HispanicBusiness

Merger will take place in the second quarter of 2013.

Ronald E. Hermance, Jr., the Company's Chairman and Chief Executive Officer commented, "Net income for the fourth quarter was $47.9 million or $0.10 per diluted share. The decrease in net income from the linked third quarter is due to the continuing reduction in the size of the balance sheet as investment alternatives remain scarce in the current interest rate environment. In addition, we suspended the execution of the initiatives that were outlined in our 2012 Strategic Plan as we move towards completion of our merger with M&T."

Mr. Hermance continued, "In the days following Hurricane Sandy, we identified our mortgage loans that were in the areas most affected by the storm. We performed property inspections on these homes and evaluated the potential impact to the collateral, taking into account flood insurance coverage and land values. We estimate that our loss exposure to these loans is less than $6.0 million. As a result we increased our loan loss provision to $25.0 million during the fourth quarter as compared to $20.0 million for the linked third quarter. As we reported to you previously, we were fortunate to have only one branch significantly damaged by Hurricane Sandy. That branch, in the Midland Beach section of Staten Island, has since reopened. Most importantly, we continue to work with our customers to help them, and their communities, recover. "

Statement of Financial Condition Summary

Total assets decreased $4.76 billion, or 10.5%, to $40.60 billion at December 31, 2012 from $45.36 billion at December 31, 2011. The decrease in total assets reflected a $2.27 billion decrease in total mortgage-backed securities, a $2.25 billion decrease in net loans and a $154.1 million decrease in Federal Home Loan Bank ("FHLB") stock.

Net loans amounted to $26.89 billion at December 31, 2012 as compared to $29.14 billion at December 31, 2011. During 2012, our loan production (origination and purchases) amounted to $5.06 billion as compared to $5.27 billion for 2011. Loan production was offset by principal repayments of $7.13 billion in 2012, as compared to principal repayments of $6.71 billion in 2011. Loan production declined during 2012 which reflects our low appetite for adding long-term fixed-rate mortgage loans in the current low market interest rate environment. The decrease in net loans was also due to continued elevated levels of refinancing activity caused by low market interest rates.

Total mortgage-backed securities decreased $2.27 billion to $11.02 billion at December 31, 2012 from $13.29 billion at December 31, 2011. The decrease in mortgage-backed securities reflected repayments of $3.69 billion, partially offset by purchases of $1.47 billion of mortgage-backed securities issued by government-sponsored entities ("GSEs").

Total liabilities decreased $4.90 billion, or 12.0%, to $35.90 billion at December 31, 2012 from $40.80 billion at December 31, 2011. The decrease in total liabilities primarily reflected a $2.90 billion decrease in borrowed funds and a decrease in total deposits of $2.03 billion. Borrowings amounted to $12.18 billion at December 31, 2012 as compared to $15.08 billion at December 31, 2011. The decrease in borrowed funds is a result of the maturity of short-term borrowings during 2012 and the continuation of our strategy of allowing the balance sheet to deleverage as the borrowings mature. The decrease in deposits is primarily due to planned reductions in our deposit rates to curtail deposit growth at this time of limited investment opportunities.

Total shareholders' equity increased $139.4 million to $4.70 billion at December 31, 2012 from $4.56 billion at December 31, 2011. The increase was primarily due to net income of $249.1 million for the year ended December 31, 2012 and an increase in accumulated other comprehensive income of $30.3 million. The increase was partially offset by cash dividends paid to common shareholders of $158.8 million. At December 31, 2012, our consolidated shareholders' equity to asset ratio was 11.59% and our tangible book value per share was $9.16.

Accumulated other comprehensive income amounted to $70.0 million at December 31, 2012 and included a $122.5 million after-tax net unrealized gain on securities available for sale ($207.2 million pre-tax) partially offset by a $52.5 million after-tax accumulated other comprehensive loss related to the funded status of our employee benefit plans. Accumulated other comprehensive income amounted to $39.7 million at December 31, 2011 and included an $89.3 million after-tax net unrealized gain on securities available for sale ($150.9 million pre-tax) partially offset by a $49.6 million after-tax accumulated other comprehensive loss related to the funded status of our employee benefit plans.