The provision for loan losses amounted to $20.0 million for the first quarter of 2009 as compared to $2.5 million for the first quarter of 2008. The increase in the provision for loan losses reflects the risks inherent in our loan portfolio due to decreases in real estate values in our lending markets, the increase in non-performing loans, the increase in loan charge-offs and worsening economic conditions, particularly increasing levels of unemployment. Non-performing loans were $320.2 million or 1.06% of total loans at March 31, 2009 as compared to $217.6 million or 0.74% of total loans at December 31, 2008. The increase in non-performing loans reflects the current economic recession coupled with the continued deterioration of the housing market. Net charge-offs amounted to $4.7 million for the first quarter of 2009 as compared to $469,000 for the first quarter of 2008. The conditions in the housing market are evidenced by declining house prices, reduced levels of home sales, increasing inventories of houses on the market, and an increase in the length of time houses remain on the market. Total non-interest expense increased $6.7 million, or 13.9%, to $54.8 million for the first quarter of 2009 from $48.1 million for the first quarter of 2008. The increase is primarily due to a $1.2 million increase in compensation and employee benefits expense, a $1.1 million increase in net occupancy expense, a $2.2 million increase in Federal deposit insurance expense and a $2.2 increase in other non-interest expense.
We grew our assets by 4.5% to $56.57 billion at March 31, 2009 from $54.15 billion at December 31, 2008. Loans increased $669.4 million to $30.11 billion at March 31, 2009 from $29.44 billion at December 31, 2008. While the residential real estate markets have weakened considerably during the past year, low market interest rates, decreased lending competition and an increase in mortgage refinancing caused by market interest rates that are at near historic lows have resulted in increased loan production. The increase in refinancing activity has also caused an increase in principal repayments. Total securities increased $1.72 billion to $24.67 billion at March 31, 2009 from $22.95 billion at December 31, 2008. The increase in securities was primarily due to purchases (including purchases recorded in the first quarter of 2009 with settlement dates after March 31, 2009) of mortgage-backed and investment securities of $1.75 billion and $1.30 billion, respectively, partially offset by principal collections on mortgage-backed securities of $699.1 million and calls of investment securities of $775.0 million. The increase in our total assets during the first quarter of 2009 was funded primarily by an increase in customer deposits. Deposits increased $1.98 billion to $20.44 billion at March 31, 2009 from $18.46 billion at December 31, 2008. The increase in deposits was attributable to growth in our time deposits and money market accounts. The increase in these accounts was a result of our competitive pricing strategies that focused on attracting these types of deposits as well as customer preferences for time deposits rather than other types of deposit accounts. In addition, we believe the turmoil in the credit and equity markets has made deposit products in strong financial institutions desirable for many customers. Borrowed funds increased $50.0 million to $30.28 billion at March 31, 2009 from $30.23 billion at December 31, 2008. The additional borrowed funds were used primarily to supplement our deposit growth.

Comparison of Financial Condition at March 31, 2009 and December 31, 2008 Total assets increased $2.42 billion, or 4.5%, to $56.57 billion at March 31, 2009 from $54.15 billion at December 31, 2008.
Loans increased $669.4 million, or 2.3%, to $30.11 billion at March 31, 2009 from $29.44 billion at December 31, 2008 due primarily to the origination of residential first mortgage loans in New Jersey, New York and Connecticut and our continued loan purchase activity. For the first quarter of 2009, we originated $1.32 billion and purchased $723.3 million of loans, compared to originations of $820.4 million and purchases of $543.4 million for the first quarter of 2008. The origination and purchases of loans were partially offset by principal repayments of $1.35 billion for the first quarter of 2009 as compared to $655.9 million for the first quarter of 2008. Loan originations have increased due primarily to our competitive rates and an increase in mortgage refinancing caused by market interest rates that are at near-historic lows. Our loan production has also benefited from decreased lending competition resulting from the absence of historically significant competitors that have not survived the current financial crisis. The increase in refinancing activity occurring in the marketplace has also caused an increase in principal repayments in the first quarter of 2009.
Our first mortgage loan originations and purchases during the first quarter of 2009 were substantially all in one-to four-family mortgage loans. Approximately 47.0% of mortgage loan originations for the first quarter of 2009 were variable-rate loans as compared to approximately 48.0% for the first quarter of 2008. Substantially all purchased mortgage loans during the quarter ended March 31, 2009 were fixed-rate loans since variable-rate loans available for purchase are typically outside of our defined geographic parameters and include features, such as option ARM's, that do not meet our underwriting standards. Fixed-rate mortgage loans accounted for 75.0% of our first mortgage loan portfolio at March 31, 2009 and 75.7% at December 31, 2008.
The following table presents the geographic distribution of our loan portfolio and our non-performing loans:

                                                         At March 31, 2009                              At December 31, 2008
                                             Total loans         Non-performing loans         Total loans        Non-performing loans
New Jersey                                          44.5 %                     42.5 %              44.8 %                      40.4 %
New York                                            16.3 %                     20.1 %              15.6 %                      22.6 %
Connecticut                                          9.9 %                      3.7 %               9.3 %                       2.3 %

Total New York metropolitan area                    70.7 %                     66.3 %              69.7 %                      65.3 %

Virginia                                             5.3 %                      3.3 %               5.5 %                       4.2 %
Illinois                                             4.1 %                      3.6 %               4.3 %                       3.5 %
Maryland                                             4.1 %                      4.3 %               4.2 %                       5.4 %
Massachusetts                                        2.9 %                      2.5 %               3.0 %                       2.7 %
Minnesota                                            1.7 %                      3.6 %               1.8 %                       3.8 %
Michigan                                             1.6 %                      4.4 %               1.7 %                       3.7 %
Pennsylvania                                         1.5 %                      1.6 %               1.5 %                       1.5 %
All others                                           8.1 %                     10.4 %               8.3 %                       9.9 %

                                                    29.3 %                     33.7 %              30.3 %                      34.7 %

                                                   100.0 %                    100.0 %             100.0 %                     100.0 %

Total mortgage-backed securities increased $1.20 billion to $20.69 billion at March 31, 2009 from $19.49 billion at December 31, 2008. This increase in total mortgage-backed securities resulted from the purchase of $1.54 billion of mortgage-backed securities, all of which were issued by U.S. government-sponsored enterprises. The increase was partially offset by repayments of $699.1 million. At March 31, 2009, variable-rate mortgage-backed securities accounted for 80.4% of our portfolio compared with 83.5% at December 31, 2008. The purchase of variable-rate mortgage-backed securities is a component of our interest rate risk management strategy. Since our loan production includes a concentration of fixed-rate mortgage loans, the purchase of variable-rate mortgage-backed securities provides us with an asset that reduces our exposure to interest rate fluctuations.
Total investment securities increased $518.6 million to $3.98 billion at March 31, 2009 as compared to $3.46 billion at December 31, 2008. The increase in investment securities is primarily due to purchases of $1.30 billion. The increase was partially offset by calls of investment securities of $775.0 million.
Total cash and cash equivalents increased $86.3 million to $348.1 million at March 31, 2009 as compared to $261.8 million at December 31, 2008. Other assets decreased $48.3 million, primarily due to a decrease in deferred tax assets of $49.7 million.
Total liabilities increased $2.31 billion, or 4.7%, to $51.52 billion at March 31, 2009 from $49.21 billion at December 31, 2008. The increase in total liabilities primarily reflected a $1.98 billion increase in deposits, a $207.9 million increase in due to brokers and a $50.0 million increase in borrowed funds.
Total deposits amounted to $20.44 billion at March 31, 2009 as compared to $18.46 billion at December 31, 2008. The increase in total deposits reflected a $1.35 billion increase in our time deposits, a $418.3 million increase in our money market checking accounts and a $136.3 million increase in our interest-bearing transaction accounts and savings accounts. The increase in our deposit accounts reflects our competitive pricing, our strategy to grow deposits and customer preference for these types of deposits. At March 31, 2009 we had 129 branches as compared to 127 at December 31, 2008 and 119 at March 31, 2008. In addition, we believe that the turmoil in the credit and equity markets has made deposit products in strong financial institutions desirable for many customers.
Borrowings amounted to $30.28 billion at March 31, 2009 as compared to $30.23 billion at December 31, 2008. The increase in borrowed funds was the result of $650.0 million of new borrowings at a weighted-average rate of 1.62%, largely offset by repayments of $600.0 million with a weighted average rate of 1.52%. Borrowed funds at March 31, 2009 were comprised of $15.18 billion of Federal Home Loan Bank of New York ("FHLB") advances and $15.10 billion of securities sold under agreements to repurchase.
Substantially all of our borrowed funds are callable at the discretion of the issuer after an initial non-call period. As a result, if interest rates were to decrease, or remain consistent with current rates, these borrowings would probably not be called and our average cost of existing borrowings would not decrease even as market interest rates decrease. Conversely, if interest rates increase above the market interest rate for similar borrowings, these borrowings would likely be called at their next call date and our cost to replace these borrowings would increase. These call features are generally quarterly, after an initial non-call period of one to five years from the date of borrowing. Our callable borrowings typically have a final maturity of ten years and may not be called for an initial period of one to five years. We have used this type of borrowing primarily to fund our loan growth because they have a longer duration than shorter-term non-callable borrowings and have a lower cost than

a non-callable borrowing with a maturity date similar to the first call date of the callable borrowing. During the current period of credit instability we may not be able to continue to borrow in this manner. We believe that we will continue to be able to borrow from the same institutions as in the past, but structured callable borrowings may not be available. In order to fund our growth and provide for our liquidity we may need to borrow a combination of short-term borrowings with maturities of three to six months and longer term fixed-maturity borrowings with terms of two to five years. Our new borrowings in the first quarter of 2009 consisted of non-callable borrowings of $400.0 million with maturities of one to three months and $250.0 million of non-callable borrowings with maturities of two to three years.
The Company has two collateralized borrowings in the form of repurchase agreements totaling $100.0 million with Lehman Brothers, Inc. Lehman Brothers, Inc. is currently in liquidation under the Securities Industry Protection Act. Mortgage-backed securities with an amortized cost of approximately $114.5 million are pledged as collateral for these borrowings. We intend to pursue full recovery of the pledged collateral in accordance with the contractual terms of the repurchase agreements. If full recovery of the collateral does not occur, we will be pursuing a customer claim against the Lehman Brothers, Inc. estate for the $14.5 million difference between the amortized cost of the securities and the amount of the underlying borrowings. There can be no assurances that the final settlement of this transaction will result in the full recovery of the collateral or the full amount of the claim. We have not recognized a loss in our financial statements related to these repurchase agreements.
Due to brokers amounted to $447.0 million at March 31, 2009 as compared to $239.1 million at December 31, 2008. Due to brokers at March 31, 2009 represents securities purchased in the first quarter of 2009 with settlement dates after March 31, 2009. Other liabilities increased to $359.1 million at March 31, 2009 as compared to $278.4 million at December 31, 2008. The increase is primarily the result of an increase in accrued taxes payable of $89.1 million. Total shareholders' equity increased $114.0 million to $5.05 billion at March 31, 2009 from $4.94 billion at December 31, 2008. The increase was primarily due to net income of $127.7 million for the quarter ended March 31, 2009 and an $85.2 million increase in accumulated other comprehensive income. These increases to shareholders' equity were partially offset by cash dividends paid to common shareholders of $68.3 million and repurchases of our common stock of $40.7 million.
As of March 31, 2009, 50,323,550 shares were available for repurchase under our existing stock repurchase programs. During the first three months of 2009, we repurchased 3.8 million shares of our outstanding common stock at a total cost of $40.7 million. The repurchase of shares during the first quarter of 2009 offered us an effective use of capital as strong deposit growth provided liquidity and market conditions were favorable. The average price of shares repurchased in the first quarter was $10.85. Our capital ratios remain in excess of the regulatory requirements for a well-capitalized bank. See "Liquidity and Capital Resources".
The accumulated other comprehensive income of $132.8 million at March 31, 2009 includes a $161.1 million after-tax net unrealized gain on securities available for sale ($272.4 million pre-tax) partially offset by a $28.3 million after-tax accumulated other comprehensive loss related to the funded status of our employee benefit plans. We invest primarily in mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, as well as other securities issued by U.S. government-sponsored enterprises. We do not purchase unrated or private label mortgage-backed securities or other higher risk securities such as those backed by sub-prime loans. There were no debt securities past due or securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the security.

At March 31, 2009, our shareholders' equity to asset ratio was 8.93% compared with 9.12% at December 31, 2008. For the first quarter of 2009, the ratio of average shareholders' equity to average assets was 9.08% compared with 10.35% for the first quarter of 2008. The lower equity-to-assets ratios reflect our strategy to grow assets and pay dividends. Our book value per share, using the period-end number of outstanding shares, less purchased but unallocated employee stock ownership plan shares and less purchased but unvested recognition and retention plan shares, was $10.40 at March 31, 2009 and $10.10 at December 31, 2008. Our tangible book value per share, calculated by deducting goodwill and the core deposit intangible from shareholders' equity, was $10.07 as of March 31, 2009 and $9.77 at December 31, 2008.

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2009 and 2008
Average Balance Sheet. The following table presents the average balance sheets, average yields and costs and certain other information for the three months ended March 31, 2009 and 2008. The table presents the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we considered to be adjustments to yields. Yields on tax-exempt obligations were not computed on a tax equivalent basis. Nonaccrual loans were included in the computation of average balances and therefore have a zero yield. The yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income.

                                                                                 For the Three Months Ended March 31,
                                                                      2009                                                     2008
                                                                                       Average                                                  Average
                                                 Average                               Yield/             Average                               Yield/
                                                 Balance            Interest            Cost              Balance            Interest            Cost
                                                                                        (Dollars in thousands)
Assets:
Interest-earnings assets:
First mortgage loans, net (1)                  $ 29,346,715         $ 414,208              5.65 %       $ 24,050,648         $ 346,277              5.76 %
Consumer and other loans                            402,059             5,990              5.96              435,627             6,856              6.30
Federal funds sold                                  146,751               176              0.49              277,400             2,073              3.01
Mortgage-backed securities at amortized
cost                                             19,435,625           250,914              5.16           14,690,323           194,355              5.29
Federal Home Loan Bank stock                        872,095             6,373              2.92              721,542            14,226              7.89
Investment securities, at amortized cost          3,692,237            45,661              4.95            4,190,796            49,501              4.72

Total interest-earning assets                    53,895,482           723,322              5.37           44,366,336           613,288              5.53

Noninterest-earnings assets                       1,209,460                                                  749,141

Total Assets                                   $ 55,104,942                                             $ 45,115,477

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Savings accounts                               $    718,720             1,348              0.76         $    731,766             1,372              0.75
Interest-bearing transaction accounts             1,624,474             9,068              2.26            1,565,329            12,901              3.31
Money market accounts                             2,918,741            16,705              2.32            1,682,795            15,897              3.80
Time deposits                                    13,602,195           111,703              3.33           10,952,763           127,846              4.69

Total interest-bearing deposits                  18,864,130           138,824              2.98           14,932,653           158,016              4.26

Repurchase agreements                            15,099,951           151,052              4.06           12,006,644           128,407              4.30
Federal Home Loan Bank of New York
advances                                         15,266,667           149,615              3.97           12,716,379           133,550              4.22

Total borrowed funds                             30,366,618           300,667              4.02           24,723,023           261,957              4.26

Total interest-bearing liabilities               49,230,748           439,491              3.62           39,655,676           419,973              4.26

Noninterest-bearing liabilities:
Noninterest-bearing deposits                        563,360                                                  509,924
Other noninterest-bearing liabilities               310,286                                                  280,569

Total noninterest-bearing liabilities               873,646                                                  790,493

Total liabilities                                50,104,394                                               40,446,169
Shareholders' equity                              5,000,548                                                4,669,308

Total Liabilities and Shareholders'
Equity                                         $ 55,104,942                                             $ 45,115,477

Net interest income/net interest rate
spread (2)                                                          $ 283,831              1.75                              $ 193,315              1.27

Net interest-earning assets/net interest
margin (3)                                     $  4,664,734                                2.06 %       $  4,710,660                                1.72 %

Ratio of interest-earning assets to
interest-bearing liabilities                                                               1.09 x                                                   1.12 x

(1) Amount includes deferred loan costs and non-performing loans and is net of the allowance for loan losses.

(2) Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.

(3) Determined by dividing annualized net interest income . . .