarding Computation of Per Share Earnings
31.1		Certification Required by Securities Exchange Act of 1934 Rule 13a-14(a) (Chief Executive Officer)
31.2		Certification Required by Securities Exchange Act of 1934 Rule 13a-14(a) (Chief Financial Officer)
32		Certifications Required by Section 1350 of Title 18 of the United States Code

ITEM 5. Other Information

27Cash Dividend – On July 21, 2004, the Company’s Board of Directors declared a regular quarterly cash dividend of $.29 per share. The cash dividend is payable August 20, 2004 to shareholders of record on August 6, 2004.

ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits: See Index to Exhibits.

(b) Reports on Form 8-K:

On April 5, 2004, the Company filed a report on Form 8-K correcting its proxy statement for its April 21, 2004 annual meeting of shareholders. Additionally, the Company clarified its disclosure regarding the total tax fees paid to its principal independent auditors.

On April 19, 2004, the Company filed a report on Form 8-K containing its earnings release dated April 19, 2004.

On May 5, 2004, the Company filed a report on Form 8-K announcing that it had entered into Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Citizens Financial Group, Inc., a Delaware corporation (“Citizens”), Cardinal Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Citizens, and, solely with respect to Article 11 of the Merger Agreement, The Royal Bank of Scotland Group plc, a public limited liability company incorporated under the laws of Scotland and an indirect parent of Citizens.

SIGNATURES

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


		CHARTER ONE FINANCIAL, INC.
Date: August 10, 2004		/s/ Charles John Koch

		Charles John Koch
		Chairman of the Board, President and Chief
		Executive Officer
		(Duly Authorized Officer and Principal
		Executive Officer)
Date: August 10, 2004		/s/ Richard W. Neu

		Richard W. Neu
		Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal
		Financial and Accounting Officer)

INDEX TO EXHIBITS


EXHIBIT
NUMBER		DESCRIPTION
2.1		Agreement and Plan of Merger, dated as of May 4, 2004, by and between Charter One Financial, Inc., Citizens Financial Group, Inc., Cardinal Acquisition Corp. and, solely with respect to Article 11 of the Agreement, The Royal Bank of Scotland Group plc, filed on May 10, 2004 as Exhibit 2.1 to Registrant’s Report on Form 8-K (File No. 001-15495), is incorporated herein by reference.

3.1		Registrant’s Second Restated Certificate of Incorporation, as amended and currently in effect, filed as Exhibit 3.1 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-15495), is incorporated herein by reference.

3.2		Registrant’s Bylaws, as amended and restated and currently in effect, filed as Exhibit 3.2 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 001-15495), is incorporated herein by reference.

4.1		Form of Certificate of Common Stock, as currently in effect, filed as Exhibit 4.1 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-15495), is incorporated herein by reference.

4.2		Amended and Restated Stockholder Protection Rights Agreement, dated October 20, 1999, between the Company and Fleet National Bank (f/k/a BankBoston, N.A.), as rights agent, filed as Exhibit 2 to the Company’s Registration Statement on Form 8-A/A filed on October 30, 1999 (File No. 001-15495), is incorporated herein by reference.

4.3		The Registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, with copies of all instruments defining rights of holders of long-term debt of Charter One and its consolidated subsidiaries.

10.1		Registrant’s Long-Term Stock Incentive Plan, filed on January 22, 1988 as Exhibit 10.1 to Registrant’s Registration Statement on Form S-1 (File No. 33-16207), is incorporated herein by reference.

10.2		Registrant’s Directors’ Stock Option Plan, filed on January 22, 1988 as Exhibit 10.2 to Registrant’s Registration Statement on Form S-1 (File No. 33-16207), is incorporated herein by reference.

10.3		Charter One Bank, F.S.B. Executive Incentive Goal Achievement Plan, filed as Exhibit 10.8 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 000-16311) is incorporated herein by reference.

10.4		First American Savings Bank, F.S.B. Nonqualified Retirement Plan and First Amendment thereto, filed as Exhibit 10.17 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 000-16311), are incorporated herein by reference.

10.5		Amendment 1, dated May 3, 1996, to Forms of Supplemental Retirement Agreements, dated October 31, 1995, between Charter One and Charles John Koch, Richard W. Neu, John David Koch, Mark D. Grossi, and Robert J. Vana filed as Exhibit 10.7 to the Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference. The Agreements, originally filed on July 25, 1995 as Exhibits 10.4 and 10.5 to Registrant’s Registration Statement on Form S-4 (File No. 33-61273), are incorporated herein by reference.

10.6		Amended and Restated Employment Agreements, effective August 1, 1999, between Charter One Financial, Inc. and Charles John Koch, Richard W. Neu, John D. Koch, Mark D. Grossi, and Robert J. Vana filed as Exhibit 10.8 to Registrant’s Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 000-16311), is incorporated herein by reference.

10.7		Alliance Bancorp 1997 Long-Term Incentive Stock Benefit Plan, filed as an attachment to the proxy statement for the annual meeting of stockholders of Alliance held on May 28, 1997 (File No. 000-20082), is incorporated herein by reference.

10.8		Hinsdale Financial Corporation 1994 Incentive Stock Option Plan, filed as an attachment to the proxy statement for the annual meeting of stockholders of Alliance held on February 8, 1995 (File No. 000-20082), is incorporated herein by reference.


EXHIBIT
NUMBER		DESCRIPTION
10.9		Hinsdale Financial Corporation 1992 Stock Option Plan for Outside Directors and the Hinsdale Financial Corporation 1992 Incentive Stock Option Plan, filed as attachments to the proxy statement for the annual meeting of stockholders of Alliance held on February 10, 1993 (File No. 000-20082) is incorporated herein by reference.

10.10		Charter One Financial, Inc. 1997 Stock Option and Incentive Plan, as amended and restated, filed as Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File No. 001-15495), is incorporated herein by reference.

10.11		1992 Stock-Based Compensation Plan of RCSB Financial, Inc., filed on October 8, 1997, as an exhibit to Post-Effective Amendment Number One on Form S-8 to Form S-4 (File No. 333-33259), is incorporated herein by reference.

10.12		Home Federal Savings Bank Stock Compensation Program, filed on September 29, 1997 as an exhibit to Post-Effective Amendment Number One on Form S-8 to Form S-4 (File No. 333-33169), is incorporated herein by reference.

10.13		The RCSB Financial, Inc. Non-Employee Director Deferred Compensation Plan, as amended and restated on December 1, 1998, filed as Exhibit 10.16 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference.

10.14		ALBANK Financial Corporation 1992 Stock Incentive Plan for Key Employees, as amended and restated as of December 18, 1995, filed as Exhibit 10.11 to ALBANK’s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 000-19843), is incorporated herein by reference.

10.15		ALBANK Financial Corporation 1995 Stock Incentive Plan for Outside Directors, filed as Exhibit 10.12.1 to ALBANK’s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 000-19843), is incorporated herein by reference.

10.16		ALBANK Financial Corporation 1992 Stock Incentive Plan for Outside Directors, filed as an appendix to the Proxy Statement for the 1992 Annual Meeting of the Stockholders of ALBANK held on October 26, 1992 (File No. 001-19843), is incorporated herein by reference.

10.17		Employment Agreement, dated November 30, 1998, between Charter One Financial, Inc. and Herbert G. Chorbajian, filed as Exhibit 10.20 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 000-16311), is incorporated herein by reference.

10.18		Charter One Financial, Inc. Top Executive Incentive Goal Achievement Plan, filed as Appendix A to the Registrant’s Proxy Statement for the 2003 Annual Meeting of Shareholders held on April 22, 2003 (File No. 001-15495), is incorporated herein by reference.

10.19		Charter One Bank, N.A.’s Director Non-Stock Deferred Compensation Plan, filed as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.

10.20		Charter One Bank, N.A.’s Non-Stock Deferred Compensation Plan, filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.

10.21		Charter One Bank, N.A.’s Stock Deferred Compensation Plan, filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.

10.22		Master Trust Agreement for Charter One Financial, Inc. Deferred Compensation Plans, filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.

10.23		Amendment No. 1 to the amended and restated Charter One Financial, Inc. 1997 Stock Option and Incentive Plan, filed as Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 001-15495), is incorporated herein by reference.


EXHIBIT
NUMBER		DESCRIPTION
10.24		Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred Compensation Plan and Charter One Financial, Inc. 2004 Senior Executive Cash Deferred Compensation Plan, effective February 1, 2004, filed as Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-15495), is incorporated herein by reference.

10.25		Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred Compensation Plan Agreements, effective February 1, 2004, between Charter One Financial, Inc. and Charles John Koch, Richard W. Neu, John D. Koch, Mark D. Grossi, and Robert J. Vana, filed as Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-15495), is incorporated herein by reference.

10.26		Amendment 2, dated July 31, 2002 (but effective March 20, 2001), to Forms of Supplemental Retirement Agreements between Charter One Financial, Inc. and Charles John Koch, Richard W. Neu, John D. Koch, Mark D. Grossi, and Robert J. Vana, filed as Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-15495), is incorporated herein by reference.

10.27		Amendment 3, dated February 1, 2004, to Forms of Supplemental Retirement Agreements between Charter One Financial, Inc. and Charles John Koch, Richard W. Neu, John D. Koch, Mark D. Grossi, and Robert J. Vana, filed as Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-15495), is incorporated herein by reference.

11		Statement Regarding Computation of Per Share Earnings

31.1		Certification Required by Securities Exchange Act of 1934 Rule 13a-14(a) (Chief Executive Officer)

31.2		Certification Required by Securities Exchange Act of 1934 Rule 13a-14(a) (Chief Financial Officer)

32		Certifications Required by Section 1350 of Title 18 of the United States Code

Filing Compare · CHARTER ONE FINANCIAL INC