**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**_________________**

**Form      10-Q**

**          QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) **

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**For      the quarterly period ended June 30, 2007**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15 (d) **

**              OF      THE SECURITIES EXCHANGE ACT OF 1934**

**Commission      file number: 000-25391**

**Capitol      Federal Financial**

*(*
*Exact      name of registrant as specified in its charter)*

**                                               United      States**
**48-1212142**

*                                                (State or other      jurisdiction of incorporation or      organization)                  (I.R.S. Employer Identification No.)*

*                                                                                                                      *

**                                                                       700 Kansas Avenue, Topeka,      Kansas                                                                      66603**

*                                                                    *
*(Address      of principal executive      offices)                                                                (Zip      Code)*

**Registrant’s      telephone number, including area code:**

**(785)      235-1341**

----

|  PART                I -- FINANCIAL INFORMATION                                                                                                                                           | PageNumber |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Item                1.  Financial Statements (Unaudited):                                                                                                                            |       |
|              Consolidated                Balance Sheets                at                June 30, 2007 and September 30, 2006 | 3          |
|              Consolidated                Statements of Income                for the three and nine months ended              |       |
|                   June                30, 2007 and June 30, 2006                                     | 4          |
|              Consolidated                Statement of Stockholders’ Equity                for the nine months ended     |       |
|                   June                30, 2007                                                       | 5          |
|              Consolidated                Statements of Cash Flows                for the nine months ended                    |       |
|                   June                30, 2007 and June 30, 2006                                     | 6          |
|              Notes                to Consolidated Interim Financial Statements                                                | 8          |
| Item                2.  Management’s                Discussion and Analysis                of                Financial Condition and                                           |       |
|                   Results                of Operations                                               | 9          |
| Item                3.  Quantitative                and Qualitative Disclosure about Market Risk                                                                                     | 42         |
| Item                4.  Controls                and Procedures                                                                                                                       | 49         |
|                                                                                                                                                                                           |       |
| PART                II -- OTHER INFORMATION                                                                                                                                                    |       |
| Item                1.   Legal                Proceedings                                                                                                                            | 49         |
| Item                1A. Risk                Factors                                                                                                                                            | 49         |
| Item                2.   Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                  | 50         |
| Item                3.   Defaults                Upon Senior Securities                                                                                                              | 50         |
| Item                4.   Submission                of Matters to a Vote of Security Holders                                                                                          | 50         |
| Item                5.   Other                Information                                                                                                                            | 50         |
| Item                6.   Exhibits                                                                                                                                                    | 50         |
|                                                                                                                                                                                           |       |
| Signature                Page                                                                                                                                                                  | 51         |
|                                                                                                                                                                                           |       |
| INDEX                TO EXHIBITS                                                                                                                                                               | 52         |
|                                                                                                                                                                                           |       |

----

**PART      I -- FINANCIAL INFORMATION**

**Item      1. Financial Statements**

CONSOLIDATED      BALANCE SHEETS      

|                                                                                                                     |   | June                30, |       | September                30, |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|------------------------------|--------|
|                                                                                                                     |   | 2007                    |       | 2006                         |   |
| ASSETS:                                                                                                                  |   |                    | (Unaudited | )                            |   |   |   |
| Cash                and cash equivalents                                                                                 |   | $                       | 188,664    |                         | $      | 183,242 |   |
| Investment                securities:                                                                                    |   |                    |       |                         |   |   |   |
| Available-for-sale                (“AFS”) at market (amortized cost of $107,456 and                $189,275) |   |                    | 107,427    |                         |   | 189,480 |   |
| Held-to-maturity                (“HTM”) at cost (market value of $560,448 and $233,525)                      |   |                    | 565,733    |                         |   | 240,000 |   |
| Mortgage-related                securities:                                                                              |   |                    |       |                         |   |   |   |
| Trading,                at market                                                                                        |   |                    | --         |                         |   | 396,904 |   |
| AFS,                at market (amortized cost of $386,205 and $558,939)                                                  |   |                    | 386,515    |                         |   | 556,248 |   |
| HTM,                at cost (market value of $1,050,564 and $1,101,159)                                                  |   |                    | 1,080,307  |                         |   | 1,131,634 |   |
| Loans                receivable held-for-sale, net                                                                       |   |                    | 354        |                         |   | 1,440 |   |
| Loans                receivable, net                                                                                     |   |                    | 5,250,270  |                         |   | 5,221,117 |   |
| Mortgage                servicing rights ("MSR")                                                                         |   |                    | 6,017      |                         |   | 6,917 |   |
| Capital                stock of Federal Home Loan Bank ("FHLB"), at cost                                                 |   |                    | 147,557    |                         |   | 165,130 |   |
| Accrued                interest receivable                                                                               |   |                    | 34,809     |                         |   | 38,032 |   |
| Premises                and equipment, net                                                                               |   |                    | 27,388     |                         |   | 26,500 |   |
| Real                estate owned, net                                                                                    |   |                    | 1,828      |                         |   | 2,409 |   |
| Income                taxes receivable                                                                                   |   |                    | 7,987      |                         |   | 5,359 |   |
| Deferred                income taxes, net                                                                                |   |                    | 3,989      |                         |   | 20,967 |   |
| Other                assets                                                                                              |   |                    | 14,984     |                         |   | 13,694 |   |
|         TOTAL                ASSETS                                              |   | $                       | 7,823,829  |                         | $      | 8,199,073 |   |
|                                                                                                                     |   |                    |       |                         |   |   |   |
| LIABILITIES:                                                                                                             |   |                    |            |                         |   |   |   |
| Deposits                                                                                                                 |   | $                       | 3,946,693  |                         | $      | 3,900,431 |   |
| Advances                from FHLB                                                                                        |   |                    | 2,870,337  |                         |   | 3,268,705 |   |
| Other                borrowings, net                                                                                     |   |                    | 53,509     |                         |   | 53,467 |   |
| Advance                payments by borrowers for taxes and insurance                                                     |   |                    | 22,214     |                         |   | 48,353 |   |
| Accounts                payable and accrued expenses                                                                     |   |                    | 60,981     |                         |   | 64,898 |   |
|         Total                liabilities                                         |   |                    | 6,953,734  |                         |   | 7,335,854 |   |
|                                                                                                                     |   |                    |       |                         |   |   |   |
| STOCKHOLDERS'                EQUITY:                                                                                     |   |                    |       |                         |   |   |   |
| Preferred                stock ($0.01 par value) 50,000,000 shares authorized; none                issued                |   |                    | --         |                         |   | -- |   |
| Common                stock ($0.01 par value) 450,000,000 shares authorized; 91,512,287                                  |   |                    |       |                         |   |   |   |
|         shares                issued as of June 30, 2007 and September 30, 2006  |   |                    | 915        |                         |   | 915 |   |
| Additional                paid-in capital                                                                                |   |                    | 437,515    |                         |   | 429,286 |   |
| Unearned                compensation, Employee Stock Ownership Plan ("ESOP")                                             |   |                    | (12,602    | )                            |   | (14,784 | ) |
| Unearned                compensation, Recognition and Retention Plan ("RRP")                                             |   |                    | (716       | )                            |   | (825 | ) |
| Retained                earnings                                                                                         |   |                    | 754,233    |                         |   | 760,890 |   |
| Accumulated                other comprehensive gain (loss)                                                               |   |                    | 174        |                         |   | (1,543 | ) |
| Less                shares held in treasury (17,215,567 and 17,480,537 shares as                of                       |   |                    |       |                         |   |   |   |
|        June                30, 2007 and September 30, 2006, at cost)                  |   |                    | (309,424   | )                            |   | (310,720 | ) |
|            Total                stockholders' equity              |   |                    | 870,095    |                         |   | 863,219 |   |
|                                                                                                                     |   |                    |       |                         |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                                                                |   | $                       | 7,823,829  |                         | $      | 8,199,073 |   |

<Index>

----

CAPITOL      FEDERAL FINANCIAL AND SUBSIDIARY

|                                                                                                |   | For                the Three Months Ended |    | For                the Nine Months Ended |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|------------------------------------------|--------|
|                                                                                                |   | June                30,                   |    | June                30,                  |   |
|                                                                                                |   | 2007                                      |    | 2006                                     |   | 2007 |   | 2006 |   |
| INTEREST                AND DIVIDEND INCOME:                                                        |   |                                      |    |                                     |   |   |   |   |   |
| Loans                receivable                                                                     |   | $                                         | 73,219  |                                     | $      | 76,123 |   | $ | 220,401 |   | $ | 226,788 |   |
| Mortgage-related                securities                                                          |   |                                      | 16,224  |                                     |   | 18,175 |   |   | 53,062 |   |   | 56,469 |   |
| Investment                securities                                                                |   |                                      | 8,459   |                                     |   | 4,170 |   |   | 24,405 |   |   | 13,489 |   |
| Capital                stock of FHLB                                                                |   |                                      | 2,413   |                                     |   | 2,483 |   |   | 7,656 |   |   | 7,339 |   |
| Cash                and cash equivalents                                                            |   |                                      | 1,211   |                                     |   | 1,476 |   |   | 5,741 |   |   | 2,160 |   |
|      Total                interest and dividend income                     |   |                                      | 101,526 |                                     |   | 102,427 |   |   | 311,265 |   |   | 306,245 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| INTEREST                EXPENSE:                                                                    |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                            |   |                                      | 37,377  |                                     |   | 31,588 |   |   | 109,113 |   |   | 87,807 |   |
| FHLB                advances                                                                        |   |                                      | 37,220  |                                     |   | 39,005 |   |   | 116,469 |   |   | 116,985 |   |
| Other                borrowings                                                                     |   |                                      | 1,113   |                                     |   | 1,070 |   |   | 3,343 |   |   | 3,018 |   |
|      Total                interest expense                                 |   |                                      | 75,710  |                                     |   | 71,663 |   |   | 228,925 |   |   | 207,810 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| NET                INTEREST AND DIVIDEND INCOME                                                     |   |                                      | 25,816  |                                     |   | 30,764 |   |   | 82,340 |   |   | 98,435 |   |
| PROVISION                (RECOVERY) FOR LOAN LOSSES                                                 |   |                                      | --      |                                     |   | 40 |   |   | (225 | ) |   | 170 |   |
|     NET                INTEREST AND DIVIDEND INCOME                             |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
|        AFTER                PROVISION (RECOVERY) FOR LOAN LOSSES |   |                                      | 25,816  |                                     |   | 30,724 |   |   | 82,565 |   |   | 98,265 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| OTHER                INCOME:                                                                        |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Retail                fees and charges                                                              |   |                                      | 3,957   |                                     |   | 4,347 |   |   | 11,788 |   |   | 12,610 |   |
| Loan                fees                                                                            |   |                                      | 644     |                                     |   | 436 |   |   | 1,856 |   |   | 1,346 |   |
| Insurance                commissions                                                                |   |                                      | 529     |                                     |   | 434 |   |   | 1,483 |   |   | 1,666 |   |
| Gain                on trading securities, net                                                      |   |                                      | --      |                                     |   | -- |   |   | 34 |   |   | -- |   |
| Loss                on sale of available-for-sale securities                                        |   |                                      | --      |                                     |   | -- |   |   | (47 | ) |   | -- |   |
| Other,                net                                                                           |   |                                      | 778     |                                     |   | 844 |   |   | 2,440 |   |   | 2,295 |   |
|      Total                other income                                     |   |                                      | 5,908   |                                     |   | 6,061 |   |   | 17,554 |   |   | 17,917 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| OTHER                EXPENSES:                                                                      |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                                       |   |                                      | 10,717  |                                     |   | 10,063 |   |   | 31,211 |   |   | 30,183 |   |
| Occupancy                of premises                                                                |   |                                      | 3,488   |                                     |   | 3,254 |   |   | 9,887 |   |   | 9,538 |   |
| Regulatory                and outside services                                                      |   |                                      | 1,781   |                                     |   | 1,307 |   |   | 4,914 |   |   | 3,607 |   |
| Deposit                and loan transaction costs                                                   |   |                                      | 1,226   |                                     |   | 1,113 |   |   | 3,226 |   |   | 3,325 |   |
| Advertising                                                                                         |   |                                      | 1,081   |                                     |   | 819 |   |   | 3,193 |   |   | 2,384 |   |
| Other,                net                                                                           |   |                                      | 1,843   |                                     |   | 1,610 |   |   | 5,356 |   |   | 4,656 |   |
|      Total                other expenses                                   |   |                                      | 20,136  |                                     |   | 18,166 |   |   | 57,787 |   |   | 53,693 |   |
| INCOME                BEFORE INCOME TAX EXPENSE                                                     |   |                                      | 11,588  |                                     |   | 18,619 |   |   | 42,332 |   |   | 62,489 |   |
| INCOME                TAX EXPENSE                                                                   |   |                                      | 4,299   |                                     |   | 7,313 |   |   | 16,336 |   |   | 24,283 |   |
| NET                INCOME                                                                           |   | $                                         | 7,289   |                                     | $      | 11,306 |   | $ | 25,996 |   | $ | 38,206 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Basic                earnings per common share                                                      |   | $                                         | 0.10    |                                     | $      | 0.16 |   | $ | 0.36 |   | $ | 0.53 |   |
| Diluted                earnings per common share                                                    |   | $                                         | 0.10    |                                     | $      | 0.15 |   | $ | 0.36 |   | $ | 0.52 |   |
| Dividends                declared per public share                                                  |   | $                                         | 0.50    |                                     | $      | 0.50 |   | $ | 1.59 |   | $ | 1.80 |   |
|                                                                                                |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
|      Basic                weighted average common shares                   |   |                                      | 72,947  |                                     |   | 72,525 |   |   | 72,795 |   |   | 72,607 |   |
|      Diluted                weighted average common shares                 |   |                                      | 73,043  |                                     |   | 72,754 |   |   | 72,944 |   |   | 72,882 |   |

----

CAPITOL      FEDERAL FINANCIAL AND SUBSIDIARY

|                                                                            |                 |                     |                      |                   |                           | Accumulated                |                       |                           |
|---------------------------------------------------------------------------------|----------------------|--------------------------|---------------------------|------------------------|--------------------------------|----------------------------|----------------------------|--------------------------------|
|                                                                            |                 | Additional               | Unearned                  | Unearned               |                           | Other                      |                       |                           |
|                                                                            | Common               | Paid-In                  | Compensation              | Compensation           | Retained                       | Comprehensive              | Treasury                   |                           |
|                                                                            | Stock                | Capital                  | (ESOP)                    | (RRP)                  | Earnings                       | Gain                (Loss) | Stock                      | Total                          |
|                                                                            |                 |                     |                      |                   |                           |                       |                       |                           |
| Balance                at October 1, 2006                                       | $                915 | $                429,286 | $                (14,784) | $                (825) | $                760,890  | $                (1,543)   | $                (310,720) | $                863,219  |
| Comprehensive                income:                                            |                 |                     |                      |                   |                           |                       |                       |                           |
|    Net                income                                     |                 |                     |                      |                   | 25,996                    |                       |                       | 25,996                    |
|    Changes                in unrealized (gains) losses on        |                 |                     |                      |                   |                           |                       |                       |                           |
|    mortgage-related                securities available-for-sale |                 |                     |                      |                   |                           |                       |                       |                           |
|                   net of deferred income taxes of $1.0 million   |                 |                     |                      |                   |                           | 1,717                 |                       | 1,717                     |
| Total                comprehensive income                                       |                 |                     |                      |                   |                           |                       |                       | 27,713                    |
|                                                                            |                 |                     |                      |                   |                           |                       |                       |                           |
| Tax                benefit of market value change in vested                     |                 |                     |                      |                   |                           |                       |                       |                           |
|   RRP                shares                                           |                 | 36                       |                      |                   |                           |                       |                       | 36                        |
| Common                stock committed to be released for                        |                 |                     |                      |                   |                           |                       |                       |                           |
|   allocation                - ESOP                                    |                 | 4,253                    | 1,513                |                   |                           |                       |                       | 5,766                     |
| Acquisition                of treasury stock                                    |                 |                     |                      |                   |                           |                       | (1,516)                    | (1,516)                        |
| Stock                options exercised                                          |                 | 3,587                    |                      |                   |                           |                       | 2,770                 | 6,357                     |
| Treasury                stock activity related to RRP, net                      |                 | 138                      |                      | (190)                  |                           |                       | 42                    | (10)                           |
| Amortization                of unearned compensation - RRP                      |                 |                     |                      | 299               |                           |                       |                       | 299                       |
| Stock                based compensation expense                                 |                 | 215                      |                      |                   |                           |                       |                       | 215                       |
| Dividends                in excess of debt service cost - ESOP                  |                 |                     | 669                  |                   |                           |                       |                       | 669                       |
| Dividends                on common stock to stockholders                        |                 |                     |                      |                   |                           |                       |                       |                           |
|   ($1.59                per public share)                             |                 |                     |                      |                   | (32,653)                       |                       |                       | (32,653)                       |
| Balance                at June 30, 2007                                         | $                915 | $                437,515 | $                (12,602) | $                (716) | $                754,233  | $                174  | $                (309,424) | $                870,095  |

<Index>

----

CONSOLIDATED      STATEMENTS OF CASH FLOWS

|                                                                                                                                             |   | For                the Nine Months Ended |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                                                                                             |   | June                30,                  |     |
|                                                                                                                                             |   | 2007                                     |     | 2006 |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                                             |   |                                     |     |   |   |
| Net                income                                                                                                                        |   | $                                        | 25,996   |   | $ | 38,206 |   |
| Adjustments                to reconcile net income to net cash provided by                                                                       |   |                                     |     |   |   |   |   |
|   operating                activities:                                                                                                 |   |                                     |     |   |   |   |   |
|   FHLB                stock dividends                                                                                                  |   |                                     | (7,655   | ) |   | (7,339 | ) |
|   (Recovery)                provision for loan losses                                                                                  |   |                                     | (225     | ) |   | 170 |   |
|   Originations                of loans receivable held-for-sale                                                                        |   |                                     | (1,941   | ) |   | (2,997 | ) |
|   Proceeds                from sales of loans receivable held-for-sale                                                                 |   |                                     | 3,103    |   |   | 4,699 |   |
|   MSR                activity, net                                                                                                     |   |                                     | 900      |   |   | 382 |   |
|   Amortization                and accretion of premiums and discounts on                                                               |   |                                     |     |   |   |   |   |
|           mortgage-related                securities and investment securities                 |   |                                     | (626     | ) |   | 5,781 |   |
|   Principal                collected on trading securities                                                                             |   |                                     | 7,729    |   |   | -- |   |
|   Proceeds                from sale of trading securities                                                                              |   |                                     | 389,209  |   |   | -- |   |
|   Depreciation                and amortization of premises and equipment                                                               |   |                                     | 3,399    |   |   | 2,807 |   |
|   Amortization                of deferred debt issuance costs                                                                          |   |                                     | 42       |   |   | 43 |   |
|   Common                stock committed to be released for allocation - ESOP                                                           |   |                                     | 5,766    |   |   | 5,018 |   |
|   RRP                shares sold, net of forfeitures                                                                                   |   |                                     | (10      | ) |   | (11 | ) |
|   Stock                based compensation - stock options and RRP                                                                      |   |                                     | 514      |   |   | 664 |   |
|   Other,                net                                                                                                            |   |                                     | (515     | ) |   | (505 | ) |
|   Changes                in:                                                                                                           |   |                                     |     |   |   |   |   |
|           Accrued                interest receivable                                           |   |                                     | 3,223    |   |   | 3,800 |   |
|           Other                assets                                                          |   |                                     | (1,290   | ) |   | 663 |   |
|           Income                taxes payable/receivable and deferred income taxes             |   |                                     | 13,337   |   |   | 16,861 |   |
|           Accounts                payable and accrued expenses                                 |   |                                     | (2,285   | ) |   | (3,380 | ) |
|              Net                cash provided by operating activities           |   |                                     | 438,671  |   |   | 64,862 |   |
|                                                                                                                                             |   |                                     |     |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                                             |   |                                     |     |   |   |   |   |
| Proceeds                from maturities or calls of investment securities AFS                                                                    |   |                                     | 83,740   |   |   | -- |   |
| Purchases                of investment securities AFS                                                                                            |   |                                     | (1,520   | ) |   | (142,413 | ) |
| Proceeds                from maturities or calls of investment securities HTM                                                                    |   |                                     | 361,500  |   |   | 190,510 |   |
| Purchases                of investment securities HTM                                                                                            |   |                                     | (683,717 | ) |   | -- |   |
| Principal                collected on mortgage-related securities AFS                                                                            |   |                                     | 174,750  |   |   | 226,262 |   |
| Purchases                of mortgage-related securities AFS                                                                                      |   |                                     | (19,912  | ) |   | -- |   |
| Proceeds                from sale of mortgage-related securities AFS                                                                             |   |                                     | 15,237   |   |   | (87,884 | ) |
| Principal                collected on mortgage-related securities HTM                                                                            |   |                                     | 186,217  |   |   | 212,544 |   |
| Purchases                of mortgage-related securities HTM                                                                                      |   |                                     | (135,570 | ) |   | (983 | ) |
| Proceeds                from the redemption of capital stock of FHLB                                                                             |   |                                     | 25,529   |   |   | 22,042 |   |
| Purchases                of capital stock of FHLB                                                                                                |   |                                     | (301     | ) |   | -- |   |
| Loan                originations, net of principal collected                                                                                     |   |                                     | (96,602  | ) |   | (65,029 | ) |
| Loan                purchases, net of principal collected                                                                                        |   |                                     | 64,824   |   |   | (39,948 | ) |
| Net                deferred fee activity                                                                                                         |   |                                     | 177      |   |   | 759 |   |
| Purchases                of premises and equipment, net                                                                                          |   |                                     | (4,292   | ) |   | (5,038 | ) |
| Proceeds                from sales of real estate owned, net                                                                                     |   |                                     | 3,711    |   |   | 3,393 |   |
|              Net                cash (used in) provided by investing activities |   |                                     | (26,229  | ) |   | 314,215 |   |
|                                                                                                                                             |   |                                     |     |   |   |   |   |
| (Continued)                                                                                                                                      |   |                                     |     |   |   |   |   |

----

| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                    |   |   |     |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|
| Dividends paid                                                                                                                          |   |   | (32,653  | )      |   | (36,744 | ) |
| Dividends in excess of debt service cost of ESOP, net                                           |   |   | 669      |   |   | (79 | ) |
| Deposits, net of withdrawals                                                                                                  |   |   | 46,262   |   |   | (64,428 | ) |
| Proceeds from advances/line of credit from FHLB                                                                |   |   | 6,901    |   |   | 629,100 |   |
| Repayments on advances/line of credit from FHLB                                                                |   |   | (406,901 | )      |   | (829,100 | ) |
| Change in advance payments by borrowers for taxes and insurance                                 |   |   | (26,139  | )      |   | (19,718 | ) |
| Acquisitions of treasury stock                                                                                                |   |   | (1,516   | )      |   | (14,882 | ) |
| Stock options exercised                                                                                                            |   |   | 3,828    |   |   | 1,968 |   |
| Excess tax benefits from stock options                                                                              |   |   | 2,529    |   |   | 1,402 |   |
|              Net cash used in financing activities |   |   | (407,020 | )      |   | (332,481 | ) |
|                                                                                                                                         |   |   |     |   |   |   |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                      |   |   | 5,422    |   |   | 46,596 |   |
| CASH AND CASH EQUIVALENTS:                                                                                                    |   |   |     |   |   |   |   |
| Beginning of period                                                                                                                |   |   | 183,242  |   |   | 58,566 |   |
| End of period                                                                                                                      |   | $      | 188,664  |   | $      | 105,162 |   |
|                                                                                                                                         |   |   |     |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                  |   |   |     |   |   |   |   |
|       Income tax payments                                                                            |   | $      | 711      |   | $      | 6,020 |   |
|       Interest payments, net of interest credited to deposits               |   | $      | 124,992  |   | $      | 127,055 |   |
|                                                                                                                                         |   |   |     |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH                                                                                 |   |   |     |   |   |   |   |
|       INVESTING AND FINANCING ACTIVITIES:                                                       |   |   |     |   |   |   |   |
|       Loans transferred to real estate owned                                          |   | $      | 2,673    |   | $      | 3,772 |   |
|                                                                                                                                         |   |   |     |   |   |   |   |
|       Loans made on the sale of real estate owned                      |   | $      | -        |   | $      | 96 |   |
|                                                                                                                                         |   |   |     |   |   |   |   |
|       Market value change related to fair value hedge:                      |   |   |     |   |   |   |   |
|             Interest rate swaps hedging FHLB advances   |   | $      | (1,632   | )      | $      | 18,600 |   |

<Index>

----

**Notes      to Consolidated Interim Financial Statements      (Unaudited)**

**1.   Basis      of Financial Statement Presentation**

**2.   Earnings      Per Share**

The      Company accounts for the 3,024,574 shares acquired by its ESOP in accordance      with Statement of Position (“SOP”) 93-6 and the shares awarded pursuant to its      RRP in a manner similar to the ESOP shares; shares acquired by the ESOP and      shares awarded pursuant to the RRP are not considered in the basic average      shares outstanding until the shares are committed for allocation or vested      to an      employee’s individual account. The following is a reconciliation of the      numerators and denominators of the basic and diluted earnings per share      calculations. 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | For                the Three Months Ended |       | For                the Nine Months Ended            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|-----------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | June                30,                   |       | June                30,                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 2007(1)                         |       | 2006(3)                (4)      |   | 2007(1)                (2)      |   | 2006(3)                (4)      |
|                                                                                                                                           (Dollars in thousands, except per share amounts) |
| Net                income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       | $                7,289                    |       | $                11,306                             |   | $                25,996 |   | $                38,206 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                      |       |                                                |   |   |   |   |
| Average                common shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |       | 72,846,007                                |       | 72,423,231                                          |   | 72,743,849 |   | 72,556,486 |
| Average                committed ESOP shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | 101,374                                   |       | 101,374                                             |   | 50,779 |   | 50,779 |
| Total                basic average common shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | 72,947,381                                |       | 72,524,605                                          |   | 72,794,628 |   | 72,607,265 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                      |       |                                                |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                      |       |                                                |   |   |   |   |
| Effect                of dilutive RRP shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | 5,234                                     |       | 3,794                                               |   | 5,987 |   | 2,659 |
| Effect                of dilutive stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 90,298                                    |       | 225,289                                             |   | 143,210 |   | 272,284 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                      |       |                                                |   |   |   |   |
| Total                diluted average common shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 73,042,913 |                                      | 72,753,688 |                                                | 72,943,825 |   | 72,882,208 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                      |       |                                                |   |   |   |   |
| Net                earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       |                                      |       |                                                |   |   |   |   |
|      Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | $                0.10                     |       | $                0.16                               |   | $                0.36 |   | $                0.53 |
|      Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | $                0.10                     |       | $                0.15                               |   | $                0.36 |   | $                0.52 |

----

**3.**
**   **
**Recent      Accounting Pronouncements **

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

----

| ·   | our                ability to continue to maintain overhead costs at reasonable levels; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | our                ability to continue to originate a significant volume of one- to                four-family mortgage loans in our market                area; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                ability to acquire funds from or invest funds in wholesale or secondary                markets; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | the                future earnings and capital levels of the Bank, which could affect                the                ability of the Company to pay dividends in accordance with its dividend                policies; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                credit risks of lending and investing activities, including changes                in the                level and direction of loan delinquencies and write-offs and changes                in                estimates of the adequacy of the allowance for loan                losses; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                strength of the U.S. economy in general and the strength of the local                economies in which we conduct                operations; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                effects of, and changes in, trade, monetary and fiscal policies and                laws,                including interest rate policies of the Board of Governors of the                Federal                Reserve System; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                effects of, and changes in, foreign and military policies of the                United                States Government; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | inflation,                interest rate, market and monetary fluctuations; |
|--------------------|----------------------------------------------------------------------------|

| ·   | our                ability to access cost-effective                funding; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | the                timely development of and acceptance of our new products and services                and                the perceived overall value of these products and services by users,                including the features, pricing and quality compared to competitors’                products and services; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                willingness of users to substitute competitors’ products and services with                our products and services; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                success in gaining regulatory approval of our products and services,                when                required; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                impact of changes in financial services laws and regulations, including                laws concerning taxes, banking, securities and                insurance; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | technological                changes; |
|--------------------|---------------------------------------|

| ·   | acquisitions                and dispositions; |
|--------------------|-----------------------------------------------|

| ·   | changes                in consumer spending and saving habits;                and |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | our                success at managing the risks involved in our                business. |
|--------------------|-------------------------------------------------------------------------------------------|

**Executive      Summary**

----

----

**Available      Information**

**Critical      Accounting Policies**

**Allowance      for Loan Losses.**

----

**Securities      Impairment.**

**Valuation      of Mortgage Servicing Rights.**

**Valuation      of Deferred Income Tax Assets.**

**Derivative      Instruments.**

----

**Financial      Condition**

|                                                            |   | Balance                at                                       |       |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|
|                                                            |   | June                30,                                         |       | March                31, |   | December                31, |   | September                30, |   | June                30, |   |
|                                                            |   | 2007                                                            |       | 2007 |   | 2006 |   | 2006 |   | 2006 |   |
|                                                            |   | (Dollars                in thousands, except per share amounts) |       |
| Selected                Balance Sheet Data:                     |   |                                                            |       |   |   |   |   |   |   |   |   |
| Total                assets                                     |   | $                                                               | 7,823,829  |   | $ | 8,097,293 |   | $ | 8,205,833 |   | $ | 8,199,073 |   | $ | 8,117,173 |   |
| Cash                and cash equivalents                        |   |                                                            | 188,664    |   |   | 242,186 |   |   | 187,479 |   |   | 183,242 |   |   | 105,162 |   |
| Investment                securities                            |   |                                                            | 673,160    |   |   | 773,404 |   |   | 844,514 |   |   | 429,480 |   |   | 382,128 |   |
| Mortgage-related                securities                      |   |                                                            | 1,466,822  |   |   | 1,603,443 |   |   | 1,668,548 |   |   | 2,084,786 |   |   | 1,788,858 |   |
| Loans                receivable, net                            |   |                                                            | 5,250,270  |   |   | 5,215,701 |   |   | 5,229,032 |   |   | 5,221,117 |   |   | 5,564,502 |   |
| MSR                                                             |   |                                                            | 6,017      |   |   | 6,304 |   |   | 6,508 |   |   | 6,917 |   |   | 2,487 |   |
| Capital                stock of FHLB                            |   |                                                            | 147,557    |   |   | 157,344 |   |   | 167,829 |   |   | 165,130 |   |   | 167,556 |   |
| Deposits                                                        |   |                                                            | 3,946,693  |   |   | 4,002,866 |   |   | 3,934,707 |   |   | 3,900,431 |   |   | 3,895,869 |   |
| Advances                from FHLB                               |   |                                                            | 2,870,337  |   |   | 3,074,973 |   |   | 3,270,125 |   |   | 3,268,705 |   |   | 3,207,865 |   |
| Other                borrowings                                 |   |                                                            | 53,509     |   |   | 53,495 |   |   | 53,481 |   |   | 53,467 |   |   | 53,453 |   |
| Stockholders'                equity                             |   |                                                            | 870,095    |   |   | 870,624 |   |   | 867,139 |   |   | 863,219 |   |   | 860,032 |   |
| Accumulated                other comprehensive gain (loss) |   |                                                            | 174        |   |   | 370 |   |   | (457 | ) |   | (1,543 | ) |   | (4,359 | ) |
| Equity                to total assets at end of period     |   |                                                            | 11.12      | %   |   | 10.75 | %   |   | 10.57 | %   |   | 10.53 | %   |   | 10.60 | % |
| Book                value per share                             |   | $                                                               | 11.92      |   | $ | 11.94 |   | $ | 11.92 |   | $ | 11.89 |   | $ | 11.85 |   |
| Shares                outstanding                               |   |                                                            | 73,010,580 |   |   | 72,932,544 |   |   | 72,725,595 |   |   | 72,589,660 |   |   | 72,565,520 |   |

----

The      following table presents rate information at the dates      indicated.

|                                                         | June                30, |   | March                31, |   | December                31, |   | September                30, |   | June                30, |
|--------------------------------------------------------------|-------------------------|--------|--------------------------|--------|-----------------------------|--------|------------------------------|--------|-------------------------|
|                                                         | 2007                    |   | 2007                     |   | 2006                        |   | 2006                         |   | 2006                    |
| Average                Yield / Cost at End of Period:        |                    |   |                     |   | (annualized)                |   |                         |   |                    |   |   |   |
|    Loans                receivable            | 5.69                    | %      |                     | 5.72   | %                           |   | 5.66                         | %      |                    | 5.64 | % |   | 5.59 | % |
|    Mortgage-related                securities | 4.30                    |   |                     | 4.27   |                        |   | 4.26                         |   |                    | 4.54 |   |   | 4.14 |   |
|    Investment                securities       | 4.68                    |   |                     | 4.76   |                        |   | 4.82                         |   |                    | 4.46 |   |   | 4.35 |   |
|    Deposits                                   | 3.85                    |   |                     | 3.76   |                        |   | 3.68                         |   |                    | 3.61 |   |   | 3.40 |   |
|    FHLB                advances               | 5.07                    |   |                     | 4.97   |                        |   | 4.88                         |   |                    | 4.88 |   |   | 4.82 |   |
|    Borrowings,                other           | 8.12                    |   |                     | 8.13   |                        |   | 8.14                         |   |                    | 8.28 |   |   | 7.84 |   |

**Loans      Receivable**
**.**

----

|                             |                                                   | For                the Three Months Ended |   |
|----------------------------------|--------------------------------------------------------|-------------------------------------------|--------|
|                             |                                                   | June                30, 2007              |   | March                31, 2007 |   | December                31, 2006 |   | September                30, 2006 |   |
|                             |                                                   | Amount                                    | Rate   |   |   | Amount | Rate |   |   | Amount | Rate |   |   | Amount | Rate |   |   |
| Loans                receivable: | (Dollars                in thousands)                  |
|                             | Beginning                balance                       |  $ 5,249,793               | 5.59   | % |   |  $ 5,259,857  | 5.57 | % |   |  $ 5,257,473  | 5.55 | % |   |  $ 5,601,211  | 5.51 | % |   |
|                             | Originations                and refinances             | 246,940                              | 6.24   |   |   | 161,705  | 6.31 |   |   | 169,473  | 6.39 |   |   | 215,763  | 6.63 |   |   |
|                             | Purchases                                              | 54,624                               | 6.25   |   |   | 23,518  | 5.75 |   |   | 26,372  | 5.98 |   |   | 85,295  | 6.08 |   |   |
|                             | Repayments                                             | (246,829)                                 |   |   |   | (194,085) |   |   |   | (193,991) |   |   |   | (240,209) |   |   |   |
|                             | Principal                balance of loans              |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   exchanged                for securities(1) |  --                             | --     |   |   |  --  | -- |   |   |  --  | -- |   |   | (404,819) | 5.72 |   |   |
|                             | Other                                                  | (698)                                     |   |   |   | (1,202) |   |   |   | 530  |   |   |   | 232  |   |   |   |
|                             | Ending                balance                          |  $ 5,303,830               | 5.64   | % |   |  $ 5,249,793  | 5.59 | % |   |  $ 5,259,857  | 5.57 | % |   |  $ 5,257,473  | 5.55 | % |   |

|                             |                                       | For                the Nine Months Ended |
|----------------------------------|--------------------------------------------|------------------------------------------|
|                             |                                       | June                30, 2007             |   | June                30, 2006 |
|                             |                                       | Amount                                   | Rate |   |   | Amount | Rate |   |
| Loans                receivable: | (Dollars                in thousands)      |
|                             | Beginning                balance           |  $ 5,257,473              | 5.55 | % |   |  $ 5,494,387  | 5.39 | % |
|                             | Originations                and refinances | 578,117                             | 6.30 |   |   | 595,483  | 6.27 |   |
|                             | Purchases                                  | 104,515                             | 6.07 |   |   | 244,024  | 5.33 |   |
|                             | Repayments                                 | (634,905)                                |   |   |   | (732,845) |   |   |
|                             | Other                                      | (1,370)                                  |   |   |   | 162  |   |   |
|                             | Ending                balance              |  $ 5,303,830              | 5.64 | % |   |  $ 5,601,211  | 5.51 | % |

----

|                                                                                                   |   | June                30, 2007          |      |  March                31, 2007 |   |  September                30, 2006 |   |
|--------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                   |   | Amount                                |      | Average                Rate         |   |  %                of Total         |   |  Amount |   | Average                Rate |   |  %                of Total |   |  Amount |   | Average                Rate |   | %                of Total |   |
|                                                                                                   |   | (Dollars                in thousands) |      |
| Real                Estate Loans:                                                                      |   |                                  |      |                                |   |                               |   |    |   |   |   |    |   |    |   |   |   |    |   |
|      One-                to four-family                                       |   | $                                     | 4,957,855 |                                |   | 5.50                                    | %      |   | 93.48 | %   | $ | 4,925,267 |   |   | 5.46 | % |   | 93.82 | %   | $ | 4,931,505 |   |   | 5.41 | %   |   | 93.80 | % |
|      Multi-family                and commercial                               |   |                                  | 61,281    |                                |   | 6.47                                    |   |   | 1.16 |   |   | 62,287 |   |   | 6.48 |   |   | 1.19 |   |   | 56,774 |   |   | 6.48 |   |   | 1.08 |   |
|      Construction                and development                              |   |                                  | 65,994    |                                |   | 6.19                                    |   |   | 1.24 |   |   | 41,765 |   |   | 5.90 |   |   | 0.79 |   |   | 45,452 |   |   | 5.81 |   |   | 0.87 |   |
|           Total                real estate loans     |   |                                  | 5,085,130 |                                |   | 5.52                                    |   |   | 95.88 |   |   | 5,029,319 |   |   | 5.47 |   |   | 95.80 |   |   | 5,033,731 |   |   | 5.43 |   |   | 95.75 |   |
|                                                                                                   |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Loans:                                                                         |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Savings                loans                                             |   |                                  | 5,159     |                                |   | 6.42                                    |   |   | 0.09 |   |   | 5,790 |   |   | 6.34 |   |   | 0.11 |   |   | 6,250 |   |   | 6.12 |   |   | 0.12 |   |
|      Automobile                                                               |   |                                  | 4,178     |                                |   | 6.95                                    |   |   | 0.08 |   |   | 4,316 |   |   | 6.93 |   |   | 0.08 |   |   | 3,660 |   |   | 6.88 |   |   | 0.07 |   |
|      Home                equity                                               |   |                                  | 208,792   |                                |   | 8.40                                    |   |   | 3.94 |   |   | 209,788 |   |   | 8.39 |   |   | 4.00 |   |   | 213,182 |   |   | 8.40 |   |   | 4.05 |   |
|      Other                                                               |   |                                  | 571       |                                |   | 8.67                                    |   |   | 0.01 |   |   | 580 |   |   | 9.15 |   |   | 0.01 |   |   | 650 |   |   | 9.03 |   |   | 0.01 |   |
|           Total                consumer loans        |   |                                  | 218,700   |                                |   | 8.32                                    |   |   | 4.12 |   |   | 220,474 |   |   | 8.31 |   |   | 4.20 |   |   | 223,742 |   |   | 8.31 |   |   | 4.25 |   |
| Total                loans receivable                                                                  |   |                                  | 5,303,830 |                                |   | 5.64                                    | %      |   | 100.00 | % |   | 5,249,793 |   |   | 5.59 | % |   | 100.00 | % |   | 5,257,473 |   |   | 5.55 | % |   | 100.00 | % |
|                                                                                                   |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                                                                  |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Loans                in process                                          |   |                                  | 39,875    |                                |   |                                    |   |   |   |   |   | 20,634 |   |   |   |   |   |   |   |   | 22,605 |   |   |   |   |   |   |   |
|      Unearned                loan fees and deferred costs                     |   |                                  | 9,496     |                                |   |                                    |   |   |   |   |   | 9,265 |   |   |   |   |   |   |   |   | 9,318 |   |   |   |   |   |   |   |
|      Allowance                for losses                                      |   |                                  | 4,189     |                                |   |                                    |   |   |   |   |   | 4,193 |   |   |   |   |   |   |   |   | 4,433 |   |   |   |   |   |   |   |
|           Total                loans receivable, net |   | $                                     | 5,250,270 |                                |   |                                    |   |   |   |   | $ | 5,215,701 |   |   |   |   |   |   |   | $ | 5,221,117 |   |   |   |   |   |   |   |
|                                                                                                   |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                information:                                                                      |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                serviced for others                                                               |   | $                                     | 698,926   |                                |   |                                    |   |   |   |   | $ | 728,394 |   |   |   |   |   |   |   | $ | 776,094 |   |   |   |   |   |   |   |

----

**Lending      Practices and Underwriting Standards**

----

----

**Asset      Quality**

|                                      |                                                 | June                30, |   | March                31, |                    | December                31, | September                30, |                    |
|-------------------------------------------|------------------------------------------------------|-------------------------|--------|--------------------------|-------------------------|-----------------------------|------------------------------|-------------------------|
|                                      |                                                 | 2007                    |   | 2007                     |                    | 2006                        | 2006                         |                    |
| Asset                quality information: | (Dollars                in thousands)                |
|                                      | Loans                30 to 89 days delinquent        | $                21,172 |   |                     | $                18,883 |                        |                         | $                24,716 |   | $                20,478 |   |   |
|                                      | Non-performing                loans                  | 6,554                   |   |                     | 6,833                   |                        |                         | 6,681                   |   | 5,609 |   |   |
|                                      | Real                estate owned                     | 1,828                   |   |                     | 1,905                   |                        |                         | 1,770                   |   | 2,401 |   |   |
| Asset                quality ratios:      |                                                 |                    |   |                     |                    |                        |                         |                    |   |   |   |
|                                      | Non-performing                assets to total assets | 0.11                    | %      |                     | 0.11                    | %                           |                         | 0.10                    | % | 0.10 | % |   |
|                                      | Non-performing                loans to total loans   | 0.12                    | %      |                     | 0.13                    | %                           |                         | 0.13                    | % | 0.11 | % |   |

----

|                                      |                                                               | For                the Three Months Ended |   | For                the Nine Months Ended |   |
|-------------------------------------------|--------------------------------------------------------------------|-------------------------------------------|--------|------------------------------------------|--------|
|                                      |                                                               | June                30,                   |   | June                30,                  |   |
|                                      |                                                               | 2007                                      |   | 2006                                     |   | 2007 |   | 2006 |   |
| Allowance                for loan losses: | (Dollars                in thousands)                              |                                      |
|                                      | Beginning                balance                                   | $                4,193                    |   | $                4,680                   |   | $                4,433 |   | $                4,598 |   |
|                                      | Losses                charged against the allowance:               |                                      |   |                                     |   |   |   |   |   |
|                                      |   One-                to four-family loans               | --                                        |   | 56                                       |   | 9 |   | 89 |   |
|                                      |   Multi-family                loans                      | --                                        |   | --                                       |   | -- |   | -- |   |
|                                      |   Commercial                and other loans              | --                                        |   | --                                       |   | -- |   | -- |   |
|                                      |   Consumer                loans                          | 4                                         |   | 15                                       |   | 10 |   | 31 |   |
|                                      |     Total                charge-offs           | 4                                         |   | 71                                       |   | 19 |   | 120 |   |
|                                      |   Recoveries                                             | --                                        |   | --                                       |   | -- |   | 1 |   |
|                                      |   Provision                (recovery) charged to expense | --                                        |   | 40                                       |   | (225) |   | 170 |   |
|                                      | Ending                balance                                      | $                4,189                    |   | $                4,649                   |   | $                4,189 |   | $                4,649 |   |
|                                      |                                                               |                                      |   |                                     |   |   |   |   |   |
|                                      | Allowance                for loan losses to non-                   |                                      |   |                                     |   |   |   |   |   |
|                                      |   performing                loans at period end          |                                      |   |                                     |   | 63.92 | % | 67.83 | % |
|                                      | Allowance                for loan losses to loans                  |                                      |   |                                     |   |   |   |   |   |
|                                      |   receivable,                net at period end           |                                      |   |                                     |   | 0.08 | % | 0.08 | % |

**Mortgage-Related      Securities.**

----

|                                        |                                                                  | For                the Three Months Ended |
|---------------------------------------------|-----------------------------------------------------------------------|-------------------------------------------|
|                                        |                                                                  | June                30, 2007              |   | March                31, 2007 |   | December                31, 2006 |   | September                30, 2006 |
|                                        |                                                                  | Amount                                    | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |
| Mortgage-related                securities: | (Dollars                in thousands)                                 |
|                                        | Beginning                balance                                      |  $   1,603,443   | 4.27 | % | 3.40 |   |  $    1,668,548  | 4.26 | % | 3.48 |   |  $    2,084,786  | 4.54 | % | 4.39 |   |  $      1,788,858  | 4.14 | % | 3.85 |
|                                        | Maturities                and repayments                              | (135,905)                                 |   |   |   |   | (112,054) |   |   |   |   | (120,737) |   |   |   |   | (124,473) |   |   |   |
|                                        | Sale                of securities, net of gains                       | --                                   |   |   |   |   | --  |   |   |   |   | (404,459) |   |   |   |   | --  |   |   |   |
|                                        | Net                amortization of premiums/discounts                 | (1,228)                                   |   |   |   |   | (988) |   |   |   |   | (1,075) |   |   |   |   | (1,222) |   |   |   |
|                                        | Purchases:                                                            |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Fixed                                                     | 692                                  | 5.62 |   | 7.61 |   | 1,983  | 5.65 |   | 18.18 |   |  --  | -- |   | -- |   |  --  | -- |   | -- |
|                                        |   Adjustable                                                | --                                   | -- |   | -- |   | 44,672  | 4.60 |   | 1.24 |   | 108,135  | 5.17 |   | 1.76 |   | 22,239  | 5.95 |   | 1.88 |
|                                        | Fair                value of securities received in exchange of loans |  --                             | -- |   | -- |   |  --  | -- |   | -- |   |  --  | -- |   | -- |   | 395,828  | 5.73 |   | 7.15 |
|                                        | Other-than-temporary                impairment of AFS securities      | --                                   |   |   |   |   | --  |   |   |   |   |  --  |   |   |   |   | (472) |   |   |   |
|                                        | Change                in valuation of securities:                     |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Available-for-sale                                        | (180)                                     |   |   |   |   | 1,282  |   |   |   |   | 1,898  |   |   |   |   | 4,028  |   |   |   |
|                                        | Ending                balance                                         |  $   1,466,822   | 4.30 | % | 4.89 |   |  $    1,603,443  | 4.27 | % | 3.40 |   |  $    1,668,548  | 4.26 | % | 3.48 |   |  $      2,084,786  | 4.54 | % | 4.39 |

|                                        |                                                  |                                     |   |                         |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------|-------------------------------------------------------|------------------------------------------|--------|------------------------------|--------|--------|------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                        |                                                  | For                the Nine Months Ended |   |                         |   |   |                                                             |   |   |   |   |   |
|                                        |                                                  | June                30, 2007             |   | June                30, 2006 |   |   |                                                             |   |   |   |   |   |   |   |
|                                        |                                                  | Amount                                   | Yield  |                         | WAL    |   | Amount                                                           | Yield  |   | WAL    |   |   |   |   |   |   |   |   |   |   |
| Mortgage-related                securities: | (Dollars                in thousands)                 |                                     |   |                         |   |   |                                                             |   |   |   |   |
|                                        | Beginning                balance                      |  $   2,084,786  | 4.54   | %                            | 4.39   |   |     $    2,145,254  | 3.71   | %      | 3.38   |   |   |   |   |   |   |   |   |   |   |
|                                        | Maturities                and repayments              | (368,696)                                |   |                         |   |   | (438,806)                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Sale                of securities, net of gains       | (404,459)                                |   |                         |   |   | --                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Net                amortization of premiums/discounts | (3,291)                                  |   |                         |   |   | (5,810)                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Purchases:                                            |                                     |   |                         |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Fixed                                     | 2,675                               | 5.64   |                         | 15.45  |   | 11,075                                                      | 6.42   |   | 2.18   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Adjustable                                | 152,807                             | 5.00   |                         | 1.61   |   | 77,792                                                      | 5.98   |   | 2.14   |   |   |   |   |   |   |   |   |   |   |
|                                        | Change                in valuation of securities:     |                                     |   |                         |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Available-for-sale                        | 3,000                               |   |                         |   |   | (647)                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Ending                balance                         |  $   1,466,822  | 4.30   | %                            | 4.89   |   |  $    1,788,858                    | 4.14   | %      | 3.85   |   |   |   |   |   |   |   |   |   |   |

----

**Investment      Securities.**

|                                  |                                                  | For                the Three Months Ended                |
|---------------------------------------|-------------------------------------------------------|----------------------------------------------------------|
|                                  |                                                  | June                30, 2007                             |   | March                31, 2007 |   | December                31, 2006 |   | September                30, 2006 |
|                                  |                                                  | Amount                                                   | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |
| Investment                securities: | (Dollars                in thousands)                 |
|                                  | Beginning                balance                      |  $      773,404  | 4.76 | % | 1.72 |   |  $       844,514  | 4.82 | % | 1.66 |   |  $       429,480  | 4.46 | % | 2.63 |   |  $         382,128  | 4.35 | % | 3.09 |
|                                  | Maturities                and calls                   | (158,740)                                                |   |   |   |   | (229,500) |   |   |   |   | (57,000) |   |   |   |   | (10,000) |   |   |   |
|                                  | Net                amortization of premiums/discounts | 1,303                                               |   |   |   |   | 1,572  |   |   |   |   | 1,042  |   |   |   |   | 114  |   |   |   |
|                                  | Purchases                                             | 57,329                                              | 5.01 |   | 0.74 |   | 156,768  | 5.34 |   | 1.44 |   | 471,140  | 5.18 |   | 0.68 |   | 56,730  | 5.36 |   | 1.72 |
|                                  | Change                in valuation of AFS securities  | (136)                                                    |   |   |   |   | 50  |   |   |   |   | (148) |   |   |   |   | 508  |   |   |   |
|                                  | Ending                balance                         |  $      673,160  | 4.68 | % | 1.71 |   |  $       773,404  | 4.76 | % | 1.72 |   |  $       844,514  | 4.82 | % | 1.66 |   |  $         429,480  | 4.46 | % | 2.63 |
|                                  |                                                  |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | For                the Nine Months Ended                 |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | June                30, 2007                             |   | June                30, 2006 |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | Amount                                                   | Yield |   | WAL |   | Amount | Yield |   | WAL |   |   |   |   |   |   |   |   |   |   |
| Investment                securities: | (Dollars                in thousands)                 |                                                     |   |   |   |   |   |   |   |   |   |
|                                  | Beginning                balance                      |  $      429,480  | 4.46 | % | 2.63 |   |  $       430,499  | 4.54 | % | 2.48 |   |   |   |   |   |   |   |   |   |   |
|                                  | Maturities                and calls                   | (445,240)                                                |   |   |   |   | (190,510) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Net                amortization of premiums/discounts | 3,917                                               |   |   |   |   | 29  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Purchases                                             | 685,237                                             | 5.20 |   | 0.85 |   | 142,413  | 5.32 |   | 1.27 |   |   |   |   |   |   |   |   |   |   |
|                                  | Change                in valuation of AFS securities  | (234)                                                    |   |   |   |   | (303) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Ending                balance                         |  $      673,160  | 4.68 | % | 1.71 |   |  $       382,128  | 4.35 | % | 3.09 |   |   |   |   |   |   |   |   |   |   |

----

**Liabilities.**

|                          | At                                                                                     |   | At                            |   | At                               |   | At                                |
|-------------------------------|----------------------------------------------------------------------------------------|--------|-------------------------------|--------|----------------------------------|--------|-----------------------------------|
|                          | June                30, 2007                                                           |   | March                31, 2007 |   | December                31, 2006 |   | September                30, 2006 |
|                          |                                                                                   |   | Average                       |   | %                of              |   |                              |   | Average |   | %                of |   |   |   | Average |   | %                of |   |   |   | Average |   | %                of |
|                          | Amount                                                                                 |   | Cost                          |   | Total                            |   | Amount                            |   | Cost |   | Total |   | Amount |   | Cost |   | Total |   | Amount |   | Cost |   | Total |
|                          | (Dollars                in thousands)                                                  |
| Checking                      |  $           420,952  |   | 0.21                          | %      |                             | 10.66  | %                                 |   |  $        435,300  |   | 0.21 | % |   | 10.87 | % |   |  $        423,907  |   | 0.21 | % |   | 10.77 | % |   |  $      402,898  |   | 0.21 | % |   | 10.33 | % |
| Savings(1)               | 243,040                                                                           |   | 3.07                          |   |                             | 6.16   |                              |   | 247,844  |   | 2.99 |   |   | 6.19 |   |   | 101,960  |   | 0.65 |   |   | 2.59 |   |   | 106,347  |   | 0.65 |   |   | 2.73 |   |
| Money                market   | 801,511                                                                           |   | 3.28                          |   |                             | 20.31  |                              |   | 825,432  |   | 3.28 |   |   | 20.62 |   |   | 823,151  |   | 3.33 |   |   | 20.92 |   |   | 808,910  |   | 3.31 |   |   | 20.74 |   |
| Certificates(1)          | 2,481,190                                                                         |   | 4.72                          |   |                             | 62.87  |                              |   | 2,494,290  |   | 4.62 |   |   | 62.32 |   |   | 2,585,689  |   | 4.48 |   |   | 65.72 |   |   | 2,582,276  |   | 4.35 |   |   | 66.20 |   |
| Total                deposits |  $        3,946,693                  |   | 3.85                          | %      |                             | 100.00 | %                                 |   |  $     4,002,866  |   | 3.76 | % |   | 100.00 | % |   |  $     3,934,707  |   | 3.68 | % |   | 100.00 | % |   |  $   3,900,431  |   | 3.61 | % |   | 100.00 | % |

----

**Stockholders’      Equity. **

| Total                voting shares outstanding at September 30, 2006 |   |   | 74,031,930  |   |
|----------------------------------------------------------------------|--------|--------|-------------|--------|
| Treasury                stock acquisitions                (1)        |   |   | (38,345     | )      |
| RRP                grants, net                                       |   |   | 4,600       |   |
| Options                exercised, net                                |   |   | 298,535     |   |
| Total                voting shares outstanding at June 30, 2007      |   |   | 74,296,720  |   |
| Unvested                shares in ESOP                               |   |   | (1,411,470  | )      |
| Shares                held by MHC                                    |   |   | (52,192,817 | )      |
| Total                public shares June 30, 2007                     |   |   | 20,692,433  |   |

----

|                                                     |   | Calendar                Year                                    |         |
|----------------------------------------------------------|--------|-----------------------------------------------------------------|--------------|
|                                                     |   | 2007                                                            |         | 2006 |   | 2005 |   |
|                                                     |   | (Dollars                in thousands, except per share amounts) |         |
| Quarter                ended March 31                    |   |                                                            |         |   |   |   |   |
|   Number                of dividend shares     |   |                                                            | 20,520,793   |   |   | 20,457,283 |   |   | 20,634,728 |   |
|   Dividend                per share            |   | $                                                               | 0.50         |   | $ | 0.50 |   | $ | 0.50 |   |
|   Total                dividends paid          |   | $                                                               | 10,261       |   | $ | 10,229 |   | $ | 10,317 |   |
| Quarter                ended June 30                     |   |                                                            |         |   |   |   |   |   |   |   |
|   Number                of dividend shares     |   |                                                            | 20,673,933   |   |   | 20,257,420 |   |   | 20,393,519 |   |
|   Dividend                per share            |   | $                                                               | 0.50         |   | $ | 0.50 |   | $ | 0.50 |   |
|   Total                dividends paid          |   | $                                                               | 10,337       |   | $ | 10,129 |   | $ | 10,197 |   |
| Quarter                ended September 30                |   |                                                            |         |   |   |   |   |   |   |   |
|   Number                of dividend shares     |   |                                                            | 20,694,333   |   |   | 20,250,134 |   |   | 20,363,619 |   |
|   Dividend                per share            |   | $                                                               | 0.50         |   | $ | 0.50 |   | $ | 0.50 |   |
|   Total                dividends paid          |   | $                                                               | 10,347       |   | $ | 10,125 |   | $ | 10,182 |   |
| Quarter                ended December 31                 |   |                                                            |         |   |   |   |   |   |   |   |
|   Number                of dividend shares     |   |                                                            |         |   |   | 20,432,393 |   |   | 20,483,464 |   |
|   Dividend                per share            |   |                                                            |         |   | $ | 0.50 |   | $ | 0.50 |   |
|   Total                dividends paid          |   |                                                            |         |   | $ | 10,216 |   | $ | 10,242 |   |
| Special                year end dividend                 |   |                                                            |         |   |   |   |   |   |   |   |
|   Number                of dividend shares     |   |                                                            |         |   |   | 20,432,793 |   |   | 20,483,464 |   |
|   Dividend                per share            |   |                                                            |         |   | $ | 0.09 |   | $ | 0.30 |   |
|   Total                dividends paid          |   |                                                            |         |   | $ | 1,839 |   | $ | 6,145 |   |
|                                                     |   |                                                            |    |   |   |   |   |   |   |   |
| Calendar                year-to-date dividends per share |   | $                                                               | 1.50         |   | $ | 2.09 |   | $ | 2.30 |   |

----

**Analysis      of Net Interest Income**

**Average      Balance Sheet: **

|                                                                     |   | For                the Three Months Ended |      |
|--------------------------------------------------------------------------|--------|-------------------------------------------|-----------|
|                                                                     |   | June                30, 2007              |      | March                31, 2007 |   | December                31, 2006 |   | September                30, 2006 |   | June                30, 2006 |   |
|                                                                     |   | Average                                   |      |   |   | Average |   |   |   | Average |   |   |   | Average |   |   |   | Average |   |   |   |
|                                                                     |   | Outstanding                               |      | Yield/ |   | Outstanding |   | Yield/ |   | Outstanding |   | Yield/ |   | Outstanding |   | Yield/ |   | Outstanding |   | Yield/ |   |
|                                                                     |   | Balance                                   |      | Rate |   | Balance |   | Rate |   | Balance |   | Rate |   | Balance |   | Rate |   | Balance |   | Rate |   |
| Assets:                                                                  |   | (Dollars                in thousands)     |      |
|   Interest-earning                assets:                      |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Loans                receivable (1)        |   | $                                         | 5,238,291 |   |   | 5.59 | %   | $ | 5,223,416 |   |   | 5.67 | %    | $ | 5,235,039 |   |   | 5.59 | %    | $ | 5,502,349 |   |   | 5.60 | %    | $ | 5,541,566 |   |   | 5.50 | % |
|      Mortgage-related                securities |   |                                      | 1,543,049 |   |   | 4.21 |   |   | 1,633,477 |   |   | 4.24 |   |   | 1,803,033 |   |   | 4.33 |   |   | 1,826,499 |   |   | 4.23 |   |   | 1,801,196 |   |   | 4.04 |   |
|      Investment                securities       |   |                                      | 717,008   |   |   | 4.72 |   |   | 776,143 |   |   | 4.77 |   |   | 574,857 |   |   | 4.65 |   |   | 412,013 |   |   | 4.42 |   |   | 372,980 |   |   | 4.47 |   |
|      Cash                and cash equivalents   |   |                                      | 89,768    |   |   | 5.34 |   |   | 114,528 |   |   | 5.17 |   |   | 236,522 |   |   | 5.15 |   |   | 93,095 |   |   | 5.03 |   |   | 122,098 |   |   | 4.85 |   |
|      Capital                stock of FHLB       |   |                                      | 149,288   |   |   | 6.48 |   |   | 159,171 |   |   | 6.48 |   |   | 165,159 |   |   | 6.48 |   |   | 163,997 |   |   | 6.23 |   |   | 165,584 |   |   | 6.02 |   |
|   Total                interest-earning assets (1)             |   |                                      | 7,737,404 |   |   | 5.25 |   |   | 7,906,735 |   |   | 5.30 |   |   | 8,014,610 |   |   | 5.24 |   |   | 7,997,953 |   |   | 5.23 |   |   | 8,003,424 |   |   | 5.12 |   |
|   Other                noninterest-earning assets              |   |                                      | 160,904   |   |   |   |   |   | 170,200 |   |   |   |   |   | 192,225 |   |   |   |   |   | 164,325 |   |   |   |   |   | 176,790 |   |   |   |   |
| Total                assets                                              |   | $                                         | 7,898,308 |   |   |   |   | $ | 8,076,935 |   |   |   |   | $ | 8,206,835 |   |   |   |   | $ | 8,162,278 |   |   |   |   | $ | 8,180,214 |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and stockholders' equity:                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                liabilities:                 |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                   |   | $                                         | 3,940,736 |   |   | 3.81 |   | $ | 3,917,104 |   |   | 3.75 |   | $ | 3,855,407 |   |   | 3.65 |   | $ | 3,881,477 |   |   | 3.55 |   | $ | 3,916,142 |   |   | 3.24 |   |
|      FHLB                advances (2)           |   |                                      | 2,915,505 |   |   | 5.05 |   |   | 3,110,915 |   |   | 4.95 |   |   | 3,271,001 |   |   | 4.89 |   |   | 3,215,093 |   |   | 4.89 |   |   | 3,211,783 |   |   | 4.79 |   |
|      Other                borrowings            |   |                                      | 53,500    |   |   | 8.23 |   |   | 53,486 |   |   | 8.24 |   |   | 53,472 |   |   | 8.26 |   |   | 53,457 |   |   | 8.36 |   |   | 53,443 |   |   | 7.92 |   |
|   Total                interest-bearing liabilities            |   |                                      | 6,909,741 |   |   | 4.36 |   |   | 7,081,505 |   |   | 4.31 |   |   | 7,179,880 |   |   | 4.25 |   |   | 7,150,027 |   |   | 4.19 |   |   | 7,181,368 |   |   | 3.97 |   |
|   Other                noninterest-bearing liabilities         |   |                                      | 118,137   |   |   |   |   |   | 126,904 |   |   |   |   |   | 161,865 |   |   |   |   |   | 150,838 |   |   |   |   |   | 138,571 |   |   |   |   |
|   Stockholders'                equity                          |   |                                      | 870,430   |   |   |   |   |   | 868,526 |   |   |   |   |   | 865,090 |   |   |   |   |   | 861,413 |   |   |   |   |   | 860,275 |   |   |   |   |
| Total                liabilities and                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       stockholders'                equity  |   | $                                         | 7,898,308 |   |   |   |   | $ | 8,076,935 |   |   |   |   | $ | 8,206,835 |   |   |   |   | $ | 8,162,278 |   |   |   |   | $ | 8,180,214 |   |   |   |   |

----

|                                                                               |   |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |          |   |    |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------------|--------|---------|--------|--------|--------|---------------|--------|---------|--------|--------|--------|---------------|--------|---------|
| Net                interest rate spread                                            |   |   |    |   |   | 0.89   | %   |   |    |   |   | 0.99   | %   |   |    |   |   | 0.99   | %   |   |    |   |   | 1.04 | %   |   |   |   |   | 1.15 | % |
| Net                interest-earning assets                                         |   | $      | 827,663 |   |   |   |          | $      | 825,230 |   |   |   |          | $      | 834,730 |   |   |   |          | $      | 847,926 |   |   |   |   | $ | 822,056 |   |   |   |   |
| Net                interest margin                                                 |   |   |    |   |   | 1.33   | %             |   |    |   |   | 1.45   | %             |   |    |   |   | 1.39   | %             |   |    |   |   | 1.43 | % |   |   |   |   | 1.54 | % |
| Ratio                of interest-earning assets                                    |   |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |   |   |   |   |   |   |   |
|       to                interest-bearing liabilities |   |   |    |   |   | 1.12   |          |   |    |   |   | 1.12   |          |   |    |   |   | 1.12   |          |   |    |   |   | 1.12 |   |   |   |   |   | 1.11 |   |
|                                                                               |   |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |   |   |   |   |   |   |   |
| Selected                performance ratios:                                        |   |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |          |   |    |   |   |   |   |   |   |   |   |   |   |
|   Return                on average assets (annualized)                   |   |   |    |   |   | 0.37   | %             |   |    |   |   | 0.42   | %             |   |    |   |   | 0.50   | %             |   |    |   |   | 0.49 | % |   |   |   |   | 0.55 | % |
|   Return                on average equity (annualized)                   |   |   |    |   |   | 3.35   | %             |   |    |   |   | 3.89   | %             |   |    |   |   | 4.74   | %             |   |    |   |   | 4.60 | % |   |   |   |   | 5.26 | % |
|   Average                equity to average assets                        |   |   |    |   |   | 11.02  | %             |   |    |   |   | 10.75  | %             |   |    |   |   | 10.54  | %             |   |    |   |   | 10.55 | % |   |   |   |   | 10.52 | % |

----

|                                                                         |   | For                the Three Months Ended                       |    |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|---------|
|                                                                         |   | June                30,                                         |    | March                31, |   | December                31, |   | September                30, |   | June                30, |   |
|                                                                         |   | 2007                                                            |    | 2007 |   | 2006 |   | 2006 |   | 2006 |   |
| Selected                income statement data:                               |   | (Dollars                in thousands, except per share amounts) |    |
| Interest                and dividend income:                                 |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loans                receivable                                  |   | $                                                               | 73,219  |   | $ | 73,990 |   | $ | 73,192 |   | $ | 77,034 |   | $ | 76,123 |   |
|   Mortgage-related                securities                       |   |                                                            | 16,224  |   |   | 17,317 |   |   | 19,521 |   |   | 19,337 |   |   | 18,175 |   |
|   Investment                securities                             |   |                                                            | 8,459   |   |   | 9,262 |   |   | 6,684 |   |   | 4,558 |   |   | 4,170 |   |
|   Other                interest and dividend income                |   |                                                            | 3,624   |   |   | 4,004 |   |   | 5,769 |   |   | 3,754 |   |   | 3,959 |   |
|     Total                interest and dividend income    |   |                                                            | 101,526 |   |   | 104,573 |   |   | 105,166 |   |   | 104,683 |   |   | 102,427 |   |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense:                                             |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits                                                         |   |                                                            | 37,377  |   |   | 36,267 |   |   | 35,469 |   |   | 34,741 |   |   | 31,588 |   |
|   FHLB                advances                                     |   |                                                            | 37,220  |   |   | 38,508 |   |   | 40,741 |   |   | 40,212 |   |   | 39,005 |   |
|   Other                borrowings                                  |   |                                                            | 1,113   |   |   | 1,101 |   |   | 1,129 |   |   | 1,142 |   |   | 1,070 |   |
|      Total                interest expense          |   |                                                            | 75,710  |   |   | 75,876 |   |   | 77,339 |   |   | 76,095 |   |   | 71,663 |   |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                (recovery) for loan losses                          |   |                                                            | --      |   |   | 55 |   |   | (280 | ) |   | 77 |   |   | 40 |   |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest and dividend income                              |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      (after                provision (recovery) for |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      loan                losses)                    |   |                                                            | 25,816  |   |   | 28,642 |   |   | 28,107 |   |   | 28,511 |   |   | 30,724 |   |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                income                                                  |   |                                                            | 5,908   |   |   | 5,431 |   |   | 6,215 |   |   | 6,878 |   |   | 6,061 |   |
| Other                expenses                                                |   |                                                            | 20,136  |   |   | 20,020 |   |   | 17,631 |   |   | 19,175 |   |   | 18,166 |   |
| Income                tax expense                                            |   |                                                            | 4,299   |   |   | 5,597 |   |   | 6,440 |   |   | 6,303 |   |   | 7,313 |   |
|      Net                income                      |   | $                                                               | 7,289   |   | $ | 8,456 |   | $ | 10,251 |   | $ | 9,911 |   | $ | 11,306 |   |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Efficiency                ratio                                              |   |                                                            | 63.47   | % |   | 58.90 | % |   | 51.74 | % |   | 54.11 | % |   | 49.41 | % |
|                                                                         |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                                      |   | $                                                               | 0.10    |   | $ | 0.12 |   | $ | 0.14 |   | $ | 0.14 |   | $ | 0.16 |   |
| Diluted                earnings per share                                    |   |                                                            | 0.10    |   |   | 0.12 |   |   | 0.14 |   |   | 0.14 |   |   | 0.15 |   |
| Dividends                declared per public share                           |   |                                                            | 0.50    |   |   | 0.50 |   |   | 0.59 |   |   | 0.50 |   |   | 0.50 |   |

----

**Comparison      of Operating Results for the Three Months Ended June 30, 2007 and      2006**

----

----

|                                                          |   | For                the Quarter Ended           |   |
|---------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                          |   | June                30, 2007 vs. June 30, 2006 |   |
|                                                          |   | Increase                (Decrease) Due to      |   |
|                                                          |   |                                           |   |   |   |   |   |
|                                                          |   | Volume                                         |   | Rate |   | Total |   |
|                                                          |   | (Dollars                in thousands)          |   |
| Interest-earning                assets:                       |   |                                           |   |   |   |   |   |   |   |   |
| Loans                receivable, net                          |   | $                                              | (4,102 | ) | $ | 1,198 |   | $ | (2,904 | ) |
| Mortgage-related                securities                    |   |                                           | (2,690 | ) |   | 739 |   |   | (1,951 | ) |
| Investment                securities                          |   |                                           | 4,047  |   |   | 242 |   |   | 4,289 |   |
| Capital                stock of FHLB                          |   |                                           | (254   | ) |   | 184 |   |   | (70 | ) |
| Cash                equivalents                               |   |                                           | (408   | ) |   | 144 |   |     |                  (264 | ) |
| Total                interest-earning assets                  |   | $                                              | (3,407 | ) | $ | 2,507 |   | $ | (900 | ) |
|                                                          |   |                                           |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                  |   |                                           |   |   |   |   |   |   |   |   |
| Savings(1)                                                    |   | $                                              | 372    |   | $ | 1,229 |   | $ | 1,601 |   |
| Checking                                                      |   |                                           | (1     | ) |   | (10 | ) |   | (11 | ) |
| Money                market                                   |   |                                           | (208   | ) |   | 935 |   |   | 727 |   |
| Certificates(1)                                               |   |                                           | (743   | ) |   | 4,215 |   |   | 3,472 |   |
| FHLB                advances and other borrowings             |   |                                           | (3,567 | ) |   | 1,825 |   |    | (1,742 | ) |
| Total                interest-bearing liabilities             |   | $                                              | (4,147 | ) | $ | 8,194 |   | $ | 4,047 |   |
|                                                          |   |                                           |   |   |   |   |   |   |   |   |
| Net                change in net interest and dividend income |   | $                                              | 740    |   | $ | (5,687 | ) | $ | (4,947 | ) |

**Comparison      of Operating Results for the Nine Months ended June 30, 2007 and      2006**

----

----

----

|                                                                               |   | For                the Nine Months Ended |      |
|------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|
|                                                                               |   | June                30, 2007             |      | June                30, 2006 |   |
|                                                                               |   | Average                                  |      |   |   | Average |   |   |   |
|                                                                               |   | Outstanding                              |      | Yield/ |   | Outstanding |   | Yield/ |   |
|                                                                               |   | Balance                                  |      | Rate |   | Balance |   | Rate |   |
| Assets:                                                                            |   | (Dollars                in thousands)    |      |
|   Interest-earning                assets:                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
|      Loans                receivable (1)                  |   | $                                        | 5,232,290 |   |   | 5.62 | % | $ | 5,541,421 |   |   | 5.46 | % |
|      Mortgage-related                securities           |   |                                     | 1,660,441 |   |   | 4.26 |   |   | 1,928,206 |   |   | 3.90 |   |
|      Investment                securities                 |   |                                     | 688,599   |   |   | 4.73 |   |   | 400,437 |   |   | 4.49 |   |
|      Cash                and cash equivalents             |   |                                     | 147,386   |   |   | 5.14 |   |   | 62,424 |   |   | 4.63 |   |
|      Capital                stock of FHLB                 |   |                                     | 157,895   |   |   | 6.48 |   |   | 177,496 |   |   | 5.53 |   |
|   Total                interest-earning assets (1)                       |   |                                     | 7,886,611 |   |   | 5.26 |   |   | 8,109,984 |   |   | 5.04 |   |
|   Other                noninterest-earning assets                        |   |                                     | 155,907   |   |   |   |   |   | 152,741 |   |   |   |   |
| Total                assets                                                        |   | $                                        | 8,042,518 |   |   |   |   | $ | 8,262,725 |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and stockholders' equity:                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                liabilities:                           |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                             |   | $                                        | 3,903,934 |   |   | 3.74 |   | $ | 3,922,759 |   |   | 2.99 |   |
|      FHLB                advances (2)                     |   |                                     | 3,099,727 |   |   | 4.96 |   |   | 3,307,962 |   |   | 4.66 |   |
|      Other                borrowings                      |   |                                     | 53,486    |   |   | 8.24 |   |   | 53,351 |   |   | 7.46 |   |
|   Total                interest-bearing liabilities                      |   |                                     | 7,057,147 |   |   | 4.31 |   |   | 7,284,072 |   |   | 3.78 |   |
|   Other                noninterest-bearing liabilities                   |   |                                     | 117,529   |   |   |   |   |   | 115,503 |   |   |   |   |
|   Stockholders'                equity                                    |   |                                     | 867,842   |   |   |   |   |   | 863,150 |   |   |   |   |
| Total                liabilities and stockholders' equity                          |   | $                                        | 8,042,518 |   |   |   |   | $ | 8,262,725 |   |   |   |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
| Net                interest rate spread                                            |   |                                     |      |   |   | 0.95 | % |   |   |   |   | 1.26 | % |
| Net                interest-earning assets                                         |   | $                                        | 829,464   |   |   |   |   | $ | 825,912 |   |   |   |   |
| Net                interest margin                                                 |   |                                     |      |   |   | 1.39 | % |   |   |   |   | 1.62 | % |
| Ratio                of interest-earning assets                                    |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
|       to                interest-bearing liabilities |   |                                     |      |   |   | 1.12 |   |   |   |   |   | 1.11 |   |
|                                                                               |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
| Selected                Performance Ratios:                                        |   |                                     |      |   |   |   |   |   |   |   |   |   |   |
|   Return                on average assets (annualized)                   |   |                                     |      |   |   | 0.43 | % |   |   |   |   | 0.62 | % |
|   Return                on average equity (annualized)                   |   |                                     |      |   |   | 3.99 | % |   |   |   |   | 5.90 | % |
|   Average                equity to average assets                        |   |                                     |      |   |   | 10.79 | % |   |   |   |   | 10.45 | % |

----

|                                                          |   | For                the Nine Months Ended       |    |
|---------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                          |   | June                30, 2007 vs. June 30, 2006 |    |
|                                                          |   | Increase                (Decrease) Due to      |    |
|                                                          |   |                                           |    |   |   |   |   |
|                                                          |   | Volume                                         |    | Rate |   | Total |   |
|                                                          |   | (Dollars                in thousands)          |    |
| Interest-earning                assets:                       |   |                                           |    |   |   |   |   |   |   |   |
| Loans                receivable, net                          |   | $                                              | (12,477 | ) | $ | 6,090 |   | $ | (6,387 | ) |
| Mortgage-related                securities                    |   |                                           | (8,301  | ) |   | 4,894 |   |   | (3,407 | ) |
| Investment                securities                          |   |                                           | 10,179  |   |   | 737 |   |   | 10,916 |   |
| Capital                stock of FHLB                          |   |                                           | (868    | ) |   | 1,185 |   |   | 317 |   |
| Cash                and cash equivalents                      |   |                                           | 3,313   |   |   | 268 |   |    | 3,581 |   |
| Total                interest-earning assets                  |   | $                                              | (8,154  | ) | $ | 13,174 |   | $ | 5,020 |   |
|                                                          |   |                                           |    |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                  |   |                                           |    |   |   |   |   |   |   |   |
| Savings(1)                                                    |   | $                                              | 436     |   | $ | 2,252 |   | $ | 2,688 |   |
| Checking                                                      |   |                                           | --      |   |   | 30 |   |   | 30 |   |
| Money                market                                   |   |                                           | (820    | ) |   | 5,149 |   |   | 4,329 |   |
| Certificates(1)                                               |   |                                           | (1,180  | ) |   | 15,439 |   |   | 14,259 |   |
| FHLB                advances and other borrowings             |   |                                           | (7,546  | ) |   | 7,355 |   |    | (191 | ) |
| Total                interest-bearing liabilities             |   | $                                              | (9,110  | ) | $ | 30,225 |   | $ | 21,115 |   |
|                                                          |   |                                           |    |   |   |   |   |   |   |   |
| Net                change in net interest and dividend income |   | $                                              | 956     |   | $ | (17,051 | ) | $ | (16,095 | ) |

**Comparison      of Operating Results for the Three Months Ended June 30, 2007 and March 31,      2007**

----

----

|                                                          |   | For                the Quarter Ended            |   |
|---------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                          |   | June                30, 2007 vs. March 31, 2007 |   |
|                                                          |   | Increase                (Decrease) Due to       |   |
|                                                          |   |                                            |   |   |   |   |   |
|                                                          |   | Volume                                          |   | Rate |   | Total |   |
|                                                          |   | (Dollars                in thousands)           |   |
| Interest-earning                assets:                       |   |                                            |   |   |   |   |   |   |   |   |
| Loans                receivable, net                          |   | $                                               | 189    |   | $ | (960 | ) | $ | (771 | ) |
| Mortgage-related                securities                    |   |                                            | (952   | ) |   | (141 | ) |   | (1,093 | ) |
| Investment                securities                          |   |                                            | (699   | ) |   | (104 | ) |   | (803 | ) |
| Capital                stock of FHLB                          |   |                                            | (131   | ) |   | (1 | ) |   | (132 | ) |
| Cash                and cash equivalents                      |   |                                            | (300   | ) |   | 52 |   |   | (248 | ) |
| Total                interest-earning assets                  |   | $                                               | (1,893 | ) | $ | (1,154 | ) | $ | (3,047 | ) |
|                                                          |   |                                            |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                  |   |                                            |   |   |   |   |   |   |   |   |
| Savings                                                       |   | $                                               | 331    |   | $ | 150 |   | $ | 481 |   |
| Checking                                                      |   |                                            | 4      |   |   | -- |   |   | 4 |   |
| Money                market                                   |   |                                            | (71    | ) |   | (101 | ) |   | (172 | ) |
| Certificates                                                  |   |                                            | (155   | ) |   | 952 |   |   | 797 |   |
| FHLB                advances and other borrowings             |   |                                            | (2,255 | ) |   | 979 |   |   | (1,276 | ) |
| Total                interest-bearing liabilities             |   | $                                               | (2,146 | ) | $ | 1,980 |   | $ | (166 | ) |
|                                                          |   |                                            |   |   |   |   |   |   |   |   |
| Net                change in net interest and dividend income |   | $                                               | 253    |   | $ | (3,134 | ) | $ | (2,881 | ) |

**Liquidity      and Capital Resources**

----

----

**Off      Balance Sheet Arrangements, Commitments and Contractual      Obligations**

| ·   | the                origination, purchase or sale of                loans, |
|--------------------|---------------------------------------------------------------------------|

| ·   | the                purchase or sale of investment and mortgage-related                securities, |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | extensions                of credit on home equity loans and construction                loans, |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | terms                and conditions of operating leases,                and |
|--------------------|-----------------------------------------------------------------------------|

| ·   | funding                withdrawals of savings accounts at                maturity. |
|--------------------|------------------------------------------------------------------------------------|

|                                                     |   | **Maturity                Range** |      |
|----------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                     |   |                              |      | **Less                than** |   | **1                - 3** |   | **3                - 5** |   | **More                than** |   |
|                                                     |   | **Total**                         |      | **1                year** |   | **years** |   | **years** |   | **5                years** |   |
|                                                     |   |                              |      |
|                                                     |   |                              |      |   |   |   |   |   |   |   |   |
| FHLB                Advances                             |   | $                                 | 2,896,000 |   | $ | 1,275,000 |   | $ | 1,195,000 |   | $ | 426,000 |   | $ | - |   |
|                                                     |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates                of Deposit                   |   |                              | 2,481,190 |   |   | 1,639,467 |   |   | 773,112 |   |   | 66,945 |   |   | 1,666 |   |
|                                                     |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments                to originate and              |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    purchase                mortgage loans |   |                              | 113,311   |   |   | 113,311 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                     |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments                to fund unused home           |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    equity                lines of credit  |   |                              | 271,779   |   |   | 271,779 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                     |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unadvanced                portion of                     |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    construction                loans      |   |                              | 39,875    |   |   | 39,875 |   |   | -- |   |   | -- |   |   | -- |   |

|                       |              |                                                                                                                                                                                                                                                                                                                                   |                        |                         |                      |   |
|----------------------------|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|------------------------------|---------------------------|--------|
|                       |              |                                                                                                                                                                                                                                                                                                                                   | Actual                rates |                         | Effective                 |   |
|                       |              |                                                                                                                                                                                                                                                                                                                                   | without                     |                         | rates                with |   |
| Maturity                by |              | interest                rate                                                                                                                                                                                                                                                                                                           |                        | interest                rate |                      |
| Fiscal                year | Amount            | swaps                                                                                                                                                                                                                                                                                                                                  |                        | swaps                        |                      |
|                       |              |                                                                 (Dollars in thousands) |                        |                         |                      |   |
|                       | 2007              | $                   350,000                                                                                                                                                                                                                                                                                             | 3.63                        | %                            | 3.63                      | %      |
|                       | 2008              | 1,125,000                                                                                                                                                                                                                                                                                                                              | 4.23                        |                         | 4.64                      |   |
|                       | 2009              | 620,000                                                                                                                                                                                                                                                                                                                                | 4.27                        |                         | 4.27                      |   |
|                       | 2010              | 775,000                                                                                                                                                                                                                                                                                                                                | 5.90                        |                         | 7.00                      |   |
|                       | 2011              | 26,000                                                                                                                                                                                                                                                                                                                                 | 5.09                        |                         | 5.09                      |   |
|                       |   Total | $                2,896,000                                                                                                                                                                                                                                                                                                             | 4.62                        | %                            | 5.07                      | %      |

----

|                                   |                              |                                  | Weighted |   |   |   |
|----------------------------------------|-----------------------------------|---------------------------------------|----------|--------|--------|--------|
|                                   |                              |                                  | Average  |   |   |   |
| Maturity                by Quarter End | Amount                            | Rate                                  |     |   |   |
|                                   |                              | (Dollars                in thousands) |     |   |   |   |
|                                   | September                30, 2007 | $                350,000              | 3.63     | %      |   |   |
|                                   | December                31, 2007  | 200,000                               | 3.73     |   |   |   |
|                                   |                              | $                550,000              | 3.67     | %      |   |   |

**Contingencies**

**Capital**

|                                     |   |   | Regulatory                               |
|------------------------------------------|--------|--------|------------------------------------------|
|                                     |   |   | Requirement                              |
|                                     | Bank   |   | For                “Well           |
|                                     | Ratios |   | Capitalized”                Status |
| Core                capital              | 10.0%  |   | 5.0%                                     |
| Tier                I risk-based capital | 23.1%  |   | 6.0%                                     |
| Total                risk-based capital  | 23.0%  |   | 10.0%                                    |

----

**Item      3.   Quantitative and Qualitative Disclosure About Market      Risk**

**Gap      Table**

----

|                  Interest-earning                  assets:            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Within                  Three Months |      | Three                  Months To One Year |   | More                  Than One Year to Three Years |   | More                  Than Three Years to Five Years |      | Over                  Five Years |   | Total    |   |
|----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|-----------|-------------------------------------------|--------|----------------------------------------------------|--------|------------------------------------------------------|-----------|----------------------------------|--------|----------|--------|
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |
| Loans                  receivable(1)(2):                                   |                                                                                                                                                             (Dollars in thousands) |
| Mortgage                  loans:                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Fixed                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                                    | 160,857   |                                      | $      | 361,667                                            |   | $                                                    | 847,457   |                             | $      | 613,708  |   | $ | 1,305,607 |   |   | 3,289,296 |   |
| Adjustable                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 171,101   |                                      |   | 595,207                                            |   |                                                 | 791,976   |                             |   | 207,965  |   |   | 13,952 |   |   | 1,780,201 |   |
| Other                  loans                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 136,505   |                                      |   | 5,517                                              |   |                                                 | 11,513    |                             |   | 7,644    |   |   | 57,103 |   |   | 218,282 |   |
| Securities:                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Non-mortgage(3)                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 197,497   |                                      |   | 351,572                                            |   |                                                 | 57,456    |                             |   | 52,795   |   |   | 13,869 |   |   | 673,189 |   |
| Mortgage-related                  securities(4)                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 343,189   |                                      |   | 547,978                                            |   |                                                 | 277,941   |                             |   | 111,620  |   |   | 185,785 |   |   | 1,466,513 |   |
| Other                  interest-earning assets                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 146,588   |                                      |   | --                                                 |   |                                                 | --        |                             |   | --       |   |   | -- |   |   | 146,588 |   |
| Total                  interest-earning assets                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 1,155,737 |                                      |   | 1,861,941                                          |   |                                                 | 1,986,343 |                             |   | 993,732  |   |   | 1,576,316 |   |   | 7,574,069 |   |
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Deposits:                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Passbook                  and passcard(5)                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 141,509   |                                      |   | 7,295                                              |   |                                                 | 16,832    |                             |   | 12,599   |   |   | 64,805 |   |   | 243,040 |   |
| Checking                  (5)                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 32,139    |                                      |   | 50,408                                             |   |                                                 | 100,998   |                             |   | 65,956   |   |   | 171,451 |   |   | 420,952 |   |
| Money                  market (5)                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 19,809    |                                      |   | 57,500                                             |   |                                                 | 128,796   |                             |   | 89,639   |   |   | 505,767 |   |   | 801,511 |   |
| Certificates                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 386,479   |                                      |   | 1,252,042                                          |   |                                                 | 773,489   |                             |   | 67,667   |   |   | 1,513 |   |   | 2,481,190 |   |
| Borrowings                  (6)                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 1,150,000 |                                      |   | 700,000                                            |   |                                                 | 820,000   |                             |   | 226,000  |   |   | 53,609 |   |   | 2,949,609 |   |
| Total                  interest-bearing liabilities                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | 1,729,936 |                                      |   | 2,067,245                                          |   |                                                 | 1,840,115 |                             |   | 461,861  |   |   | 797,145 |   |   | 6,896,302 |   |
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Excess                  (deficiency) of interest-earning assets over       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
|   interest-bearing                  liabilities                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                                    | (574,199  | )                                         | $      | (205,304                                           | )      | $                                                    | 146,228   |                             | $      | 531,871  |   | $ | 779,171 |   | $ | 677,767 |   |
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Cumulative                  excess (deficiency) of interest-earning        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
|   assets                  over interest-bearing liabilities      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                                    | (574,199  | )                                         | $      | (779,503                                           | )      | $                                                    | (633,275  | )                                | $      | (101,404 | )      | $ | 677,767 |   |   |  |   |
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Cumulative                  excess (deficiency) of interest-earning        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
|   assets                  over interest-bearing liabilities as a |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| percent                  of total assets at June 30, 2007                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | (7.34     | )%                                        |   | (9.96                                              | )%     |                                                 | (8.10     | )%                               |   | (1.30    | )%     |   | 8.66 | % |   |   |   |
| Cumulative                  one-year gap at September 30, 2006             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   | (13.62                                             | )      |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
| Cumulative                  one-year gap at September 30, 2005             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   | (4.01                                              | )      |                                                 |      |                             |   |     |   |   |   |   |   |   |   |
|                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 |      |                                      |   |                                               |   |                                                 |      |                             |   |     |   |   |   |   |   |   |   |

----

|     | June                30, 2007          |
|----------|---------------------------------------|
|     |                                  |   | Paying |   |   |
| Fiscal   |                                  | Notional | 1                Month |   |   | Receiving |   |
| Year     | Fair                                  | Principal | LIBOR |   | Interest | Interest |   |
| Maturity | Value(1)                              | Amount | Rate                (2) | Margin | Rate | Rate | Spread |
|     | (Dollars                in thousands) |   |   |   |   |   |
| 2008     | $                (3,878)              | $                225,000 | 5.32% | 2.41% | 7.73% | 5.68% | (2.05)% |
| 2010     | (21,785)                              | 575,000 | 5.32    | 2.51    | 7.83    | 6.35    | (1.48)    |
|     | $                (25,663)             | $                800,000 | 5.32% | 2.48% | 7.80% | 6.16% | (1.64)% |

----

**Changes      in portfolio composition.**

|                                                               |   | For                the Three Months Ended |    |  For                the Three Months Ended |   |
|--------------------------------------------------------------------|--------|-------------------------------------------|---------|-------------------------------------------------|--------|
|                                                               |   | June                30, 2007              |    |  June                30, 2006              |   |
|                                                               |   | Amount                                    |    | Rate                                            |   | %                of Total |   |  Amount |   | Rate |   | %                of Total |   |
| Fixed-rate:                                                        |   | (Dollars                in thousands)     |    |
|    One-                to four-family:              |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                15 years  |   | $                                         | 35,188  |                                            |   | 5.69 | % |   | 11.67 | %    | $ | 27,593 |   |   | 5.93 | % |   | 9.54 | % |
|       >                15 years   |   |                                      | 163,983 |                                            |   | 6.04 |   |   | 54.39 |   |   | 146,918 |   |   | 6.28 |   |   | 50.80 |   |
|    Other                real estate                 |   |                                      | --      |                                            |   | -- |   |   | -- |   |   | 5,950 |   |   | 6.76 |   |   | 2.06 |   |
|    Non                real estate                   |   |                                      | 8,480   |                                            |   | 8.32 |   |   | 2.81 |   |   | 14,865 |   |   | 7.72 |   |   | 5.14 |   |
|     Total                fixed-rate            |   |                                      | 207,651 |                                            |   | 6.07 |   |   | 68.87 |   |   | 195,326 |   |   | 6.35 |   |   | 67.54 |   |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate:                                                   |   |                                      |    |                                            |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
|    One-                to four-family:              |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                36 months |   |                                      | 8,688   |                                            |   | 5.34 |   |   | 2.88 |   |   | 9,895 |   |   | 5.50 |   |   | 3.42 |   |
|       >                36 months  |   |                                      | 47,540  |                                            |   | 5.66 |   |   | 15.76 |   |   | 57,879 |   |   | 5.68 |   |   | 20.02 |   |
|    Other                real estate                 |   |                                      | 15,000  |                                            |   | 7.45 |   |   | 4.97 |   |   | -- |   |   | -- |   |   | -- |   |
|    Non                real estate                   |   |                                      | 22,685  |                                            |   | 8.56 |   |   | 7.52 |   |   | 26,092 |   |   | 8.60 |   |   | 9.02 |   |
|     Total                adjustable-rate       |   |                                      | 93,913  |                                            |   | 6.62 |   |   | 31.13 |   |   | 93,866 |   |   | 6.47 |   |   | 32.46 |   |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loan originations and purchases               |   | $                                         | 301,564 |                                            |   | 6.24 | % |   | 100.00 | % | $ | 289,192 |   |   | 6.39 | % |   | 100.00 | % |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchased                loans included above:                     |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fixed-rate                purchased loans              |   | $                                         | 13,635  |                                            |   | 6.03 | % |   |   |   | $ | 18,851 |   |   | 6.34 | % |   |   |   |
|   Adjustable-rate                purchased loans         |   | $                                         | 40,989  |                                            |   | 6.33 | % |   |   |   | $ | 21,264 |   |   | 5.68 | % |   |   |   |

----

|                                                               |   | For                the Nine Months Ended |    |  For                the Nine Months Ended |   |
|--------------------------------------------------------------------|--------|------------------------------------------|---------|------------------------------------------------|--------|
|                                                               |   | June                30, 2007             |    |  June                30, 2006             |   |
|                                                               |   | Amount                                   |    | Rate                                           |   | %                of Total |   |  Amount |   | Rate |   | %                of Total |   |
| Fixed-Rate:                                                        |   | (Dollars                in thousands)    |    |
|    One-                to four-family:              |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                15 years  |   | $                                        | 78,611  |                                           |   | 5.69 | % |   | 11.52 | %     | $ | 84,200 |   |   | 5.61 | % |   | 10.03 | % |
|       >                15 years   |   |                                     | 366,144 |                                           |   | 6.04 |   |   | 53.64 |   |   | 339,549 |   |   | 6.07 |   |   | 40.45 |   |
|    Other                real estate                 |   |                                     | 3,873   |                                           |   | 6.54 |   |   | 0.57 |   |   | 12,648 |   |   | 6.45 |   |   | 1.51 |   |
|    Non                real estate                   |   |                                     | 25,487  |                                           |   | 8.12 |   |   | 3.73 |   |   | 34,716 |   |   | 7.59 |   |   | 4.13 |   |
|     Total                fixed-rate            |   |                                     | 474,115 |                                           |   | 6.10 |   |   | 69.46 |   |   | 471,113 |   |   | 6.11 |   |   | 56.12 |   |
|                                                               |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-Rate:                                                   |   |                                     |    |                                           |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
|    One-                to four-family:              |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                36 months |   |                                     | 23,095  |                                           |   | 5.35 |   |   | 3.38 |   |   | 58,423 |   |   | 4.88 |   |   | 6.96 |   |
|       >                36 months  |   |                                     | 106,106 |                                           |   | 5.66 |   |   | 15.54 |   |   | 233,760 |   |   | 5.32 |   |   | 27.84 |   |
|    Other                real estate                 |   |                                     | 15,000  |                                           |   | 7.45 |   |   | 2.20 |   |   | -- |   |   | -- |   |   | -- |   |
|    Non                real estate                   |   |                                     | 64,316  |                                           |   | 8.57 |   |   | 9.42 |   |   | 76,211 |   |   | 8.21 |   |   | 9.08 |   |
|     Total                adjustable-rate       |   |                                     | 208,517 |                                           |   | 6.65 |   |   | 30.54 |   |   | 368,394 |   |   | 5.85 |   |   | 43.88 |   |
|                                                               |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loan originations and purchases               |   | $                                        | 682,632 |                                           |   | 6.27 | % |   | 100.00 | % | $ | 839,507 |   |   | 6.00 | % |   | 100.00 | % |
|                                                               |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchased                loans included above:                     |   |                                     |    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fixed-rate                purchased loans              |   | $                                        | 34,644  |                                           |   | 6.08 | % |   |   |   | $ | 64,726 |   |   | 5.93 | % |   |   |   |
|   Adjustable-rate                purchased loans         |   | $                                        | 69,871  |                                           |   | 6.07 | % |   |   |   | $ | 179,298 |   |   | 5.11 | % |   |   |   |

----

The      following table presents the distribution of our loan portfolio at the dates      indicated. Our loan portfolio remains primarily weighted in fixed-rate loans.      

|                                                                                 |   | June                30, 2007          |      |  March                31, 2007 |   |  September                30, 2006 |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|-----------------------------------------|--------|
|                                                                                 |   | Amount                                |      | Rate                                |   |  %                of Total         |   |  Amount |   | Rate |   |  %                of Total |   |  Amount |   | Rate |   |  %                of Total |   |
|                                                                                 |   | (Dollars                in thousands) |      |
| Fixed-rate                loans:                                                     |   |                                  |      |                                |   |                               |   |    |   |   |   |    |   |    |   |   |   |    |   |
| One-                to four- family:                                                 |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                15 years                (1) |   | $                                     | 1,126,227 |                                |   | 5.38                                    | %      |   | 21.24 | %    | $ | 1,134,151 |   |   | 5.37 | % |   | 21.61 | %    | $ | 1,166,880 |   |   | 5.35 | % |   | 22.19 | % |
|       >                15 years (1)                 |   |                                  | 2,080,680 |                                |   | 5.94                                    |   |   | 39.23 |   |   | 1,974,136 |   |   | 5.93 |   |   | 37.60 |   |   | 1,864,854 |   |   | 5.93 |   |   | 35.47 |   |
| Other                real estate                                                     |   |                                  | 95,937    |                                |   | 6.27                                    |   |   | 1.81 |   |   | 94,027 |   |   | 6.30 |   |   | 1.79 |   |   | 86,761 |   |   | 6.34 |   |   | 1.65 |   |
| Non                real estate                                                       |   |                                  | 74,981    |                                |   | 7.77                                    |   |   | 1.41 |   |   | 72,985 |   |   | 7.69 |   |   | 1.39 |   |   | 67,083 |   |   | 7.57 |   |   | 1.28 |   |
|      Total                fixed-rate loans                  |   |                                  | 3,377,825 |                                |   | 5.80                                    |   |   | 63.69 |   |   | 3,275,299 |   |   | 5.79 |   |   | 62.39 |   |   | 3,185,578 |   |   | 5.76 |   |   | 60.59 |   |
|                                                                                 |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate                loans:                                                |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-                to four- family:                                                 |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                36 months (2)               |   |                                  | 1,151,157 |                                |   | 4.93                                    |   |   | 21.70 |   |   | 1,067,303 |   |   | 4.83 |   |   | 20.33 |   |   | 989,316 |   |   | 4.76 |   |   | 18.82 |   |
|       >                36 months (2)                |   |                                  | 599,791   |                                |   | 5.29                                    |   |   | 11.31 |   |   | 749,677 |   |   | 5.23 |   |   | 14.28 |   |   | 910,455 |   |   | 5.13 |   |   | 17.32 |   |
| Other                real estate                                                     |   |                                  | 31,338    |                                |   | 6.51                                    |   |   | 0.59 |   |   | 10,025 |   |   | 5.73 |   |   | 0.19 |   |   | 15,465 |   |   | 5.33 |   |   | 0.29 |   |
| Non                real estate                                                       |   |                                  | 143,719   |                                |   | 8.61                                    |   |   | 2.71 |   |   | 147,489 |   |   | 8.62 |   |   | 2.81 |   |   | 156,659 |   |   | 8.63 |   |   | 2.98 |   |
|      Total                adjustable-rate loans             |   |                                  | 1,926,005 |                                |   | 5.34                                    |   |   | 36.31 |   |   | 1,974,494 |   |   | 5.27 |   |   | 37.61 |   |   | 2,071,895 |   |   | 5.22 |   |   | 39.41 |   |
|         Total                loans           |   |                                  | 5,303,830 |                                |   | 5.64                                    | %      |   | 100.00 | % |   | 5,249,793 |   |   | 5.60 | % |   | 100.00 | % |   | 5,257,473 |   |   | 5.55 | % |   | 100.00 | % |
|                                                                                 |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                                                |   |                                  |      |                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loans                in process                                          |   |                                  | 39,875    |                                |   |                                    |   |   |   |   |   | 20,634 |   |   |   |   |   |   |   |   | 22,605 |   |   |   |   |   |   |   |
|   Unearned                fees and deferred costs                          |   |                                  | 9,496     |                                |   |                                    |   |   |   |   |   | 9,265 |   |   |   |   |   |   |   |   | 9,318 |   |   |   |   |   |   |   |
|   Allowance                for loan losses                                 |   |                                  | 4,189     |                                |   |                                    |   |   |   |   |   | 4,193 |   |   |   |   |   |   |   |   | 4,433 |   |   |   |   |   |   |   |
|      Total                loans receivable, net             |   | $                                     | 5,250,270 |                                |   |                                    |   |   |   |   | $ | 5,215,701 |   |   |   |   |   |   |   | $ | 5,221,117 |   |   |   |   |   |   |   |

| (1)   | Loans                are reported based on their remaining term to maturity, with consideration                for historical curtailments, as of the date                indicated. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Loans                are reported based on their term to next rate reset as of the date                indicated. |
|-----------------|-------------------------------------------------------------------------------------------------------------------|

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|                                                                             |   | June                30, 2007          |      |  March                31, 2007 |   |  December                31, 2006 |   |  September                30, 2006 |   |
|----------------------------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|----------------------------------------|--------|-----------------------------------------|--------|
|                                                                             |   | Balance                               |      | WAL                                 |   | Yield                                  |   |  Balance                           |   | WAL |   | Yield |   |  Balance |   | WAL |   | Yield |   |  Balance |   | WAL |   | Yield |   |
|                                                                             |   | (Dollars                in thousands) |      |                           |   |                                   |   |                                    |   |
| Fixed-rate                investments:                                           |   |                                  |      |                                |   |                                   |   |                               |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |   |
| Agency                bonds                                                      |   | $                                     | 655,940   |                                |   | 1.59                                   |   |                                    | 4.70   | %   | $ | 763,971 |   |   | 1.66 |   |   | 4.77 | %   | $ | 837,693 |   |   | 1.62 |   |   | 4.83 | %   | $ | 428,074 |   |   | 2.62 |   |   | 4.46 | % |
| Mortgage-related                securities, at cost                              |   |                                  | 587,263   |                                |   | 6.49                                   |   |                                    | 4.55   |   |   | 613,127 |   |   | 4.01 |   |   | 4.56 |   |   | 635,904 |   |   | 4.09 |   |   | 4.55 |   |   | 662,480 |   |   | 4.29 |   |   | 4.58 |   |
| Municipal                bonds                                                   |   |                                  | 17,249    |                                |   | 6.21                                   |   |                                    | 3.66   |   |   | 9,326 |   |   | 6.96 |   |   | 3.61 |   |   | 6,764 |   |   | 7.05 |   |   | 3.61 |   |   | 1,201 |   |   | 6.09 |   |   | 3.90 |   |
|    Total                fixed-rate investments                    |   |                                  | 1,260,452 |                                |   | 3.94                                   |   |                                    | 4.62   |   |   | 1,386,424 |   |   | 2.73 |   |   | 4.67 |   |   | 1,480,361 |   |   | 2.71 |   |   | 4.70 |   |   | 1,091,755 |   |   | 3.64 |   |   | 4.53 |   |
|                                                                             |   |                                  |      |                                |   |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate                investments:                                      |   |                                  |      |                                |   |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-related                securities, at cost                         |   |                                  | 879,250   |                                |   | 3.81                                   |   |                                    | 4.13   |   |   | 989,827 |   |   | 3.02 |   |   | 4.09 |   |   | 1,033,437 |   |   | 3.10 |   |   | 4.08 |   |   | 1,028,093 |   |   | 3.38 |   |   | 4.04 |   |
|    Total                adjustable-rate investments               |   |                                  | 879,250   |                                |   | 3.81                                   |   |                                    | 4.13   |   |   | 989,827 |   |   | 3.02 |   |   | 4.09 |   |   | 1,033,437 |   |   | 3.10 |   |   | 4.08 |   |   | 1,028,093 |   |   | 3.38 |   |   | 4.04 |   |
|      Total                investment portfolio, at cost |   | $                                     | 2,139,702 |                                |   | 3.88                                   |   |                                    | 4.42   | % | $ | 2,376,251 |   |   | 2.85 |   |   | 4.43 | % | $ | 2,513,798 |   |   | 2.87 |   |   | 4.45 | % | $ | 2,119,848 |   |   | 3.51 |   |   | 4.29 | % |

|                                         |   | June                30, 2007          |      |  March                31, 2007 |   |  December                31, 2006 |          | September                30, 2006 |      |
|----------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|----------------------------------------|---------------|-----------------------------------|-----------|
|                                         |   | Amount                                |      | Rate                                |   |  Amount                           |          | Rate                              |      |  Amount |   | Rate |   | Amount |   | Rate |   |
|                                         |   | (Dollars                in thousands) |      |                                |   |                                   |          |
| Certificates                maturing within: |   |                                  |      |                                |   |                              |          |                              |      |    |   |   |   |   |   |   |   |
| 0                to 3 months                 |   | $                                     | 360,011   |                                |   | 4.42                                   | %   | $                                 | 442,706   |   |   | 4.40 | %   | $ | 321,975 |   |   | 4.02 | %   | $ | 518,974 |   |   | 4.40 | % |
| 3                to 6 months                 |   |                                  | 358,352   |                                |   | 4.63                                   |          |                              | 357,839   |   |   | 4.41 |   |   | 460,940 |   |   | 4.41 |   |   | 314,279 |   |   | 4.04 |   |
| 6                months to one year          |   |                                  | 921,104   |                                |   | 4.81                                   |          |                              | 753,490   |   |   | 4.68 |   |   | 674,221 |   |   | 4.44 |   |   | 825,885 |   |   | 4.45 |   |
| One                year to two years         |   |                                  | 580,902   |                                |   | 4.85                                   |          |                              | 680,400   |   |   | 4.81 |   |   | 858,453 |   |   | 4.70 |   |   | 695,580 |   |   | 4.38 |   |
| After                two years               |   |                                  | 260,821   |                                |   | 4.69                                   |          |                              | 259,855   |   |   | 4.62 |   |   | 270,100 |   |   | 4.54 |   |   | 227,558 |   |   | 4.23 |   |
| Total                certificates            |   | $                                     | 2,481,190 |                                |   | 4.72                                   | %             | $                                 | 2,494,290 |   |   | 4.62 | % | $ | 2,585,689 |   |   | 4.48 | % | $ | 2,582,276 |   |   | 4.35 | % |
|                                         |   |                                  |      |                                |   |                                   |          |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                maturity (in years)   |   |                                  | 0.95      |                                |   |                                   |          |                              | 0.97      |   |   |   |   |   | 1.04 |   |   |   |   |   | 0.94 |   |   |   |   |

----

**Item      4**
**.      Controls and Procedures**

**Changes      in Internal Control Over Financial Reporting**

**Part II -   OTHER      INFORMATION**

**Item      1.  Legal Proceedings**

**Item      1A. Risk Factors**

----

<Index>

**Item      2.  Unregistered Sales of Equity Securities and Use of      Proceeds** 

|                                            | Total                    |                      | Total                Number of     | Maximum                Number     |
|-------------------------------------------------|--------------------------|---------------------------|------------------------------------|-----------------------------------|
|                                            | Number                of | Average                   | Shares                Purchased as | of                Shares that May |
|                                            | Shares                   | Price                Paid | Part                of Publicly    | Yet                Be Purchased   |
| Period                                          | Purchased                | per                Share  | Announced                Plans     | Under                the Plan     |
| April                1, 2007 through            |                     |                      |                               |                              |
|    April                30, 2007 | --                       | --                        | --                                 | 461,316                           |
| May                1, 2007 through              |                     |                      |                               |                              |
|    May                31, 2007   | --                       | --                        | --                                 | 461,316                           |
| June                1, 2007 through             |                     |                      |                               |                              |
|    June                30, 2007  | --                       | --                        | --                                 | 461,316                           |
|      Total             | --                       |                      | --                                 | 461,316                           |

**Item      3.  Defaults Upon Senior Securities**

**<Index>**

**Item      4.  Submission of Matters to a Vote of Security Holders**

**<Index>**

**Item      5.  Other Information**

**<Index>**

**Item      6.  Exhibits**

----

**SIGNATURES**

<Index>

----

**INDEX      TO EXHIBITS**

| ExhibitNumber                       |  Document |
|-------------------------------------|----------------|
|      2.0   |           | Plan                of Reorganization and Stock Issuance Plan* |
|      3(i)  |           | Federal                Stock Charter of Capitol Federal Financial* |
|      3(ii) |           | Bylaws                of Capitol Federal Financial filed on August 4, 2004 as Exhibit 3(ii)                to |
|                                |           | the                June 30, 2004 Form 10-Q and incorporated herein by                reference |
|      4(i)  |           | Form                of Stock Certificate of Capitol Federal Financial* |
|      4(ii) |           | The                Registrant agrees to furnish to the Securities and Exchange Commission,                upon request, the |
|                                |           | instruments                defining the rights of the holders of the Registrant’s long-term debt |
|    10.1              |           | Registrant’s                Thrift and Stock Ownership Plan filed on December 14, 2005 as Exhibit                10.1                to |
|                                |           | the                Annual Report on Form 10-K and incorporated herein by                reference |
|    10.2              |           | Registrant’s                2000 Stock Option and Incentive Plan (the “Stock Option Plan”) filed on                April 13, |
|                                |           | 2000                as Appendix A to Registrant’s Revised Proxy Statement (File No. 000-25391)                and incorporated herein by reference |
|    10.3              |           | Registrant’s                2000 Recognition and Retention Plan (the “RRP”) filed on April 13, 2000 as |
|                                |           | Appendix                B to Registrant’s Revised Proxy Statement (File No. 000-25391) and                incorporated herein by reference |
|    10.4              |           | Capitol                Federal Financial Deferred Incentive Bonus Plan filed on December                14, 2006 |
|                                |           | as                Exhibit 10.4 to the Annual Report on Form 10-K and incorporated herein                by                reference |
|    10.5              |           | Form                of Incentive Stock Option Agreement under the Stock Option Plan filed                on                February 4, 2005 |
|                                |           | as                Exhibit 10.5 to the December 31, 2004 Form 10-Q and incorporated                herein by                reference |
|    10.6              |           | Form                of Non-Qualified Stock Option Agreement under the Stock Option Plan                filed                on February 4, |
|                                |           | 2005                as Exhibit 10.6 to the December 31, 2004 Form 10-Q and incorporated                herein                by reference |
|    10.7              |           | Form                of Restricted Stock Agreement under the RRP filed on February 4,                2005 as                Exhibit 10.7 to the |
|                                |           | December                31, 2004 Form 10-Q and incorporated herein by reference |
|    10.8              |           | Description                of Named Executive Officer Salary and Bonus Arrangements filed on                December                14, |
|                                |           | 2006                as Exhibit 10.8 to the Annual Report on Form 10-K and incorporated                herein                by reference |
|    10.9              |           | Description                of Director Fee Arrangements filed on February 5, 2007 as Exhibit                10.9 to                the December 31, 2006 Form 10-Q and incorporated herein by                reference |
|    10.10             |           | Short-term                Performance Plan filed on December 14, 2005 as Exhibit 10.10 to the                Annual |
|                                |           | Report                on Form 10-K for the fiscal year ended September 30, 2005 and incorporated                herein by reference |
|    11                |           | Statement                re: computation of earnings per share** |
|    31.1              |           | Certification                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by                John B.                Dicus, President and Chief Executive Officer |
|    31.2              |           | Certification                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by                Kent G.                Townsend, Executive Vice President, Chief Financial Officer and                Treasurer |
|    32                |           | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002 made by John B. Dicus, President and                Chief                Executive Officer, and Kent G. Townsend, Executive Vice President,                Chief                Financial Officer and Treasurer |

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