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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 June 30, 2002

OR

[   ] 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.

(216) 566-5300

NOT APPLICABLE

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

The number of shares outstanding of the registrant’s sole class of common stock as of July 31, 2002 was 218,615,797.

Table of Contents

TABLE OF CONTENTS

Item
Number				Page
PART I — FINANCIAL STATEMENTS
	1.    Financial Statements
		Consolidated Statements of Financial Condition — June 30, 2002 and December 31, 2001			1
		Consolidated Statements of Income — Three and six months ended June 30, 2002 and 2001			2
		Consolidated Statements of Cash Flows — Six months ended June 30, 2002 and 2001			3
		Notes to Consolidated Financial Statements			4
	2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations				6
	3.    Quantitative and Qualitative Disclosure About Market Risk				24
PART II — OTHER INFORMATION
	4.    Submission of Matters to a Vote of Security Holders				25
	5.    Other Information				25
	6.    Exhibits and Reports on Form 8-K				25
Signatures					26
Certifications					26

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PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

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

					6/30/02				12/31/01
					(Dollars in thousands,
					except per share data)
ASSETS
Cash accounts					$	583,448			$	472,658
Interest-bearing deposits with banks						9,123				8,355
Federal funds sold and other						800,509				35,507
		Total cash and cash equivalents				1,393,080				516,520
Investment securities:
	Available for sale					169,203				129,312
	Held to maturity (fair value of $4,651 and $6,467)					4,381				6,274
Mortgage-backed securities:
	Available for sale					9,634,674				8,030,512
	Held to maturity (fair value of $759,307 and $1,022,658)					728,003				983,904
Loans and leases, net						24,382,986				25,396,071
Loans held for sale						161,438				332,629
Bank owned life insurance						814,429				808,231
Federal Home Loan Bank and Federal Reserve Bank stock						668,905				617,836
Premises and equipment						362,909				352,235
Accrued interest receivable						165,262				162,065
Real estate and other collateral owned						44,511				54,351
Loan servicing assets						175,650				139,840
Goodwill						378,078				350,839
Other assets						299,303				293,897
		Total assets			$	39,382,812			$	38,174,516
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits					$	26,557,315			$	25,123,309
Federal Home Loan Bank advances						7,841,524				8,657,238
Federal funds purchased and repurchase agreements						53,089				203,259
Other borrowings						720,133				304,410
Advance payments by borrowers for taxes and insurance						51,822				54,103
Accrued interest payable						38,029				57,704
Accrued expenses and other liabilities						1,087,446				845,993
		Total liabilities				36,349,358				35,246,016
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; 224,853,682 and 224,855,827 shares issued					2,249				2,249
	Additional paid-in capital					2,104,361				2,091,767
	Retained earnings					971,103				811,093
	Less 4,662,584 and 516,082 shares of common stock held in treasury at cost					(135,378	)			(14,586	)
	Accumulated other comprehensive income					91,119				37,977
			Total shareholders’ equity			3,033,454				2,928,500
			Total liabilities and shareholders’ equity		$	39,382,812			$	38,174,516

See Notes to Consolidated Financial Statements.

1

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

				Three Months Ended								Six Months Ended
				6/30/02				6/30/01				6/30/02				6/30/01
				(Dollars in thousands, except per share data)
Interest income:
	Loans and leases			$	415,057			$	458,851			$	842,895			$	925,518
	Mortgage-backed securities:
		Available for sale			141,773				84,613				252,901				167,337
		Held to maturity			12,261				23,283				27,061				49,570
	Investment securities:
		Available for sale			2,625				2,216				5,587				5,052
		Held to maturity			60				91				131				236
	Other interest-earning assets				9,478				10,888				17,390				21,505
		Total interest income			581,254				579,942				1,145,965				1,169,218
Interest expense:
	Deposits				169,576				216,327				339,977				430,784
	FHLB advances				103,927				128,186				207,643				263,933
	Other borrowings				9,884				7,758				17,381				17,349
		Total interest expense			283,387				352,271				565,001				712,066
		Net interest income			297,867				227,671				580,964				457,152
Provision for loan and lease losses					55,277				17,076				83,994				34,804
		Net interest income after provision for loan and lease losses			242,590				210,595				496,970				422,348
Other income:
	Retail banking				83,543				72,130				157,299				139,499
	Mortgage banking				9,168				8,830				20,458				18,310
	Leasing operations				317				331				587				1,538
	Net gains				37,840				25,580				59,567				41,674
	Bank owned life insurance and other				8,924				9,785				18,432				19,634
		Total other income			139,792				116,656				256,343				220,655
Administrative expenses:
	Compensation and employee benefits				80,645				65,438				157,897				133,537
	Net occupancy and equipment				27,634				26,314				56,197				53,175
	Marketing expenses				10,012				9,633				18,841				15,692
	Federal deposit insurance premiums				1,106				932				2,317				1,848
	Amortization of goodwill				3,832				4,039				7,730				8,078
	Other administrative expenses				49,219				44,467				95,526				86,079
		Total administrative expenses			172,448				150,823				338,508				298,409
Income before income taxes					209,934				176,428				414,805				344,594
Income taxes					66,654				56,016				131,702				109,392
		Net income		$	143,280			$	120,412			$	283,103			$	235,202
Basic earnings per share(1)				$	.65			$	.55			$	1.28			$	1.07
Diluted earnings per share(1)				$	.63			$	.54			$	1.25			$	1.05
Average common shares outstanding(1):
	Basic				220,188,006				217,811,601				220,420,017				218,330,403
	Diluted				227,736,469				223,381,474				227,307,251				223,812,751

See Notes to Consolidated Financial Statements.

2

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

					Six Months Ended
					6/30/02				6/30/01
					(Dollars in thousands)
Cash flows from operating activities:
	Net income				$	283,103			$	235,202
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for loan and lease losses				83,994				34,804
		Net gains				(69,787	)			(45,065	)
		Accretion of discounts, amortization of premiums, amortization of goodwill and depreciation, net				59,264				51,939
		Origination of loans held for sale				(1,125,258	)			(759,925	)
		Proceeds from sale of loans held for sale				1,122,671				762,967
		Increase (decrease) in accrued interest payable				(19,675	)			36,920
		Other				308,762				285,988
			Net cash provided by operating activities			643,074				602,830
Cash flows from investing activities:
	Net principal disbursed on loans and leases					(2,968,722	)			(3,753,417	)
	Proceeds from principal repayments and maturities of:
		Mortgage-backed securities held to maturity				258,232				237,631
		Mortgage-backed securities available for sale				817,069				471,215
		Investment securities held to maturity				1,751				15,946
		Investment securities available for sale				21,059				323,393
	Proceeds from sale of:
		Mortgage-backed securities available for sale				4,416,575				1,893,114
		Investment securities available for sale				645				5,104
		Federal Home Loan Bank and Federal Reserve Bank stock				7,538				6,353
	Purchase of:
		Mortgage-backed securities available for sale				(2,431,548	)			(652,086	)
		Investment securities available for sale				(29,315	)			(4,080	)
		Federal Home Loan Bank and Federal Reserve Bank stock				(41,588	)			—
		Loans				(10,090	)			(11,723	)
		Loan servicing assets, including those originated				(57,088	)			(25,778	)
	Net cash paid in connection with business combination					(90,425	)			—
	Other					(52,574	)			(52,643	)