UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended

September 30, 2003

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

0-22516

Commission File Number

GreenPoint Financial Corp.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

As of October 31, 2003, there were 133,350,795 shares of common stock outstanding.

GreenPoint Financial Corp.
FORM 10-Q
For the Quarterly Period Ended
September 30, 2003

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Statements of Financial Condition (unaudited) as of September 30, 2003 and December 31, 2002

Consolidated Statements of Income (unaudited) for the quarter and nine month periods ended September 30, 2003 and 2002

Consolidated Statements of Comprehensive Income (unaudited) for the quarter and nine month periods ended September 30, 2003 and 2002

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the nine months ended September 30, 2003 and 2002

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2003 and 2002

Notes to the Unaudited Consolidated Financial Statements

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

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

Item 4 - Controls and Procedures

PART II – OTHER INFORMATION

Item 1 - Legal Proceedings

Item 6 - Exhibits and Reports on Form 8-K

GreenPoint Financial Corp. and Subsidiaries

Part I – Item 1. Financial Statements

Consolidated Statements of Financial Condition

(Unaudited)

(In millions, except share amounts)	Sept. 30, 2003			Dec. 31, 2002
ASSETS
Cash and due from banks	$	227		$	277
Money market investments:
Interest-bearing deposits in other banks	3			21
Federal funds sold and securities purchased under agreements to resell	13			71
Total cash and cash equivalents	243			369
Securities:
Securities available for sale	2,574			2,006
Securities available for sale-pledged to creditors	2,822			2,087
Retained interests in securitizations available for sale	58			108
Federal Home Loan Bank of New York stock	195			300
Securities held to maturity (fair value of $5 and $3, respectively)	5			3
Total securities	5,654			4,504
Loans receivable held for sale	6,010			5,595
Loans receivable held for investment (net of allowance for loan losses of $78)	9,431			9,901
Other interest-earning assets	142			141
Accrued interest receivable	74			87
Banking premises and equipment, net	182			168
Servicing assets	159			117
Goodwill (net of accumulated amortization and impairment of $788)	395			395
Other assets	576			537
Total assets	$	22,866		$	21,814

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
N.O.W. and checking	$	2,690		$	1,877
Savings	1,493			1,323
Variable rate savings	2,211			2,296
Money market	1,299			948
Total core deposits	7,693			6,444
Wholesale money market deposits	328			43
Term certificates of deposit	4,490			5,309
Total deposits	12,511			11,796
Borrowings:
Securities sold under agreements to repurchase	2,799			2,000
Other short term borrowings	870			285
Federal Home Loan Bank of New York advances	3,300			4,600
Senior notes	350			—
Subordinated bank notes	150			150
Guaranteed preferred beneficial interest in Company’s junior subordinated debentures	200			200
Total borrowings	7,669			7,235
Mortgagors’ escrow	74			68
Liability under recourse exposure	256			301
Other liabilities	513			490
Total liabilities	21,023			19,890
Commitments and contingencies
Stockholders’ equity:
Preferred stock ($0.01 par value; 50,000,000 shares authorized; none issued)	—			—
Common stock ($0.01 par value; 220,000,000 shares authorized; 165,391,746 shares issued)	2			1
Additional paid-in capital	936			907
Unallocated Employee Stock Ownership Plan (ESOP) shares	(85		)	(89		)
Retained earnings	1,840			1,563
Accumulated other comprehensive income, net	(18		)	24
Treasury stock, at cost (30,987,870 shares and 20,930,000 shares, respectively)	(832		)	(482		)
Total stockholders’ equity	1,843			1,924
Total liabilities and stockholders’ equity	$	22,866		$	21,814

(See accompanying notes to the unaudited consolidated financial statements)

Consolidated Statements of Income

(Unaudited)

	Quarter Ended September 30,						Nine Months Ended September 30,
(In millions, except per share amounts)	2003			2002			2003			2002
Interest income:
Mortgage loans held for investment	$	147.6		$	181.1		$	471.4		$	561.9
Loans held for sale	76.7			85.8			223.2			212.2
Securities	44.5			58.9			156.2			185.6
Other	4.1			3.3			12.2			15.8
Total interest income	272.9			329.1			863.0			975.5
Interest expense:
Deposits	55.6			69.1			178.7			220.1
Other borrowed funds	54.1			60.6			161.4			164.9
Long-term debt	11.0			8.5			28.0			29.1
Total interest expense	120.7			138.2			368.1			414.1
Net interest income	152.2			190.9			494.9			561.4
Provision for loan losses	(1.1		)	(0.5		)	(2.0		)	(1.2		)
Net interest income after provision for loan losses	151.1			190.4			492.9			560.2
Non-interest income:
Income from fees and commissions:
Loan servicing fees	11.7			(0.4		)	17.1			10.7
Banking services fees and commissions	18.6			15.4			50.3			42.4
Fees, commissions and other income	4.2			4.2			10.7			11.2
Total income from fees and commissions	34.5			19.2			78.1			64.3
Net gain on sales of loans	105.9			89.2			375.9			265.2
Change in valuation of retained interests	(1.1		)	(0.1		)	(2.5		)	(7.2		)
Net gain on sale of securities	1.4			1.8			2.0			5.6
Total non-interest income	140.7			110.1			453.5			327.9
Non-interest expense:
General and administrative expenses:
Salaries and benefits	66.8			49.2			194.9			145.9
Employee Stock Ownership and stock plans expense	6.9			6.3			19.7			19.3
Net expense of premises and equipment	22.3			18.1			64.1			53.6
Federal deposit insurance premiums	0.5			0.4			1.5			1.4
Other administrative expenses	33.9			27.6			97.2			84.8
Total general and administrative expenses	130.4			101.6			377.4			305.0
Other real estate owned operating income	(0.7		)	—			(2.2		)	(1.1		)
Total non-interest expense	129.7			101.6			375.2			303.9
Income from continuing operations before income taxes	162.1			198.9			571.2			584.2
Income taxes related to earnings from continuing operations	61.0			72.4			213.4			214.6
Net income from continuing operations	101.1			126.5			357.8			369.6
Discontinued operations:
Net income (loss) from disposal of discontinued business	0.2			(0.2		)	0.6			1.5
Net income	$	101.3		$	126.3		$	358.4		$	371.1

Basic earnings per share:
Net income from continuing operations	$	0.84		$	0.96		$	2.89		$	2.79
Net income from discontinued operations	—			—			0.01			0.01
Net income	$	0.84		$	0.96		$	2.90		$	2.80
Diluted earnings per share:
Net income from continuing operations	$	0.82		$	0.94		$	2.84		$	2.72
Net income from discontinued operations	—			—			—			0.01
Net income	$	0.82		$	0.94		$	2.84		$	2.73
Dividends declared per share	$	0.24		$	0.17		$	0.66		$	0.50

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

Consolidated Statements of Comprehensive Income

(Unaudited)

	Quarter Ended September 30,						Nine Months Ended September 30,
(In millions)	2003			2002			2003			2002

Net income	$	101.3		$	126.3		$	358.4		$	371.1
Other comprehensive income, before tax:
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during period	(41.7		)	11.1			(70.6		)	50.3
Less: reclassification adjustment for (gains) included in net income	(1.4		)	(1.8		)	(2.0		)	(5.6		)
Other comprehensive (loss) income, before tax	(43.1		)	9.3			(72.6		)	44.7
Income tax benefit (expense) related to items of other comprehensive income	18.5			(3.9		)	31.1			(19.0		)
Other comprehensive (loss) income, net of tax	(24.6		)	5.4			(41.5		)	25.7
Total comprehensive income, net of tax	$	76.7		$	131.7		$	316.9		$	396.8

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

Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)

	Nine Months Ended September 30,
(In millions)	2003			2002
Common stock
Balance at beginning of period	$	1		$	1
3 for 2 stock split	1			—
Balance at end of period	2			1
Additional paid-in capital
Balance at beginning of period	907			877
3 for 2 stock split	(1		)	—
Reissuance of treasury stock	—			(8		)
Amortization of ESOP shares committed to be released	20			18
Amortization of stock plans shares	—			1
Tax benefit for vested stock plans shares	10			14
Balance at end of period	936			902
Unallocated ESOP shares
Balance at beginning of period	(89		)	(95		)
Amortization of ESOP shares committed to be released	4			4
Balance at end of period	(85		)	(91		)
Unearned stock plans shares
Balance at beginning of period	—			(1		)
Balance at end of period	—			(1		)
Retained earnings
Balance at beginning of period	1,563			1,148
Net income	358			371
Dividends declared	(81		)	(67		)
Balance at end of period	1,840			1,452
Accumulated other comprehensive income, net
Balance at beginning of period	24			11
Net change in accumulated other comprehensive income, net	(42		)	26
Balance at end of period	(18		)	37
Treasury stock, at cost
Balance at beginning of period	(482		)	(285		)
Reissuance of treasury stock	35			51
Purchase of treasury stock	(385		)	(157		)
Balance at end of period	(832		)	(391		)
Total stockholders’ equity	$	1,843		$	1,909

(See accompanying notes to the unaudited consolidated financial statements)

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
(In millions)	2003			2002
Cash flows from operating activities:
Net income	$	358		$	371
Adjustments to reconcile net income to net cash used in operating activities:
Provision for loan losses	1			1
Depreciation and amortization	27			25
Gain on sales of loans	(376		)	(265		)
Gain on sale of securities	(2		)	(6		)
ESOP and stock plans expense	24			24
Capitalization of servicing assets	(90		)	(47		)
Net premium amortization on:
Mortgage loans	36			12
Available for sale securities	31			8
Amortization and impairment of servicing assets	28			43
(Increase) decrease in assets associated with operating activities:
Loans receivable held for sale:
Loan originations	(30,120		)	(23,310		)
Proceeds from loan sales	29,785			22,008
Other	296			176
Retained interests in securitizations	47			22
Accrued interest receivable	13			4
Other assets	(5		)	(25		)
Increase (decrease) in liabilities associated with operating activities:
Liabilities under recourse exposure	(45		)	(113		)
Other liabilities	(1		)	6
Other, net	1			(5		)
Net cash provided by (used in) operating activities	8			(1,071		)
Cash flows from investing activities:
Net change in:
Loans receivable held for investment	400			116
Premises and equipment	(41		)	(37		)
Available for sale securities:
Proceeds from maturities	126			154
Proceeds from sales	2,075			1,547
Purchase of securities	(6,684		)	(4,344		)
Principal repayments	3,125			1,579
Proceeds from sales (purchases) of Federal Home Loan Bank Stock	105			(42		)
Other, net	36			22
Net cash used in investing activities	(858		)	(1,005		)
Cash flows from financing activities:
Net change in:
Domestic deposits	715			651
Mortgagors’ escrow accounts	6			8
Proceeds from Securities sold under agreements to repurchase and other borrowings	76,388			100,740
Repayments of Securities sold under agreements to repurchase and other borrowings	(75,004		)	(100,015		)
Proceeds from advances from Federal Home Loan Bank	223,610			195,295
Repayments of advances from Federal Home Loan Bank	(224,910		)	(194,295		)
Proceeds from Senior notes	350			—
Cash dividends paid	(81		)	(67		)
Treasury stock purchased	(385		)	(157		)
Exercise of stock options	35			43
Retirement of long term debt	—			(134		)
Net cash provided by financing activities	724			2,069
Net decrease in cash and cash equivalents	(126		)	(7		)
Cash and cash equivalents at beginning of period	369			357
Cash and cash equivalents at end of period	$	243		$	350
Non-cash activities:
Additions to other real estate owned, net	$	(34	)	$	(21	)
Unsettled trades	$	(43	)	$	—
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	272		$	116
Interest paid	$	376		$	436

(See accompanying notes to the unaudited consolidated financial statements)

Notes To The Unaudited Consolidated Financial Statements

NOTE 1 Summary of Significant Accounting Policies

Basis of Presentation

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

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

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

Accounting for Loan Sales

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

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

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

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

Retained Interests

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

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

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

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

Servicing Assets

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

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

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

Goodwill Amortization

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

Stock-Based Compensation Plans

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

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

	Quarter Ended September 30,						Nine Months Ended September 30,
(In millions)	2003			2002			2003			2002

Net income as reported	$	101.3		$	126.3		$	358.4		$	371.1
Deduct: Total stock-based employee compensation expense determined under fair value based method net of related tax effects	(2.4		)	(2.3		)	(7.2		)	(6.6		)
Proforma net income	$	98.9		$	124.0		$	351.2		$	364.5

Earnings per share:
Basic – as reported	$	0.84		$	0.96		$	2.90		$	2.80
Basic – pro forma	$	0.82		$	0.94		$	2.84		$	2.75
Diluted – as reported	$	0.82		$	0.94		$	2.84		$	2.73
Diluted – pro forma	$	0.80		$	0.92		$	2.78		$	2.68

NOTE 2 Loans Receivable

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

(In millions)	Sept. 30, 2003		Dec. 31, 2002
Conventional first mortgage loans:
Residential one-to four-family	$	4,962	$	5,062
Commercial property	110		78
Second mortgage and home equity loans	885		404
Other	1		1
Total loans receivable held for sale	5,958		5,545
Net deferred loan origination costs	52		50
Loans receivable held for sale, net	$	6,010	$	5,595

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

(In millions)	Sept. 30, 2003			Dec. 31, 2002
Conventional first mortgage loans:
Residential one-to four-family	$	7,928		$	8,666
Residential multi-family	245			319
Commercial property	900			620
Second mortgage and home equity loans	319			267
Other	76			69
Total loans receivable held for investment	9,468			9,941
Net deferred loan origination costs and purchase premium	41			38
Allowance for loan losses	(78		)	(78		)
Loans receivable held for investment, net	$	9,431		$	9,901

NOTE 3 Securities Available for Sale

The amortized cost and estimated fair value of securities available for sale at June 30, 2003 and December 31, 2002 are summarized as follows:

	September 30, 2003
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government and Federal Agency Obligations:
U.S. Treasury notes/bills	$	106	$	—	$	(1	)	$	105
Agency notes	115		—		(4		)	111
Mortgage-backed securities	578		10		(2		)	586
Collateralized mortgage obligations	4,166		8		(32		)	4,142
Trust certificates collateralized by GNMA securities	3		—		—			3
Corporate bonds	142		—		(2		)	140
Municipal bonds	46		3		—			49
Equity securities	274		1		(15		)	260
Total securities available for sale	$	5,430	$	22	$	(56	)	$	5,396

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

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

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

Recourse Arrangements

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

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

	September 30, 2003
(In millions)	Principal Balance		Maximum Recourse Exposure (1)		Recorded Liability
Manufactured housing securitizations	$	3,751	$	557	$	245
Manufactured housing sales	229		229		10
Mortgage securitizations (2)	596		57		—
Mortgage sales (3)	201		197		1

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

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

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

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

Manufactured housing securitization letter of credit exposure is as follows:

(In millions)	Sept. 30, 2003			Dec. 31, 2002
Letters of credit outstanding	$	556		$	617
Projected letter of credit draws	(268		)	(326		)
Remaining letter of credit exposure	$	288		$	291

At September 30, 2003, GreenPoint has six manufactured housing securitizations with principal balances of $1.6 billion, which have cumulative (actual plus projected) letter of credit draws equal to the maximum recourse exposure for those securitizations. GreenPoint records a liability based on the net present value of the projected letter of credit draws. At September 30, 2003, the projected draws exceed the recorded liability by $23 million, representing future interest expense.

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

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

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

	Sept. 30, 2003		Dec. 31, 2002		Sept. 30, 2003		Dec. 31, 2002
(In millions)	Manufactured Housing				Mortgage
Principal balance of loans	$	3,980	$	4,460	$	797	$	1,152
Principal balance of loans 90 days or more past due (1)	176		220		47		62

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

In addition to the recourse arrangements described in the tables above, GreenPoint has established a reserve related to representations and warranties for mortgage loans sold. The activity in the representations and warranty reserve is summarized as follows:

	At and for the Quarter Ended September 30,						At and for the Nine Months Ended September 30,
(In millions)	2003			2002			2003			2002
Balance at beginning of period	$	43		$	21		$	32		$	19
Provision charged to income (1)	15			8			41			18
Losses	(6		)	(4		)	(21		)	(12		)
Balance at end of period	$	52		$	25		$	52		$	25

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

Balances and Changes in Retained Interests

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

	At and for the Quarter Ended September 30,						At and for the Nine Months Ended September 30,
(In millions)	2003			2002			2003			2002
Liability for Recourse Exposure
Balance at beginning of period	$	279		$	343		$	300		$	467
Interest expense	5			5			14			19
Letter of credit draws and other charges	(21		)	(35		)	(63		)	(172		)
Change in valuation of retained interests	(7		)	41			5			40
Balance at end of period	$	256		$	354		$	256		$	354

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

	At and for the Quarter Ended September 30,											At and for the Nine Months Ended September 30,
	2003			2002		2003			2002			2003			2002			2003			2002
(In millions)	Manufactured Housing					Mortgage						Manufactured Housing						Mortgage
Retained Interests in Securitizations
Balance at beginning of period	$		1	$	—	$	83		$	106		$	4		$	1		$	104		$	130
Additions from securitizations	—			—		1			1			—			—			9			8
Interest and other income	—			—		3			2			—			2			8			13
Cash received	—			—		(8		)	(5		)	—			(3		)	(17		)	(34		)
Clean-up call exercise	—			—		(19		)	—			—			—			(42		)	—
Change in unrealized gain	—			—		(1		)	3			—			—			(2		)	(3		)
Change in valuation of retained interests	—			—		(2		)	—			(3		)	—			(3		)	(7		)
Balance at end of period	$	1		$	—	$	57		$	107		$	1		$	—		$	57		$	107

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

Valuation Assumptions

There were no new securitizations recorded during the quarter ended September 30, 2003. The key economic assumptions used in estimating the fair value of the entire portfolio of retained interests at September 30, 2003 and December 31, 2002 were as follows:

	Estimate of Fair Value at
	Sept. 30, 2003		Dec. 31, 2002		Sept. 30, 2003		Dec. 31, 2002
	Manufactured Housing				Mortgage
Weighted average life (in years)	5.7		4.9		0.8		0.9
Weighted average prepayment rate (1)	5.8	%	8.2	%	58.2	%	52.6	%
Weighted average default rate	5.6	%	6.3	%	N/A		N/A
Loss severity rate	94.4	%	86.6	%	N/A		N/A
Weighted average loss rate	5.3	%	5.5	%	2.8	%	3.3	%
Cumulative loss (2)	30.2	%	27.0	%	2.2	%	3.0	%
Weighted average discount rate – asset	14.0	%	14.0	%	8.1	%	9.3	%
Weighted average discount rate – liability	6.6	%	6.6	%	—		—

(1) Excludes weighted average default rate.

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

Servicing Assets

On a quarterly basis, GreenPoint reviews capitalized servicing rights for impairment. This review is performed based on risk strata, which are determined on a disaggregated basis given the predominant risk characteristics of the underlying loans. For manufactured housing loans, the predominant risk characteristics are loan type and interest rate type. For mortgage loans, the predominant risk characteristics are loan type and interest rate. The asset pools underlying certain mortgage and manufactured housing servicing assets at times do not meet agreed-upon servicing covenants. Management evaluates the impact of these covenants on the value of the servicing assets and incorporates the assessment in their quarterly impairment review.

The activity in servicing assets is summarized as follows:

	At and for the Quarter Ended September 30,													At and for the Nine Months Ended September 30,
	2003				2002			2003			2002			2003			2002			2003			2002
(In millions)	Manufactured Housing							Mortgage						Manufactured Housing						Mortgage
Servicing Assets
Balance at beginning of period	$		97		$	115		$	122		$	90		$	101		$	127		$	112		$	86
Additions	—				—			43			17			—			3			90			44
Sales	—				—			—			—			—			—			(20		)	(8		)
Amortization	(2			)	(8		)	(11		)	(8		)	(6		)	(23		)	(28		)	(23		)
Balance at end of period	95				107			154			99			95			107			154			99
Reserve for impairment of servicing assets
Balance at beginning of period	(70			)	(70		)	(29		)	(23		)	(69		)	(67		)	(27		)	(23		)
Recoveries (additions)	2				10			7			(4		)	1			7			5			(4		)
Balance at end of period	(68			)	(60		)	(22		)	(27		)	(68		)	(60		)	(22		)	(27		)
Servicing assets, net	$	27			$	47		$	132		$	72		$	27		$	47		$	132		$	72

The estimated fair values of manufactured housing servicing assets were $37 million and $54 million at September 30, 2003 and 2002, respectively, and $38 million at December 31, 2002.

The estimated fair values of mortgage servicing assets were $138 million and $78 million at September 30, 2003 and 2002, respectively, and $90 million at December 31, 2002.

Servicer advances receivable totaled $97 million and $85 million at September 30, 2003 and December 31, 2002, respectively.

The significant assumptions used in estimating the fair value of the servicing assets at September 30, 2003 and December 31, 2002 were as follows:

	Sept. 30, 2003		Dec. 31, 2002		Sept. 30, 2003		Dec. 31, 2002
	Manufactured Housing				Mortgage
Weighted average prepayment rate	6.5	%(1)	7.4	%(1)	28.3	%(2)	25.4	%(2)
Weighted average life (in years)	5.4		5.1		5.1		4.6
Weighted average default rate	5.0	%	5.2	%	N/A		N/A
Cash flows discounted at	14.0	%	14.0	%	10.1	%	10.2	%

(1) Excludes weighted average default rate.

(2) Includes weighted average default rate.

NOTE 5 Derivative Financial Instruments

GreenPoint enters into mandatory commitments to deliver mortgage whole loans to various investors and to issue private securities and Fannie Mae and Freddie Mac securities (“forward delivery commitments”). The forward delivery commitments are used to manage the interest rate risk associated with funded mortgage loans and interest rate lock commitments made by GreenPoint to mortgage borrowers. The notional amounts of these contracts were $3.3 billion and $3.2 billion at September 30, 2003 and December 31, 2002, respectively. The forward delivery commitments designated as fair value hedges associated with funded loans had notional values of $2.3 billion and $2.4 billion at September 30, 2003 and December 31, 2002, respectively. The notional amounts of forward delivery commitments used to manage the interest rate risk associated with interest rate lock commitments on mortgage loans were $836 million and $833 million at September 30, 2003 and December 31, 2002, respectively. The amount of hedge ineffectiveness for the three months ended September 30, 2003 was a gain of $4 million and is included in gain on sale of loans. There was no gain or loss from hedge ineffectiveness for the three months ended September 30, 2002.

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

The risks inherent in derivatives are the potential inability of a counterpart to meet the terms of its contract and the risk associated with changes in the fair values of the contracts due to movements in the underlying interest rates. The current credit exposure of derivatives is represented by the fair value of contracts with a positive fair value at the reporting date. At December 31, 2002, the receivable on contracts with a positive fair value was $1 million. There was no receivable at September 30, 2003. To reduce credit risk, management may deem it necessary to obtain collateral.

NOTE 6 Stock Incentive Plans

For the nine months ended September 30, 2003, the Company granted options to purchase 2,092,800 shares of the Company’s common stock to certain officers and directors, at an exercise price range of between $30.52 and $34.26. These awards vest at various intervals over three years, on the anniversary dates of the awards.

NOTE 7 Discontinued Operations

The assets and liabilities from discontinued operations at September 30, 2003 and December 31, 2002 were as follows:

(In millions)	Sept. 30, 2003		Dec. 31, 2002
Assets:
Cash, cash equivalents and securities	$	36	$	34
Retained interests in securitizations	1		4
Loans receivable held for investment	48		44
Servicing assets	27		32
Other assets	241		243
Total assets	$	353	$	357
Liabilities:
Liability under recourse exposure	$	256	$	300
Other liabilities and allocated capital	97		57
Total liabilities and equity	$	353	$	357

Net income (loss) from discontinued operations was $0.2 million and $0.6 million for the quarter and nine months ended September 30, 2003 versus $(0.2) million and $1.5 million in the year ago periods of 2002, respectively.

The notional value of swaps related to specific manufactured housing securitizations was $556 million and $639 million at September 30, 2003 and December 31, 2002, respectively.

During the quarter and nine months ended September 30, 2002, GreenPoint originated manufactured housing loans totaling $2 million and $106 million. These loans related to commitments outstanding at December 31, 2001 and were recorded at their estimated fair value. These loans were sold during the third quarter of 2002 at a sales price, which approximated their previously estimated fair value.

NOTE 8 Business Segments

The Company consists of three domestic business segments offering unique products and services. The Mortgage Banking segment specializes in “A” quality loans, including agency qualifying loans and Jumbo A loans and specializes in Alternative A mortgage loan products, which are primarily obtained from the Company’s network of registered mortgage brokers. The Retail Banking segment consists of 85 full service banking offices offering a variety of financial services to the Greater New York area. The Balance Sheet Management segment includes earnings from the held for investment mortgage portfolios and other corporate investment activities.

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

	Quarter Ended September 30, 2003
(In millions)	Balance Sheet Management (1)			Retail Banking			Sub-total Banking			Mortgage Banking (5)			Segment Totals			Other (4)			Consolidated Continuing Operations
Net interest income	$	39.1		$	61.1		$	100.2		$	52.0		$	152.2		$	—		$	152.2
Provision for loan losses	(1.1		)	—			(1.1		)	—			(1.1		)	—			(1.1		)
Net interest income after provision for loan losses	38.0			61.1			99.1			52.0			151.1			—			151.1
Non-interest income:
Loan servicing fees	—			—			—			22.7			22.7			(11.0		)	11.7
Banking fees and commissions	—			18.6			18.6			—			18.6			—			18.6
Other income	6.1			—			6.1			(1.9		)	4.2			—			4.2
Net gain on sale of loans	—			—			—			121.6			121.6			(15.7		)	105.9
Change in valuation of retained interests	—			—			—			(1.1		)	(1.1		)	—			(1.1		)
Net gain on sale of securities	1.4			—			1.4			—			1.4			—			1.4
Total non-interest income	7.5			18.6			26.1			141.3			167.4			(26.7		)	140.7
Non-interest expense:
Depreciation	—			2.7			2.7			4.9			7.6			1.3			8.9
ESOP and stock plans expense	—			1.4			1.4			4.2			5.6			1.3			6.9
Other expenses	0.5			31.2			31.7			64.7			96.4			17.5			113.9
Total non-interest expense	0.5			35.3			35.8			73.8			109.6			20.1			129.7
Segment income (loss) before taxes	$	45.0		$	44.4		$	89.4		$	119.5		$	208.9		$	(46.8	)	$	162.1
Total Assets	$	15,549		$	496	(2)	$	16,045		$	6,452		$	22,497		$	369	(3)	$	22,866

	Quarter Ended September 30, 2002
(In millions)	Balance Sheet Management (1)			Retail Banking			Sub-total Banking			Mortgage Banking (5)			Segment Totals			Other (4)			Consolidated Continuing Operations
Net interest income	$	77.0		$	59.4		$	136.4		$	54.5		$	190.9		$	—		$	190.9
Provision for loan losses	(0.5		)	—			(0.5		)	—			(0.5		)	—			(0.5		)
Net interest income after provision for loan losses	76.5			59.4			135.9			54.5			190.4			—			190.4
Non-interest income:
Loan servicing fees	—			—			—			(7.6		)	(7.6		)	7.2			(0.4		)
Banking fees and commissions	—			15.4			15.4			—			15.4			—			15.4
Other income	3.9			0.2			4.1			0.1			4.2			—			4.2
Net gain on sale of loans	—			—			—			97.7			97.7			(8.5		)	89.2
Change in valuation of retained interests	—			—			—			(0.1		)	(0.1		)	—			(0.1		)
Net gain on sale of securities	1.8			—			1.8			—			1.8			—			1.8
Total non-interest income	5.7			15.6			21.3			90.1			111.4			(1.3		)	110.1
Non-interest expense:
Depreciation	—			2.2			2.2			3.1			5.3			1.6			6.9
ESOP and stock plans expense	(0.1		)	1.3			1.2			4.4			5.6			0.7			6.3
Other expenses	0.6			27.1			27.7			45.8			73.5			14.9			88.4
Total non-interest expense	0.5			30.6			31.1			53.3			84.4			17.2			101.6
Segment income (loss) before taxes	$	81.7		$	44.4		$	126.1		$	91.3		$	217.4		$	(18.5	)	$	198.9
Total Assets	$	14,947		$	485	(2)	$	15,432		$	6,767		$	22,199		$	383	(3)	$	22,582

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

(2) Retail Banking segment excludes intercompany funds transfers. Intersegment assets and liabilities eliminated for consolidation purposes were $12.5 billion and $11.4 billion for the quarter ended September 30, 2003 and 2002, respectively.

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

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

(5) Intersegment revenues, in the mortgage banking segment, for the quarter ended September 30, 2003 and 2002 were $26.7 million and $1.3 million.

	Nine Months Ended September 30, 2003
(In millions)	Balance Sheet Management (1)			Retail Banking			Sub-total Banking			Mortgage Banking (5)			Segment Totals			Other (4)			Consolidated Continuing Operations
Net interest income	$	167.1		$	180.0		$	347.1		$	147.8		$	494.9		$	—		$	494.9
Provision for loan losses	(2.0		)	—			(2.0		)	—			(2.0		)	—			(2.0		)
Net interest income after provision for loan losses	165.1			180.0			345.1			147.8			492.9			—			492.9
Non-interest income:
Loan servicing fees	—			—			—			23.5			23.5			(6.4		)	17.1
Banking fees and commissions	—			50.3			50.3			—			50.3			—			50.3
Other income	15.3			—			15.3			(4.6		)	10.7			—			10.7
Net gain on sale of loans	—			—			—			423.2			423.2			(47.3		)	375.9
Change in valuation of retained interests	—			—			—			(2.5		)	(2.5		)	—			(2.5		)
Net gain on sale of securities	2.0			—			2.0			—			2.0			—			2.0
Total non-interest income	17.3			50.3			67.6			439.6			507.2			(53.7		)	453.5
Non-interest expense:
Depreciation	—			7.2			7.2			12.6			19.8			4.1			23.9
ESOP and stock plans expense	0.1			4.4			4.5			12.0			16.5			3.2			19.7
Other expenses	1.3			92.1			93.4			182.4			275.8			55.8			331.6
Total non-interest expense	1.4			103.7			105.1			207.0			312.1			63.1			375.2
Segment income (loss) before taxes	$	181.0		$	126.6		$	307.6		$	380.4		$	688.0		$	(116.8	)	$	571.2
Total Assets	$	15,549		$	496	(2)	$	16,045		$	6,452		$	22,497		$	369	(3)	$	22,866

	Nine Months Ended September 30, 2002
(In millions)	Balance Sheet Management (1)			Retail Banking			Sub-total Banking			Mortgage Banking (5)			Segment Totals			Other (4)			Consolidated Continuing Operations
Net interest income	$	244.3		$	177.8		$	422.1		$	139.3		$	561.4		$	—		$	561.4
Provision for loan losses	(1.2		)	—			(1.2		)	—			(1.2		)	—			(1.2		)
Net interest income after provision for loan losses	243.1			177.8			420.9			139.3			560.2			—			560.2
Non-interest income:
Loan servicing fees	—			—			—			3.2			3.2			7.5			10.7
Banking fees and commissions	—			42.4			42.4			—			42.4			—			42.4
Other income	9.9			0.7			10.6			0.6			11.2			—			11.2
Net gain on sale of loans	—			—			—			299.5			299.5			(34.3		)	265.2
Change in valuation of retained interests	—			—			—			(7.2		)	(7.2		)	—			(7.2		)
Net gain on sale of securities	5.6			—			5.6			—			5.6			—			5.6
Total non-interest income	15.5			43.1			58.6			296.1			354.7			(26.8		)	327.9
Non-interest expense:
Depreciation	—			6.8			6.8			10.0			16.8			4.3			21.1
ESOP and stock plans expense	—			3.5			3.5			11.4			14.9			4.4			19.3
Other expenses	1.4			77.5			78.9			136.1			215.0			48.5			263.5
Total non-interest expense	1.4			87.8			89.2			157.5			246.7			57.2			303.9
Segment income (loss) before taxes	$	257.2		$	133.1		$	390.3		$	277.9		$	668.2		$	(84.0	)	$	584.2
Total Assets	$	14,947		$	485	(2)	$	15,432		$	6,767		$	22,199		$	383	(3)	$	22,582

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

(2) Retail Banking segment excludes intercompany funds transfers. Intersegment assets and liabilities eliminated for consolidation purposes were $12.5 billion and $11.4 billion for the nine months ended September 30, 2003 and 2002, respectively.

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

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

(5) Intersegment revenues, in the mortgage banking segment, for the nine months ended September 30, 2003 and 2002 were $53.7 million and $26.8 million.

NOTE 9 Earnings Per Share

	Quarter Ended September 30,					Nine Months Ended September 30,
(In millions, except per share amounts)	2003		2002			2003		2002

Net income from continuing operations	$	101.1	$	126.5		$	357.8	$	369.6
Net income from discontinued operations	0.2		(0.2		)	0.6		1.5
Net income	$	101.3	$	126.3		$	358.4	$	371.1

Weighted average number of common shares outstanding during each period – basic	120.9		131.8			123.8		132.6
Effect of dilutive securities – stock options	2.4		3.1			2.4		3.5
Weighted average number of common shares and common stock equivalents outstanding during each period – diluted	123.3		134.9			126.2		136.1

Basic earnings per share:
Net income from continuing operations	$	0.84	$	0.96		$	2.89	$	2.79
Net income from discontinued operations	—		—			0.01		0.01
Net income	$	0.84	$	0.96		$	2.90	$	2.80

Diluted earnings per share:
Net income from continuing operations	$	0.82	$	0.94		$	2.84	$	2.72
Net income from discontinued operations	—		—			—		0.01
Net income	$	0.82	$	0.94		$	2.84	$	2.73

(1) Options to purchase 55,500 shares of common stock at prices between $33.40 and $34.26 per share were outstanding at September 30, 2003, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares for the quarter ended September 30, 2003. For the nine months ended September 30, 2003, options to purchase 111,750 shares of common stock at prices between $31.84 and $34.26 where not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of common shares.

(2) Options to purchase 79,500 shares of common stock at prices between $31.49 and $33.40 per share were outstanding at September 30, 2002, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares for both the quarter and nine months ended September 30, 2002.

NOTE 10 Three for Two Stock Split

On July 8, 2003, GreenPoint approved a three-for-two stock split which was distributed on August 20, 2003 to shareholders of record on August 8, 2003. Accordingly, the stock split required retroactive restatement of all historical per share data at September 30, 2003.

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

	Quarter Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			September 30,
(Dollars in millions, except per share data)	2003			2003			2003			2002			2002			2003			2002
Performance Ratios – Continuing Operations (Annualized):
Return on average assets	1.76		%	2.34		%	2.40		%	2.28		%	2.38		%	2.16		%	2.44		%
Return on average equity	21.86			27.46			26.52			27.05			27.32			25.31			27.44
Net interest margin	2.84			3.23			3.51			3.64			3.85			3.19			3.98
Net interest spread	2.73			3.11			3.37			3.52			3.72			3.07			3.83
Operating expense to average assets	2.26			2.24			2.28			2.17			1.91			2.27			2.02
Total non-interest expense to operating revenue	31.4			27.3			27.0			26.4			23.2			28.5			23.3
Efficiency ratio (1)	44.3			37.5			37.3			37.6			33.8			39.8			34.3
Average interest-earning assets to average interest-bearing liabilities	1.05		x	1.05		x	1.06		x	1.05		x	1.05		x	1.05		x	1.05		x

Per Share Data:
Basic earnings per share – continuing operations	$	0.84		$	1.05		$	1.00		$	0.99		$	0.96		$	2.89		$	2.79
Diluted earnings per share – continuing operations	0.82			1.03			0.98			0.97			0.94			2.84			2.72
Book value per common share	15.17			15.35			15.00			14.71			14.24			N/A			N/A
Tangible book value per common share	11.91			12.19			11.89			11.69			11.29			N/A			N/A
Dividends per share	0.24			0.21			0.21			0.17			0.17			0.66			0.50
Shares used in calculations (in thousands):
Average (2)	123,253			126,035			129,327			132,238			134,858			126,214			136,100
Period-end (3)	121,351			125,011			126,879			130,765			134,123			N/A			N/A
Total shares outstanding (shares issued less treasury stock purchased)	134,404			138,110			140,541			144,462			147,544			N/A			N/A

Asset Quality Ratios – continuing operations:
Non-accruing loans held for investment to mortgage loans held for investment	1.72		%	1.62		%	1.67		%	1.61		%	1.57		%
Non-accruing loans held for sale to mortgage loans held for sale	1.60			1.60			1.87			1.18			0.99
Non-performing assets to total assets	1.22			1.18			1.23			1.12			1.02
Allowance for loan losses to non-performing loans held for investment	46.0			46.0			46.4			46.6			48.4
Allowance for loan losses to mortgage loans held for investment	0.79			0.75			0.78			0.75			0.76
Net loan charge-off experience (annualized) to average mortgage loans held for investment	0.05			0.03			0.01			0.04			0.02
Ratio of allowance for loan losses to annualized net charge-offs	16.94		x	30.13		x	64.4		x	20.8		x	42.8		x

Capital Data:
Tier I Capital (to risk weighted assets)	10.96		%	11.28		%	11.53		%	11.43		%	11.66		%
Total Risk Based Capital (to risk weighted assets)	12.47			12.79			13.08			12.96			13.25
Tier I Capital to average assets	7.18			7.68			7.97			7.51			7.86
Tangible equity to tangible managed assets	5.71			5.89			5.87			5.98			5.68
Tangible equity to managed receivables	7.78			7.96			8.13			7.69			7.27
Purchase of treasury stock	$	147		$	113		$	125		$	93		$	72		$	385		$	157

Other Data:
Mortgage loan originations	$	9,449		$	11,343		$	9,328		$	9,985		$	9,730		$	30,120		$	23,205
Total managed assets (4)	26,053			26,135			25,856			25,595			26,456			N/A			N/A
Total managed receivables (5)	18,848			19,053			18,354			19,555			20,338			N/A			N/A
Earnings to combined fixed charges: (6)
Excluding interest on deposits	13.25		x	19.66		x	20.67		x	20.61		x	19.09		x	17.51		x	17.22		x
Including interest on deposits	3.36		x	3.89		x	3.77		x	3.58		x	3.49		x	3.68		x	3.28		x
Full-service consumer bank offices	85			85			84			81			75

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

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

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

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

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

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

Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements, which are based on management’s current expectations. These forward-looking statements include information concerning possible or assumed future results of operations, trends, financial results and business plans, including those relating to earnings growth; revenue growth; origination volume in the Company’s mortgage business; interest and non-interest income levels; fees from product sales; credit performance on loans made by the Company; tangible capital generation; margins on sales or securitizations of loans; market share; expense levels; results from new business initiatives in the retail banking business; and other business operations and strategies. For these statements, GreenPoint claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 to the extent provided by applicable law. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to: risks and uncertainties related to acquisitions, divestitures and terminating business segments, including related integration and restructuring activities; prevailing economic conditions; changes in interest rates, loan demand, real estate values, and competition, which can materially affect origination levels, interest and non-interest income levels, gain on sale results in the Company’s mortgage business and other aspects of our financial performance; the level of defaults, losses and prepayments on loans made by the Company, whether held in portfolio, sold in the whole loan secondary markets or securitized, which can materially affect charge-off levels, required loan loss reserve levels and the Company’s periodic valuation of its retained interests from securitizations; changes in accounting principles, policies, and guidelines; adverse changes or conditions in capital or financial markets, which can adversely affect the ability of the Company to sell or securitize loan originations on a timely basis or at prices which are acceptable to the Company, as well as other aspects of our financial performance; actions by rating agencies and the affects of these actions on the Company’s businesses, operations and funding requirements; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues, whether of general applicability or specific to the Company and its subsidiaries; other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services; and the risk factors or other uncertainties described from time to time in the Company’s filings with the Securities and Exchange Commission, including the Risk Factors section included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission on March 28, 2003. The forward-looking statements are made as of the date of this Report, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

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

General

GreenPoint Financial Corp. (the “Corporation”, “Company” or “GreenPoint”), a $22 billion asset bank holding company consists of two primary businesses – a New York retail bank and a national mortgage business. The retail bank is a New York State chartered savings bank and is the second largest thrift depository in the Greater New York area with $13 billion in deposits in 85 branches serving more than 450,000 households. GreenPoint Mortgage (“GPM”), headquartered in Novato, California, originates a wide variety of exclusively “A” quality loans. This includes agency qualifying loans and Jumbo A loans, and GreenPoint’s specialty Alternative A mortgages.

Overview Of Third Quarter 2003 Financial Results

• Net income from continuing operations for the third quarter of 2003 was $0.82 per diluted share, or $101 million, a decrease of 13% compared with the third quarter of 2002. The results reflect the sudden increase in interest rates during the third quarter, which had a negative impact on net interest income and mortgage banking revenues.

The normal process of reviewing and verifying financial information for the filing of the Form 10Q for the third quarter ended September 30, 2003 led to an adjustment in the net interest income and earnings per share that was reported in the Company’s earnings announcement via news release on October 16, 2003.

The change occurred in the accrual of interest for loans held for sale. Some loans that had been sold during the quarter continued to accrue interest beyond the sale date. The adjustment reversed those accruals. No adjustments were necessary for prior quarters.

The change to accrued interest led to a reduction of net interest income, and therefore a reduction in net income after tax of $3.1 million and diluted earnings per share of $0.03 from $0.85 to $0.82. All changes resulting from the adjustment are reflected in the financial statements contained in this Form 10Q.

• Total mortgage loan originations for the third quarter of 2003 were $9.4 billion, a decrease of 3% over the $9.7 billion originated during the third quarter of 2002. Applications declined 25% over the year ago quarter. The decreases reflected a decline in refinancing activity associated with the rise in interest rates.

• Mortgage sales and securitizations totaled $7.5 billion resulting in realized gains of $106 million, compared with sales and securitizations of $6.3 billion and a gain of $89 million in the comparative quarter a year ago.

• The gain on sale of specialty loans was 227 basis points, down from 306 basis points in the second quarter of 2003 and 286 basis points in the year ago quarter.

• Net interest income from continuing operations totaled $152 million, a decrease of 20% from the $191 million in the third quarter of 2002. The net interest margin was 2.84%, decreasing from 3.85% in the third quarter of 2002. The decline in net interest income and margin reflected the record level of mortgage prepayments incurred during the quarter.

• Core deposits grew to $7.7 billion, up 26% from $6.1 billion a year ago, as the Company continued to benefit from an effective sales culture, free checking programs, small business banking initiative and the de novo branching program. The Company opened seven new branches in the last four months of 2002 and four additional branches in the first nine months of 2003.

• Asset quality in the mortgage portfolio remained strong. Net charge-offs of $1.1 million represented 0.05% annualized of average mortgage loans held for investment.

• GreenPoint continues to maintain a strong capital position with a leverage ratio of 7.18%, a Tier 1 risk-based ratio of 10.96% and a total risk-based capital ratio of 12.47% at September 30, 2003.

• Net income from the discontinued manufactured housing business was $0.2 million, reflecting a performance consistent with management’s most recent projections.

Business Segment Results

The Company consists of two primary continuing businesses – a banking business and a mortgage business. The banking business includes the results of the retail banking segment and the balance sheet management segment. The retail banking segment represents the results of the activities of 85 full service banking offices operating in the greater New York area and the balance sheet management segment includes earnings from the held for investment mortgage portfolio and other corporate investment activities. The sub-total defined as the total banking business represents the results of the Company’s traditional banking operations as distinguished from its mortgage banking operations. Following is an analysis of the results of the two primary businesses.

Banking Business

	Quarter Ended September 30,
(In millions)	2003			2002
Net interest income	$	100.2		$	136.4
Provision for loan losses	(1.1		)	(0.5		)
Net interest income after provision for loan losses	99.1			135.9
Non-interest income:
Banking fees and commissions	18.6			15.4
Other income	6.1			4.1
Net gain on securities	1.4			1.8
Total non-interest income	26.1			21.3
Non-interest expense	35.8			31.1
Income before income taxes	$	89.4		$	126.1
Total Assets	$	16,045		$	15,432

The banking business reported pre-tax income of $89 million for the third quarter of 2003, a decrease of 29% from the $126 million reported for the third quarter a year ago. The results included pre-tax income of $44 million from the retail banking segment, unchanged from a year ago, and $45 million from the balance sheet management segment, a decrease of 45% from a year ago. The decrease from a year ago quarter was primarily the result of higher prepayment activity and lower interest rates, which reduced the net interest income in the balance sheet management segment.

The Company deliberately maintains an asset-sensitive balance sheet (see Market Risk Management, page 36). Since mortgage banking revenues strengthen in periods of low interest rates, and weaken when rates rise, the asset-sensitive position is designed to offset mortgage banking cyclicality over time. The benefits of the counter-cyclical relationship between the mortgage and retail banking businesses were not realized during the third quarter of 2003. Going forward, we expect this balance to reassert itself as balance sheet and retail banking revenues increase in a higher interest rate environment.

The increase in non-interest income reflected higher banking fees associated with the growth in deposit accounts and higher non-interest expense reflected the cost of additional branches associated with the de novo branching program.

Mortgage Banking

	Quarter Ended September 30,
(In millions)	2003			2002
Net interest income	$	52.0		$	54.5
Non-interest income:
Loan servicing fees	22.7			(7.6		)
Other income	(1.9		)	0.1
Net gain on sale of loans	121.6			97.7
Change in valuation of retained interests	(1.1		)	(0.1		)
Total non-interest income	141.3			90.1
Non-interest expense	73.8			53.3
Net income before income taxes	$	119.5		$	91.3
Total Assets	$	6,452		$	6,767

The mortgage banking business reported pre-tax income of $120 million, an increase of 31% from the $91 million reported in the third quarter of 2002. Net interest income decreased $3 million, or 5% due to a lower yield earned on the loans held for sale portfolio which was partially offset by a higher average balance. Net gain on sale of mortgage loans increased $24 million or 25% from the year ago period, due to a higher volume of loans sales due to record origination levels in the second quarter of 2003. Service fee income increased $30 million from the prior year quarter as servicing recoveries (both internal and external) of $20 million were recorded in the current quarter, compared with $10 million of impairment reported in the prior year quarter. Non-interest expense increased $21 million to $74 million versus the third quarter a year ago, reflecting the higher level of mortgage originations during the first half of 2003.

Net Interest Income

Net interest income on a fully taxable-equivalent basis, decreased by $39 million and $69 million, or 20% and 12%, to $154 million and $500 million for the quarter and nine months ended September 30, 2003. Net interest margin declined to 2.84% and 3.19% from 3.85% and 3.98% in the comparable quarter and nine months periods a year ago.

The net interest margin decline resulted from the reduction in asset yields associated with the high level of mortgage prepayments, which led to accelerated premium amortization. The accelerated amortization negatively affected the yield on the held for investment mortgage portfolio and the mortgage-backed securities portfolio. The premium amortization on these two portfolios totaled $32 million in the third quarter of 2003, compared with $20 million in the second quarter of 2003 and $10 million in the prior year third quarter. Year to date premium amortization totaled $68 million, compared with $20 million in the prior year.

Net interest income in the third quarter of 2003 was also affected by the suspension of the quarterly dividend by the Federal Home Loan Bank of New York. No income was recognized in the current quarter compared with income of $4 million in the second quarter of 2003 and $2 million in the prior year third quarter.

Average earning assets increased by $1.7 billion and $1.9 billion for the quarter and nine month periods, or 9% and 10% to $21.8 billion and $21.0 billion from $20.1 billion and $19.1 billion in the year ago periods. The increase from the prior year third quarter and nine month periods reflected growth in loans held for sale due to higher origination volume, and higher investment securities. The yield on interest-earning assets and rates paid on interest-bearing liabilities, in both periods, decreased due to higher premium amortization and declining market interest rates from a year ago.

The growth in average earning assets was funded in part by a substantial growth in core deposits as the average balance increased 27% and 32% over the comparable quarter and nine month periods a year ago. The growth resulted from the continued success of the Company’s sales culture, checking programs, de novo branching program and small business banking initiative.

Average Consolidated Balance Sheet, Interest and Rates

The following table sets forth certain information relating to the continuing operations of the Company’s average statements of financial condition (unaudited) and statements of income (unaudited) for the quarter and nine months ended September 30, 2003 and 2002, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such annualized yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances. Average balances and yields include non-accrual loans. The yields and costs include fees that are considered adjustments to yields. Interest and yields are presented on a taxable-equivalent yield basis.

	Quarter Ended
	September 30, 2003						September 30, 2002
(Taxable-equivalent interest and rates, in millions) (1)	Average Balance		Interest		Average Yield/ Cost		Average Balance		Interest		Average Yield/ Cost
Assets:
Interest-earning assets:
Mortgage loans held for investment (2)	$	9,777	$	147.2	6.02	%	$	9,944	$	181.1	7.28	%
Other loans (2)	24		0.4		7.14		20		0.4		8.22
Loans held for sale (2)	5,901		76.7		5.20		5,354		85.8		6.35
Securities (3)	5,875		45.9		3.12		4,531		58.9		5.20
Other interest-earning assets	267		4.2		6.41		280		5.1		7.31
Total interest-earning assets	21,844		274.4		5.02		20,129		331.3		6.57
Non-interest earning assets (4)	1,144						1,136
Total assets	$	22,988					$	21,265

GREENPOINT FINANCIAL CORP 10-Q