| UNITED                STATES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECURITIES                AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Washington,                D.C. 20549                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
| FORM                10-Q                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|   [X]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | EXCHANGE                ACT OF 1934 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | For                the quarterly period ended March 31, 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
| OR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   [                ]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES                EXCHANGE |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | ACT                OF 1934 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | For                the transition period from                _____________________to_____________________ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (I.R.S.                Employer Identification No.) |
|                  or                organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| 700                Kansas Avenue, Topeka, Kansas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 66603 |
| (Address                of principal executive offices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Zip                Code) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   Registrant’s                telephone number, including area code:                (785) 235-1341                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|          Indicate                by check mark whether the registrant (1) has filed all reports required                to                be filed by Section 13 or 15(d) of the Securities Exchange Act of                1934                during the preceding 12 months (or for such shorter period that the                registrant was required to file such reports) and (2) has been subject                to                such requirements for the past 90 days. YES X                NO                __                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|         Indicate                by check mark whether the registrant is a large accelerated filer,                an                accelerated filer, or a non-accelerated filer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| See                definition of “accelerated filer and large accelerated filer” in Rule                12b-2 of the Exchange Act). (Check one):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Large                accelerated filer   X                                 Accelerated                filer____                                   Non-accelerated                filer ____                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|          Indicate                by check mark whether the registrant is a shell company (as defined                in                Rule 12b-2 of the Exchange Act).                                                                                                                                                  YES                    NO X  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|           Indicate                the number of shares outstanding of each of the issuer’s classes of common                stock, as of the latest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| practicable                date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                Common                Stock                                                                                  74,058,745                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                         Class                                                            Shares                Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                              as                of April 28, 2006                                                                                                                                                                                                                                                                                                                                                                                         |

----

|  PART                I -- FINANCIAL INFORMATION                                                                                                                                            | PageNumber |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Item                1.  Financial Statements (Unaudited):                                                                                                                             |       |
|              Consolidated                Balance Sheets                at                March 31, 2006 and September 30, 2005 | 3          |
|              Consolidated                Statements of Income                for the three and six months ended                |       |
|                   March                31, 2006 and March 31, 2005                                    | 4          |
|              Consolidated                Statement of Stockholders’ Equity                for the six months ended       |       |
|                   March                31, 2006                                                       | 5          |
|              Consolidated                Statements of Cash Flows                for the six months ended                      |       |
|                   March                31, 2006 and March 31, 2005                                    | 6          |
|              Notes                to Consolidated Interim Financial Statements                                                 | 8          |
| Item                2.  Management’s                Discussion and Analysis                of                Financial Condition and                                            |       |
|                   Results                of Operations                                                | 14         |
| Item                3.  Quantitative                and Qualitative Disclosure about Market Risk                                                                                      | 43         |
| Item                4.  Controls                and Procedures                                                                                                                        | 52         |
|                                                                                                                                                                                            |       |
| PART                II -- OTHER INFORMATION                                                                                                                                                     |       |
| Item                1.  Legal                Proceedings                                                                                                                              | 52         |
| Item                2.  Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                    | 53         |
| Item                3.  Defaults                Upon Senior Securities                                                                                                                | 53         |
| Item                4.  Submission                of Matters to a Vote of Security Holders                                                                                            | 53         |
| Item                5.  Other                Information                                                                                                                              | 53         |
| Item                6.  Exhibits                                                                                                                                                      | 53         |
|                                                                                                                                                                                            |       |
| Signature                Page                                                                                                                                                                   | 54         |
|                                                                                                                                                                                            |       |
| INDEX                TO EXHIBITS                                                                                                                                                                | 55         |
|                                                                                                                                                                                            |       |

----

**PART      I -- FINANCIAL INFORMATION**

**Item      1. Financial Statements**

CONSOLIDATED      BALANCE SHEETS      

|                                                                                                                                   |   | March                31, |       | September                30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|------------------------------|--------|
|                                                                                                                                   |   | 2006                     |       | 2005                         |   |
| ASSETS:                                                                                                                                |   |                     | (Unaudited | )                            |   |   |   |
| Cash                and cash equivalents                                                                                               |   | $                        | 206,175    |                         | $      | 58,566 |   |
| Investment                securities held-to-maturity, at cost (market value of                $371,888                                |   |                     |       |                         |   |   |   |
|         and                $424,952)                                                           |   |                     | 380,518    |                         |   | 430,499 |   |
| Mortgage-related                securities:                                                                                            |   |                     |       |                         |   |   |   |
|         Available-for-sale,                at market (amortized cost of $581,403 and $743,710) |   |                     | 575,930    |                         |   | 737,638 |   |
|         Held-to-maturity,                at cost (market value of $1,223,147 and $1,383,268)   |   |                     | 1,263,663  |                         |   | 1,407,616 |   |
| Loans                receivable held for sale, net                                                                                     |   |                     | 361        |                         |   | 1,891 |   |
| Loans                receivable, net                                                                                                   |   |                     | 5,522,825  |                         |   | 5,464,130 |   |
| Capital                stock of Federal Home Loan Bank ("FHLB"), at cost                                                               |   |                     | 187,115    |                         |   | 182,259 |   |
| Accrued                interest receivable                                                                                             |   |                     | 36,026     |                         |   | 36,900 |   |
| Premises                and equipment, net                                                                                             |   |                     | 24,470     |                         |   | 22,963 |   |
| Real                estate owned, net                                                                                                  |   |                     | 1,931      |                         |   | 1,653 |   |
| Income                taxes receivable                                                                                                 |   |                     | 1,220      |                         |   | 44 |   |
| Deferred                income taxes, net                                                                                              |   |                     | 37,800     |                         |   | 50,618 |   |
| Other                assets                                                                                                            |   |                     | 14,161     |                         |   | 14,910 |   |
|         TOTAL                ASSETS                                                            |   | $                        | 8,252,195  |                         | $      | 8,409,687 |   |
|                                                                                                                                   |   |                     |       |                         |   |   |   |
| LIABILITIES:                                                                                                                           |   |                     |            |                         |   |   |   |
| Deposits                                                                                                                               |   | $                        | 4,015,128  |                         | $      | 3,960,297 |   |
| Advances                from FHLB                                                                                                      |   |                     | 3,213,342  |                         |   | 3,426,465 |   |
| Other                borrowings, net                                                                                                   |   |                     | 53,438     |                         |   | 53,410 |   |
| Advance                payments by borrowers for taxes and insurance                                                                   |   |                     | 39,046     |                         |   | 45,437 |   |
| Accounts                payable and accrued expenses                                                                                   |   |                     | 69,428     |                         |   | 59,015 |   |
|         Total                liabilities                                                       |   |                     | 7,390,382  |                         |   | 7,544,624 |   |
|                                                                                                                                   |   |                     |       |                         |   |   |   |
| 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 March 31, 2006 and September 30, 2005               |   |                     | 915        |                         |   | 915 |   |
| Additional                paid-in capital                                                                                              |   |                     | 426,072    |                         |   | 421,903 |   |
| Unearned                compensation, Employee Stock Ownership Plan ("ESOP")                                                           |   |                     | (15,792    | )                            |   | (16,721 | ) |
| Unearned                compensation, Recognition and Retention Plan ("RRP")                                                           |   |                     | (998       | )                            |   | (539 | ) |
| Retained                earnings                                                                                                       |   |                     | 759,927    |                         |   | 759,643 |   |
| Accumulated                other comprehensive loss                                                                                    |   |                     | (3,397     | )                            |   | (3,769 | ) |
| Less                shares held in treasury (17,368,435 and 17,225,398 shares as                of                                     |   |                     |       |                         |   |   |   |
|        March                31, 2006 and September 30, 2005, at cost)                               |   |                     | (304,914   | )                            |   | (296,369 | ) |
|            Total                stockholders' equity                            |   |                     | 861,813    |                         |   | 865,063 |   |
|                                                                                                                                   |   |                     |       |                         |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                                                                              |   | $                        | 8,252,195  |                         | $      | 8,409,687 |   |

<Index>

----

CAPITOL      FEDERAL FINANCIAL AND SUBSIDIARY

|                                                                                |   | For                the Three Months Ended |    | For                the Six Months Ended |   |
|-------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|-----------------------------------------|--------|
|                                                                                |   | March                31,                  |    | March                31,                |   |
|                                                                                |   | 2006                                      |    | 2005                                    |   | 2006 |   | 2005 |   |
| INTEREST                AND DIVIDEND INCOME:                                        |   |                                      |    |                                    |   |   |   |   |   |
| Loans                receivable                                                     |   | $                                         | 75,505  |                                    | $      | 67,028 |   | $ | 150,665 |   | $ | 132,751 |   |
| Mortgage-related                securities                                          |   |                                      | 18,950  |                                    |   | 24,353 |   |   | 38,294 |   |   | 48,624 |   |
| Investment                securities                                                |   |                                      | 4,425   |                                    |   | 6,563 |   |   | 9,319 |   |   | 14,308 |   |
| Capital                stock of FHLB                                                |   |                                      | 2,473   |                                    |   | 1,948 |   |   | 4,856 |   |   | 3,784 |   |
| Cash                and cash equivalents                                            |   |                                      | 605     |                                    |   | 304 |   |   | 684 |   |   | 513 |   |
|      Total                interest and dividend income     |   |                                      | 101,958 |                                    |   | 100,196 |   |   | 203,818 |   |   | 199,980 |   |
|                                                                                |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| INTEREST                EXPENSE:                                                    |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| Deposits                                                                            |   |                                      | 28,974  |                                    |   | 23,644 |   |   | 56,219 |   |   | 46,716 |   |
| FHLB                advances                                                        |   |                                      | 38,176  |                                    |   | 34,961 |   |   | 77,980 |   |   | 69,417 |   |
| Other                borrowings                                                     |   |                                      | 993     |                                    |   | 734 |   |   | 1,948 |   |   | 1,404 |   |
|      Total                interest expense                 |   |                                      | 68,143  |                                    |   | 59,339 |   |   | 136,147 |   |   | 117,537 |   |
|                                                                                |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| NET                INTEREST AND DIVIDEND INCOME                                     |   |                                      | 33,815  |                                    |   | 40,857 |   |   | 67,671 |   |   | 82,443 |   |
| (RECOVERY)                PROVISION FOR LOAN LOSSES                                 |   |                                      | (138    | )                                       |   | -- |   |   | 130 |   |   | -- |   |
|     NET                INTEREST AND DIVIDEND INCOME             |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
|        AFTER                (RECOVERY) PROVISION |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
|        FOR                LOAN LOSSES            |   |                                      | 33,953  |                                    |   | 40,857 |   |   | 67,541 |   |   | 82,443 |   |
|                                                                                |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| OTHER                INCOME:                                                        |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| Retail                fees and charges                                              |   |                                      | 3,869   |                                    |   | 3,647 |   |   | 8,172 |   |   | 7,455 |   |
| Loan                fees                                                            |   |                                      | 439     |                                    |   | 509 |   |   | 918 |   |   | 1,067 |   |
| Insurance                commissions                                                |   |                                      | 808     |                                    |   | 604 |   |   | 1,232 |   |   | 1,004 |   |
| Other,                net                                                           |   |                                      | 906     |                                    |   | 742 |   |   | 1,550 |   |   | 1,807 |   |
|      Total                other income                     |   |                                      | 6,022   |                                    |   | 5,502 |   |   | 11,872 |   |   | 11,333 |   |
|                                                                                |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| OTHER                EXPENSES:                                                      |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                       |   |                                      | 10,185  |                                    |   | 10,054 |   |   | 20,120 |   |   | 20,176 |   |
| Occupancy                of premises                                                |   |                                      | 3,182   |                                    |   | 3,127 |   |   | 6,171 |   |   | 6,353 |   |
| Regulatory                and outside services                                      |   |                                      | 1,101   |                                    |   | 1,344 |   |   | 2,300 |   |   | 2,321 |   |
| Deposit                and loan transaction costs                                   |   |                                      | 1,111   |                                    |   | 1,068 |   |   | 2,228 |   |   | 2,072 |   |
| Advertising                                                                         |   |                                      | 868     |                                    |   | 1,272 |   |   | 1,565 |   |   | 2,047 |   |
| Other,                net                                                           |   |                                      | 1,496   |                                    |   | 1,145 |   |   | 3,159 |   |   | 2,644 |   |
|      Total                other expenses                   |   |                                      | 17,943  |                                    |   | 18,010 |   |   | 35,543 |   |   | 35,613 |   |
| INCOME                BEFORE INCOME TAX EXPENSE                                     |   |                                      | 22,032  |                                    |   | 28,349 |   |   | 43,870 |   |   | 58,163 |   |
| INCOME                TAX EXPENSE                                                   |   |                                      | 8,445   |                                    |   | 10,867 |   |   | 16,970 |   |   | 22,108 |   |
| NET                INCOME                                                           |   | $                                         | 13,587  |                                    | $      | 17,482 |   | $ | 26,900 |   | $ | 36,055 |   |
|                                                                                |   |                                      |    |                                    |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                                             |   | $                                         | 0.19    |                                    | $      | 0.24 |   | $ | 0.37 |   | $ | 0.50 |   |
| Diluted                earnings per share                                           |   | $                                         | 0.19    |                                    | $      | 0.24 |   | $ | 0.37 |   | $ | 0.49 |   |
| Dividends                declared per public share                                  |   | $                                         | 0.50    |                                    | $      | 0.50 |   | $ | 1.30 |   | $ | 1.00 |   |
| Weighted                average number of common shares outstanding:                |   |                                      |    |                                    |   |   |   |   |   |
|      Basic                                                 |   |                                      | 72,647  |                                    |   | 72,473 |   |   | 72,649 |   |   | 72,348 |   |
|      Diluted                                               |   |                                      | 72,923  |                                    |   | 73,096 |   |   | 72,947 |   |   | 73,050 |   |

----

CAPITOL      FEDERAL FINANCIAL AND SUBSIDIARY

|                                                                               |   |   |   |       |   |         |   |         |    |     |   | Accumulated   |   |     |    |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------------|--------|--------------|---------|----------|--------|---------------|--------|----------|---------|--------|--------|
|                                                                               |   |   |   | Additional |   | Unearned     |   | Unearned     |    |     |   | Other         |   |     |    |   |   |
|                                                                               |   | Common |   | Paid-In    |   | Compensation |   | Compensation |    | Retained |   | Comprehensive |   | Treasury |    |   |   |
|                                                                               |   | Stock  |   | Capital    |   | (ESOP)       |   | (RRP)        |    | Earnings |   | Loss          |   | Stock    |    | Total  |   |
|                                                                               |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
| Balance                  at October 1, 2005                                        |   | $      | 915    |       | $      | 421,903      |   | $            | (16,721 | )        | $      | (539          | )      | $        | 759,643 |   | $      | (3,769 | ) | $ | (296,369 | ) | $ | 865,063 |   |
| Comprehensive                  income:                                             |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
|    Net                  income                                      |   |   |   |       |   |         |   |         |    |     |   |          |   |     | 26,900  |   |   |   |   |   |   |   |   | 26,900 |   |
|    Changes                  in unrealized gains/losses on           |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
|    mortgage-related                  securities available-for-sale, |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
|                     net of deferred income taxes of $228            |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   | 372 |   |   |   |   |   | 372 |   |
| Total                  comprehensive income                                        |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   | 27,272 |   |
|                                                                               |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
| Tax                  benefit of market value change in vested                      |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
|   RRP                  shares                                            |   |   |   |       |   | 9            |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   | 9 |   |
| Common                  stock committed to be released for                         |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
|   allocation                  - ESOP                                     |   |   |   |       |   | 2,345        |   |         | 1,008   |     |   |          |   |     |    |   |   |   |   |   |   |   |   | 3,353 |   |
| Acquisition                  of treasury stock                                     |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   | (10,056 | ) |   | (10,056 | ) |
| Stock                  options exercised                                           |   |   |   |       |   | 1,075        |   |         |    |     |   |          |   |     |    |   |   |   |   |   | 1,303 |   |   | 2,378 |   |
| Treasury                  stock activity related to RRP, net                       |   |   |   |       |   | 518          |   |         |    |     |   | (737          | )      |     |    |   |   |   |   |   | 208 |   |   | (11 | ) |
| Amortization                  of unearned compensation - RRP                       |   |   |   |       |   |         |   |         |    |     |   | 278           |   |     |    |   |   |   |   |   |   |   |   | 278 |   |
| Stock                  based compensation expense                                  |   |   |   |       |   | 222          |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   | 222 |   |
| Dividends                  in excess of debt service cost - ESOP                   |   |   |   |       |   |         |   |         | (79     | )        |   |          |   |     |    |   |   |   |   |   |   |   |   | (79 | ) |
| Dividends                  on common stock to stockholders                         |   |   |   |       |   |         |   |         |    |     |   |          |   |     |    |   |   |   |   |   |   |   |   |   |   |
| ($1.30                  per public share)                                          |   |   |   |       |   |         |   |         |    |     |   |          |   |     | (26,616 | )      |   |   |   |   |   |   |   | (26,616 | ) |
| Balance                  at March 31, 2006                                         |   | $      | 915    |       | $      | 426,072      |   | $            | (15,792 | )        | $      | (998          | )      | $        | 759,927 |   | $      | (3,397 | ) | $ | (304,914 | ) | $ | 861,813 |   |

<Index>

----

CONSOLIDATED      STATEMENTS OF CASH FLOWS

|                                                                                                                                             |   | For                the Six Months Ended |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                                                                                             |   | March                31,                |    |
|                                                                                                                                             |   | 2006                               |    | 2005  |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                                             |   |                                    |    |   |   |
| Net                income                                                                                                                        |   | $                                       | 26,900  |   | $ | 36,055 |   |
| Adjustments                to reconcile net income to net cash provided by                                                                       |   |                                    |    |   |   |   |   |
|   operating                activities:                                                                                                 |   |                                    |    |   |   |   |   |
|   FHLB                stock dividends                                                                                                  |   |                                    | (4,856  | ) |   | (3,784 | ) |
|   Net                loan origination fees (costs) capitalized                                                                         |   |                                    | 1,288   |   |   | (2,238 | ) |
|   Amortization                of net deferred loan origination fees                                                                    |   |                                    | (678    | ) |   | (1,462 | ) |
|   Provision                for loan losses                                                                                             |   |                                    | 130     |   |   | -- |   |
|   (Gains)                losses on sales of premises and equipment, net                                                                |   |                                    | (4      | ) |   | 57 |   |
|   Gains                on sales of real estate owned, net                                                                              |   |                                    | (280    | ) |   | (476 | ) |
|   Gains                on sales of loans receivable held for sale                                                                      |   |                                    | (39     | ) |   | (68 | ) |
|   Originations                of loans receivable held for sale                                                                        |   |                                    | (2,206  | ) |   | (4,225 | ) |
|   Proceeds                from sales of loans receivable held for sale                                                                 |   |                                    | 3,775   |   |   | 6,767 |   |
|   Amortization                and accretion of premiums and discounts on                                                               |   |                                    |    |   |   |   |   |
|           mortgage-related                securities and investment securities                 |   |                                    | 4,082   |   |   | 6,572 |   |
|   Depreciation                and amortization of premises and equipment                                                               |   |                                    | 1,769   |   |   | 2,087 |   |
|   Amortization                of deferred debt issuance costs                                                                          |   |                                    | 28      |   |   | 33 |   |
|   Common                stock committed to be released for allocation - ESOP                                                           |   |                                    | 3,353   |   |   | 3,536 |   |
|   Amortization                of unearned compensation - RRP                                                                           |   |                                    | 278     |   |   | 148 |   |
|   RRP                shares sold, net of forfeitures                                                                                   |   |                                    | (11     | ) |   | (21 | ) |
|   Stock                based compensation - stock options                                                                              |   |                                    | 222     |   |   | -- |   |
|   Changes                in:                                                                                                           |   |                                    |    |   |   |   |   |
|           Accrued                interest receivable                                           |   |                                    | 874     |   |   | 1,815 |   |
|           Other                assets                                                          |   |                                    | 749     |   |   | 1,139 |   |
|           Income                taxes payable/receivable and deferred income taxes             |   |                                    | 12,466  |   |   | 17,978 |   |
|           Accounts                payable and accrued expenses                                 |   |                                    | (2,710  | ) |   | (3,661 | ) |
|              Net                cash provided by operating activities           |   |                                    | 45,130  |   |   | 60,252 |   |
|                                                                                                                                             |   |                                    |    |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                                             |   |                                    |    |   |   |   |   |
| Proceeds                from maturities or calls of investment securities                                                                        |   |                                    | 50,000  |   |   | 132,000 |   |
| Principal                collected on mortgage-related securities                available-for-sale                                              |   |                                    | 159,067 |   |   | 228,595 |   |
| Principal                collected on mortgage-related securities held-to-maturity                                                               |   |                                    | 144,076 |   |   | 154,224 |   |
| Purchases                of mortgage-related securities held-to-maturity                                                                         |   |                                    | (983    | ) |   | (289,791 | ) |
| Loan                originations, net of principal collected                                                                                     |   |                                    | (11,503 | ) |   | (1,629 | ) |
| Loan                purchases, net of principal collected                                                                                        |   |                                    | (50,004 | ) |   | (296,628 | ) |
| Purchases                of premises and equipment, net                                                                                          |   |                                    | (3,272  | ) |   | (1,948 | ) |
| Proceeds                from sales of real estate owned                                                                                          |   |                                    | 2,074   |   |   | 3,947 |   |
|              Net                cash provided by (used in) investing activities |   |                                    | 289,455 |   |   | (71,230 | ) |

----

| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                                              |   |   |     |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|
| Dividends                paid                                                                                                                     |   |   | (26,616  | )      |   | (20,343 | ) |
| Dividends                in excess of debt service cost of ESOP, net                                                                              |   |   | (79      | )      |   | 2,069 |   |
| Deposits,                net of withdrawals                                                                                                       |   |   | 54,831   |   |   | (76,143 | ) |
| Proceeds                from advances/line of credit from FHLB                                                                                    |   |   | 629,100  |   |   | 265,000 |   |
| Repayments                on advances/line of credit from FHLB                                                                                    |   |   | (829,100 | )      |   | (265,000 | ) |
| Change                in advance payments by borrowers for taxes                and insurance                                                |   |   | (6,391   | )      |   | (3,984 | ) |
| Acquisitions                of treasury stock                                                                                                     |   |   | (10,056  | )      |   | (174 | ) |
| Acquisitions                of treasury stock for exercise of stock options                                                                       |   |   | --       |   |   | (2,793 | ) |
| Stock                options exercised                                                                                                            |   |   | 1,335    |   |   | 4,726 |   |
|              Net                cash used in financing activities                |   |   | (186,976 | )      |   | (96,642 | ) |
|                                                                                                                                              |   |   |     |   |   |   |   |
| NET                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                               |   |   | 147,609  |   |   | (107,620 | ) |
| CASH                AND CASH EQUIVALENTS:                                                                                                         |   |   |     |   |   |   |   |
| Beginning                of period                                                                                                                |   |   | 58,566   |   |   | 171,526 |   |
| End                of period                                                                                                                      |   | $      | 206,175  |   | $      | 63,906 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURES OF CASH FLOW INFORMATION:                                                                                 |   |   |     |   |   |   |   |
|       Income                tax payments                                                                            |   | $      | 2,885    |   | $      | 4,000 |   |
|       Interest                payments, net of interest credited to deposits                                        |   | $      | 84,633   |   | $      | 75,196 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURE OF NON-CASH                                                                                                |   |   |     |   |   |   |   |
|       INVESTING                AND FINANCING ACTIVITIES:                                                            |   |   |     |   |   |   |   |
|       Loans                transferred to real estate owned                                                         |   | $      | 2,072    |   | $      | 2,471 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Loan                modifications and refinances                                                              |   | $      | 60,801   |   | $      | 160,913 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Tax                effect of premature disposal of incentive stock option shares                              |   | $      | 1,043    |   | $      | 4,180 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Treasury                stock activity related to RRP (excluding RRP shares sold for                          |   |   |     |   |   |   |   |
|             employee                withholding tax purposes)                         |   | $      | 208      |   | $      | 108 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Tax                effect of RRP share transactions                                                           |   | $      | 9        |   | $      | 19 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Purchase                of mortgage-related securities that will settle in a subsequent                period |   | $      | --       |   | $      | 15,000 |   |
|                                                                                                                                              |   |   |     |   |   |   |   |
|       Market                value change related to fair value hedge:                                               |   |   |     |   |   |   |   |
|             Interest                rate swaps hedging FHLB advances                  |   | $      | 13,123   |   | $      | 24,551 |   |

<Index>

----

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

**1.   Basis      of Financial Statement Presentation**

**2.   Recent      Accounting Pronouncements**

**3.   Accounting      for Stock Based Compensation**

----

|                                                                                                                          |   | March                31, 2005                                   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                                                                                                          |   | For                the Three Months Ended                       |   | For                the Six Months Ended |   |
|                                                                                                                          |   | (Dollars                in thousands, except per share amounts) |   |
| Net                income, as reported                                                                                        |   | $                                                               | 17,482 |   | $ | 36,055 |   |
|                                                                                                                          |   |                                                            |   |   |   |   |   |
| Add:                 Stock-based compensation expense included                                                           |   |                                                            |   |   |   |   |   |
|           in                reported net income, net of related tax effects |   |                                                            | 78     |   |   | 94 |   |
| Deduct:                 Total stock-based employee                                                                       |   |                                                            |   |   |   |   |   |
|           compensation                expense determined under              |   |                                                            |   |   |   |   |   |
|           fair                value based method for all awards,            |   |                                                            |   |   |   |   |   |
|           net                of related tax effects                (1)      |   |                                                            | 141    |   |   | 189 |   |
|                                                                                                                          |   |                                                            |   |   |   |   |   |
| Pro                forma net income                                                                                           |   | $                                                               | 17,419 |   | $ | 35,960 |   |
|                                                                                                                          |   |                                                            |   |   |   |   |   |
| Net                earnings per share:                                                                                        |   |                                                            |   |   |   |   |   |
|    Basic-as                reported                                                                            |   | $                                                               | 0.24   |   | $ | 0.50 |   |
|    Basic-pro                forma                                                                              |   | $                                                               | 0.24   |   | $ | 0.50 |   |
|                                                                                                                          |   |                                                            |   |   |   |   |   |
|    Diluted-as                reported                                                                          |   | $                                                               | 0.24   |   | $ | 0.49 |   |
|    Diluted-pro                forma                                                                            |   | $                                                               | 0.24   |   | $ | 0.49 |   |

----

|                                   | For                the Three Months Ended March 31, |   | For                the Six Months Ended March                31, |
|----------------------------------------|-----------------------------------------------------|--------|------------------------------------------------------------------|
|                                   |   2006                          |   |   2005                                       |   |   2006   |   |   2005   |
| Risk-free                interest rate | 4.5%                                                |   | 4.2%                                                             |   | 4.5% |   | 4.1% |
| Expected                life (years)   | 8.5                                                 |   | 9.6                                                              |   | 8.2 |   | 9.0 |
| Expected                volatility     | 22%                                            |   | 23%                                                         |   | 22%  |   | 23%  |
| Dividend                yield          | 6.2%                                                |   | 5.6%                                                             |   | 6.1% |   | 5.6% |
| Estimated                forfeitures   | 0.0%                                                |   | 0.0%                                                             |   | 0.0% |   | 0.0% |

***Stock      Option Plan -***

----

|                                              |   | For                the Three Months Ended |     | For                the Six Months Ended |   |
|---------------------------------------------------|--------|-------------------------------------------|----------|-----------------------------------------|--------|
|                                              |   | March                31, 2006             |     | March                31, 2006           |   |
|                                              |   |                                      |     | Weighted                                |   |   |   | Weighted |   |
|                                              |   |                                      |     | Average                                 |   |   |   | Average |   |
|                                              |   | Number                                    |     | Exercise                                |   | Number |   | Exercise |   |
|                                              |   | of                Options                 |     | Price                                   |   | of                Options |   | Price |   |
|                                              |   |                                      |     |                                    |   |   |   |   |   |
| Outstanding                at beginning of period |   |                                      | 798,899  |                                    | $      | 15.91 |   |   | 789,749 |   | $ | 15.61 |   |
| Granted                                           |   |                                      | 100,000  |                                    |   | 32.48 |   |   | 112,000 |   |   | 32.69 |   |
| Forfeited                                         |   |                                      | --       |                                    |   | -- |   |   | (1,000 | ) |   | 9.22 |   |
| Exercised                                         |   |                                      | (139,450 | )                                       |   | 9.43 |   |   | (141,300 | ) |   | 9.46 |   |
| Outstanding                at March 31, 2006      |   |                                      | 759,449  |                                    | $      | 19.28 |   |   | 759,449 |   | $ | 19.28 |   |

|                         |   | Options                Outstanding                              |    | Options                Exercisable |   |
|------------------------------|--------|-----------------------------------------------------------------|---------|------------------------------------|--------|
|                         |   |                                                            |    | Weighted                           |   | Weighted |   |   |   |   |   | Weighted |   |   |   |
|                         |   |                                                            |    | Average                            |   | Average |   |   |   |   |   | Average |   |   |   |
|                         |   | Number                                                          |    | Remaining                          |   | Exercise |   | Aggregate |   | Number |   | Exercise |   | Aggregate |   |
| Exercise                     |   | of                Options                                       |    | Contractual                        |   | Price                per |   | Intrinsic |   | of                Options |   | Price                per |   | Intrinsic |   |
| Price                        |   | Outstanding                                                     |    | Life                (in years)     |   | Share |   | Value |   | Exercisable |   | Share |   | Value |   |
|                         |   | (Dollars                in thousands, except per share amounts) |    |
| $9.22                        |   |                                                            | 416,949 |                               |   | 7.76 |   | $ | 9.22 |   | $ | 9,623 |   |   | 416,949 |   | $ | 9.22 |   | $ | 9,623 |   |
| 14.03                - 19.68 |   |                                                            | 22,800  |                               |   | 4.91 |   |   | 16.21 |   |   | 367 |   |   | 22,800 |   |   | 16.21 |   |   | 367 |   |
| 25.66                - 28.78 |   |                                                            | 41,800  |                               |   | 8.48 |   |   | 26.06 |   |   | 261 |   |   | 17,600 |   |   | 26.21 |   |   | 107 |   |
| 30.19                - 36.19 |   |                                                            | 277,900 |                               |   | 11.13 |   |   | 33.60 |   |   | 61 |   |   | 83,833 |   |   | 33.84 |   |   | 32 |   |
|                         |   |                                                            | 759,449 |                               |   | 8.95 |   | $ | 19.28 |   | $ | 10,312 |   |   | 541,182 |   | $ | 13.88 |   | $ | 10,129 |   |

***Recognition      and Retention Plan -***

----

|                                                        |   | For                the Three Months Ended |   | For                the Six Months Ended |   |
|-------------------------------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------|--------|
|                                                        |   | March                31, 2006             |   | March                31, 2006           |   |
|                                                        |   |                                      |   | Weighted                                |   |   |   | Weighted |   |
|                                                        |   |                                      |   | Average                                 |   |   |   | Average |   |
|                                                        |   | Number                                    |   | Grant                Date               |   | Number |   | Grant                Date |   |
|                                                        |   | of                Shares                  |   | Fair                Value               |   | of                Shares |   | Fair                Value |   |
| Non-vested                RRP shares at beginning of period |   |                                      | 19,800 |                                    | $      | 33.81 |   |   | 18,800 |   | $ | 33.88 |   |
| Granted                                                     |   |                                      | 20,000 |                                    |   | 32.53 |   |   | 22,500 |   |   | 32.73 |   |
| Vested                                                      |   |                                      | (6,400 | )                                       |   | 33.74 |   |   | (7,900 | ) |   | 34.09 |   |
| Forfeited                                                   |   |                                      | --     |                                    |   | -- |   |   | -- |   |   | -- |   |
|                                                        |   |                                      |   |                                    |   |   |   |   |   |   |   |   |   |
| Non-vested                RRP shares at March 31, 2006      |   |                                      | 33,400 |                                    | $      | 33.06 |   |   | 33,400 |   | $ | 33.06 |   |

----

**4.   Earnings      Per Share**

For      the      quarter ended March 31, 2006, basic and diluted earnings per share were $0.19.      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 acquired for its RRP in a      manner similar to the ESOP shares; shares acquired by the ESOP and 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 Six Months Ended |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|-----------------------------------------|--------|
|                                                                |   | March                31,                                        |       | March                31,                |   |
|                                                                |   | 2006                                                            |       | 2005                                    |   | 2006 |   | 2005 |   |
|                                                                |   | (Dollars                in thousands, except per share amounts) |       |
| Net                income                                           |   | $                                                               | 13,587     |                                    | $      | 17,482 |   | $ | 26,900 |   | $ | 36,055 |   |
|                                                                |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
| Average                common shares outstanding                    |   |                                                            | 72,596,424 |                                    |   | 72,421,545 |   |   | 72,623,113 |   |   | 72,322,769 |   |
| Average                committed ESOP shares outstanding            |   |                                                            | 50,970     |                                    |   | 50,970 |   |   | 25,482 |   |   | 25,482 |   |
| Total                basic average common shares outstanding        |   |                                                            | 72,647,394 |                                    |   | 72,472,515 |   |   | 72,648,595 |   |   | 72,348,251 |   |
|                                                                |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
| Effect                of dilutive RRP shares (1)                    |   |                                                            | 2,114      |                                    |   | 2,455 |   |   | 2,775 |   |   | 2,524 |   |
| Effect                of dilutive stock options (2)                 |   |                                                            | 273,367    |                                    |   | 620,933 |   |   | 295,837 |   |   | 699,107 |   |
|                                                                |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
| Total                diluted average common shares outstanding |   |                                                            | 72,922,875 |                                    |   | 73,095,903 |   |   | 72,947,207 |   |   | 73,049,882 |   |
|                                                                |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
| Net                earnings per share:                              |   |                                                            |       |                                    |   |   |   |   |   |   |   |   |   |
|      Basic                                 |   | $                                                               | 0.19       |                                    | $      | 0.24 |   | $ | 0.37 |   | $ | 0.50 |   |
|      Diluted                               |   | $                                                               | 0.19       |                                    | $      | 0.24 |   | $ | 0.37 |   | $ | 0.49 |   |

(1)      At      March      31, 2006, there were 16,000 unvested RRP shares at $32.53 per share that were      excluded from the computation of diluted EPS because they were anti-dilutive      for      the three months and the six months ended March 31, 2006. 

**5.   Reclassifications**

----

**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 rates, market and monetary fluctuations; |
|--------------------|-----------------------------------------------------------------------------|

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

| ·   | the                timely development 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 for                our products and services; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                possibility that the costs of replacing the Bank’s core information                technology processing system will be greater than estimated                amounts; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                success in gaining regulatory approval of our products, services                and                branching locations, 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**

----

**Critical      Accounting Policies**

**Allowance      for Loan Losses**

----

**Derivative      Instruments.**

**Deferred      Income Tax Assets.**

----

**Financial      Condition**

|                                                             |   | Balance                at                                       |       |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|
|                                                             |   | March                31,                                        |       | December                31, |   | September                30, |   | March                31, |   |
|                                                             |   | 2006                                                            |       | 2005 |   | 2005 |   | 2005 |   |
|                                                             |   | (Dollars                in thousands, except per share amounts) |       |
| Selected                Balance Sheet Data:                      |   |                                                            |       |   |   |   |   |   |   |
| Total                assets                                      |   | $                                                               | 8,252,195  |   | $ | 8,318,836 |   | $ | 8,409,687 |   | $ | 8,498,764 |   |
| Cash                and cash equivalents                         |   |                                                            | 206,175    |   |   | 51,333 |   |   | 58,566 |   |   | 63,906 |   |
| Loans                receivable, net                             |   |                                                            | 5,522,825  |   |   | 5,565,077 |   |   | 5,464,130 |   |   | 5,046,714 |   |
| Mortgage-related                securities                       |   |                                                            | 1,839,593  |   |   | 1,967,564 |   |   | 2,145,254 |   |   | 2,546,091 |   |
| Investment                securities, held-to-maturity           |   |                                                            | 380,518    |   |   | 430,517 |   |   | 430,499 |   |   | 505,617 |   |
| Capital                stock of FHLB                             |   |                                                            | 187,115    |   |   | 184,642 |   |   | 182,259 |   |   | 177,910 |   |
| Deposits                                                         |   |                                                            | 4,015,128  |   |   | 3,937,237 |   |   | 3,960,297 |   |   | 4,051,329 |   |
| Advances                from FHLB                                |   |                                                            | 3,213,342  |   |   | 3,385,502 |   |   | 3,426,465 |   |   | 3,424,878 |   |
| Other                Borrowings                                  |   |                                                            | 53,438     |   |   | 53,424 |   |   | 53,410 |   |   | 53,381 |   |
| Stockholders'                equity                              |   |                                                            | 861,813    |   |   | 862,238 |   |   | 865,063 |   |   | 857,656 |   |
| Unrealized                loss on                AFS securities, |   |                                                            |       |   |   |   |   |   |   |   |   |   |   |
|   net                of income taxes                   |   |                                                            | (3,397     | ) |   | (3,470 | ) |   | (3,769 | ) |   | (4,143 | ) |
| Equity                to total assets at end of period           |   |                                                            | 10.44      | % |   | 10.36 | % |   | 10.29 | % |   | 10.09 | % |
| Book                value per share                              |   | $                                                               | 11.87      |   | $ | 11.87 |   | $ | 11.91 |   | $ | 11.80 |   |
| Shares                outstanding                                |   |                                                            | 72,598,164 |   |   | 72,653,502 |   |   | 72,654,981 |   |   | 72,683,756 |   |

The      following table presents rate information at the dates      indicated.

|                                                  |   | March                31, |   |  December                31, |   |  September                30, |   |  March                31, |   |
|-------------------------------------------------------|--------|--------------------------|--------|-----------------------------------|--------|------------------------------------|--------|--------------------------------|--------|
|                                                  |   | 2006                     |   |  2005                        |   |  2005                         |   |  2005                     |   |
| Average                Yield / Cost at End of Period: |   |                |   |                         |   |                          |   |
|  (annualized)                                    |   |                     |   |                              |   |                               |   |                           |   |   |   |   |   |
| Loans                receivable                       |   |                     | 5.55   | %                                 |   | 5.51                               | %      |                           | 5.49   | % |   | 5.44 | % |
| Mortgage-related                securities            |   |                     | 4.01   |                              |   | 3.84                               |   |                           | 3.71   |   |   | 3.81 |   |
| Investment                securities                  |   |                     | 4.41   |                              |   | 4.54                               |   |                           | 4.54   |   |   | 4.65 |   |
| Deposits                                              |   |                     | 3.07   |                              |   | 2.86                               |   |                           | 2.67   |   |   | 2.41 |   |
| FHLB                advances                          |   |                     | 4.70   |                              |   | 4.59                               |   |                           | 4.42   |   |   | 4.13 |   |
| Borrowings,                other                      |   |                     | 7.37   |                              |   | 6.92                               |   |                           | 6.37   |   |   | 5.43 |   |

----

**Loans      Receivable.**

----

|                               |                                         | For                  the Three Months Ended |   |
|------------------------------------|----------------------------------------------|---------------------------------------------|--------|
|                               |                                         | March                  31, 2006             |   | December                  31, 2005 |   | September                  30, 2005 |   | June                  30, 2005 |   |
|                               |                                         | Amount                                      | Rate   |   |   | Amount | Rate |   |   | Amount | Rate |   |   | Amount | Rate |   |   |
| Loans                  receivable: | (Dollars                  in thousands)      |
|                               | Beginning                  balance           |  $ 5,600,378                 | 5.41   | % |   |  $ 5,494,387  | 5.39 | % |   |  $ 5,236,109  | 5.38 | % |   |  $ 5,086,202  | 5.36 | % |   |
|                               | Originations                  and refinances | 150,741                                | 6.34   |   |   | 195,665  | 5.98 |   |   | 264,867  | 5.67 |   |   | 232,498  | 5.60 |   |   |
|                               | Purchases                                    | 53,917                                 | 5.51   |   |   | 149,992  | 5.09 |   |   | 299,648  | 5.11 |   |   | 172,834  | 5.29 |   |   |
|                               | Repayments                                   | (249,837)                                   |   |   |   | (240,559) |   |   |   | (307,092) |   |   |   | (255,995) |   |   |   |
|                               | Other                                        | (508)                                       |   |   |   | 893  |   |   |   | 855  |   |   |   | 570  |   |   |   |
|                               | Ending                  balance              |  $ 5,554,691                 | 5.45   | % |   |  $ 5,600,378  | 5.41 | % |   |  $ 5,494,387  | 5.39 | % |   |  $ 5,236,109  | 5.38 | % |   |
|                               |                                         |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |                                         | For                  the Six Months Ended   |   |   |   |   |   |   |   |   |   |
|                               |                                         | March                  31, 2006             |   | March                  31, 2005 |   |   |   |   |   |   |   |   |   |
|                               |                                         | Amount                                      | Rate   |   |   | Amount | Rate |   |   |   |   |   |   |   |   |   |   |
|                               |                                         | (Dollars                  in thousands)     |   |   |   |   |   |   |   |   |   |
| Loans                  receivable: |                                         |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               | Beginning                  balance           |  $ 5,494,387                 | 5.39   | % |   |  $ 4,794,442  | 5.38 | % |   |   |   |   |   |   |   |   |   |
|                               | Originations                  and refinances | 346,406                                | 6.14   |   |   | 370,156  | 5.33 |   |   |   |   |   |   |   |   |   |   |
|                               | Purchases                                    | 203,909                                | 5.20   |   |   | 384,726  | 4.86 |   |   |   |   |   |   |   |   |   |   |
|                               | Repayments                                   | (490,396)                                   |   |   |   | (463,090) |   |   |   |   |   |   |   |   |   |   |   |
|                               | Other                                        | 385                                    |   |   |   | (32) |   |   |   |   |   |   |   |   |   |   |   |
|                               | Ending                  balance              |  $ 5,554,691                 | 5.45   | % |   |  $ 5,086,202  | 5.36 | % |   |   |   |   |   |   |   |   |   |

----

|                                                                                                   |   | March                31, 2006         |      |  December                31, 2005 |   |  September                30, 2005 |   |
|--------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|----------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                   |   | 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                                       |   | $                                     | 5,244,704 |                                   |   | 5.33                                    | %      |   | 94.42 | % | $ | 5,287,943 |   |   | 5.31 | % |   | 94.42 | % | $ | 5,189,006 |   |   | 5.30 | % |   | 94.44 | % |
|      Multi-family                                                             |   |                                  | 43,634    |                                   |   | 6.47                                    |   |   | 0.79 |   |   | 43,744 |   |   | 6.47 |   |   | 0.78 |   |   | 40,636 |   |   | 6.51 |   |   | 0.74 |   |
|      Commercial                                                               |   |                                  | 8,423     |                                   |   | 6.33                                    |   |   | 0.15 |   |   | 8,572 |   |   | 6.33 |   |   | 0.15 |   |   | 8,927 |   |   | 6.42 |   |   | 0.16 |   |
|      Construction                and development                              |   |                                  | 43,459    |                                   |   | 5.39                                    |   |   | 0.78 |   |   | 46,918 |   |   | 5.23 |   |   | 0.84 |   |   | 45,312 |   |   | 5.10 |   |   | 0.82 |   |
|           Total                real estate loans     |   |                                  | 5,340,220 |                                   |   | 5.34                                    |   |   | 96.14 |   |   | 5,387,177 |   |   | 5.32 |   |   | 96.19 |   |   | 5,283,881 |   |   | 5.31 |   |   | 96.16 |   |
|                                                                                                   |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                Loans:                                                                         |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Savings                loans                                             |   |                                  | 7,879     |                                   |   | 5.47                                    |   |   | 0.14 |   |   | 7,829 |   |   | 5.29 |   |   | 0.14 |   |   | 8,377 |   |   | 5.08 |   |   | 0.15 |   |
|      Automobile                                                               |   |                                  | 2,879     |                                   |   | 6.97                                    |   |   | 0.05 |   |   | 2,599 |   |   | 7.00 |   |   | 0.05 |   |   | 2,555 |   |   | 7.05 |   |   | 0.05 |   |
|      Home                equity                                               |   |                                  | 201,517   |                                   |   | 8.24                                    |   |   | 3.63 |   |   | 200,699 |   |   | 7.84 |   |   | 3.58 |   |   | 197,626 |   |   | 7.58 |   |   | 3.60 |   |
|      Other(1)                                                                 |   |                                  | 2,196     |                                   |   | 8.24                                    |   |   | 0.04 |   |   | 2,074 |   |   | 7.78 |   |   | 0.04 |   |   | 1,948 |   |   | 7.84 |   |   | 0.04 |   |
|           Total                consumer loans        |   |                                  | 214,471   |                                   |   | 8.12                                    |   |   | 3.86 |   |   | 213,201 |   |   | 7.74 |   |   | 3.81 |   |   | 210,506 |   |   | 7.48 |   |   | 3.84 |   |
| Total                loans receivable                                                                  |   |                                  | 5,554,691 |                                   |   | 5.45                                    | %      |   | 100.00 | % |   | 5,600,378 |   |   | 5.41 | % |   | 100.00 | % |   | 5,494,387 |   |   | 5.39 | % |   | 100.00 | % |
|                                                                                                   |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                                                                  |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Loans                in process                                          |   |                                  | 15,720    |                                   |   |                                    |   |   |   |   |   | 19,738 |   |   |   |   |   |   |   |   | 14,803 |   |   |   |   |   |   |   |
|      Deferred                fees and discounts                               |   |                                  | 11,466    |                                   |   |                                    |   |   |   |   |   | 10,731 |   |   |   |   |   |   |   |   | 10,856 |   |   |   |   |   |   |   |
|      Allowance                for losses                                      |   |                                  | 4,680     |                                   |   |                                    |   |   |   |   |   | 4,832 |   |   |   |   |   |   |   |   | 4,598 |   |   |   |   |   |   |   |
|           Total                loans receivable, net |   | $                                     | 5,522,825 |                                   |   |                                    |   |   |   |   | $ | 5,565,077 |   |   |   |   |   |   |   | $ | 5,464,130 |   |   |   |   |   |   |   |
|                                                                                                   |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                information:                                                                      |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                serviced for others                                                               |   | $                                     | 408,531   |                                   |   |                                    |   |   |   |   | $ | 426,198 |   |   |   |   |   |   |   | $ | 448,420 |   |   |   |   |   |   |   |

----

|                                                 |   | March                31,              |   |  December                31, |   |  September                30, |   |  March                31, |   |
|------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------|--------|------------------------------------|--------|--------------------------------|--------|
|                                                 |   | 2006                                  |   |  2005                        |   |  2005                         |   |  2005                     |   |
| Asset                quality information:            |   | (Dollars                in thousands) |   |
| Loans                30-89 days delinquent           |   | $                                     | 23,027 |                              | $      | 27,690                             |   | $                              | 25,518 |   | $ | 22,577 |   |
| Non-performing                loans                  |   |                                  | 8,682  |                              |   | 9,558                              |   |                           | 5,158  |   |   | 4,514 |   |
| Real                estate owned                     |   |                                  | 1,932  |                              |   | 1,678                              |   |                           | 1,653  |   |   | 3,245 |   |
| Asset                quality ratios:                 |   |                                  |   |                              |   |                               |   |                           |   |   |   |   |   |
| Non-performing                assets to total assets |   |                                  | 0.13   | %                                 |   | 0.14                               | %      |                           | 0.08   | % |   | 0.09 | % |
| Non-performing                loans to total loans   |   |                                  | 0.16   | %                                 |   | 0.17                               | %      |                           | 0.09   | % |   | 0.09 | % |

----

|                                                               |   | For                the Three Months Ended |   | For                the Six Months Ended |   |
|--------------------------------------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------|--------|
|                                                               |   | March                31,                  |   | March                31,                |   |
|                                                               |   | 2006                                      |   | 2005                                    |   | 2006 |   | 2005 |   |
| Allowance                for loan losses:                          |   | (Dollars                in thousands)     |   |
| Beginning                balance                                   |   | $                                         | 4,832  |                                    | $      | 4,473 |   | $ | 4,598 |   | $ | 4,495 |   |
| Losses                charged against the allowance:               |   |                                      |   |                                    |   |   |   |   |   |   |   |   |   |
|   One-                to four-family loans               |   |                                      | 12     |                                    |   | 16 |   |   | 33 |   |   | 32 |   |
|   Multi-family                loans                      |   |                                      | --     |                                    |   | -- |   |   | -- |   |   | -- |   |
|   Commercial                and other loans              |   |                                      | --     |                                    |   | -- |   |   | -- |   |   | -- |   |
|   Consumer                loans                          |   |                                      | 3      |                                    |   | 7 |   |   | 16 |   |   | 28 |   |
|     Total                charge-offs           |   |                                      | 15     |                                    |   | 23 |   |   | 49 |   |   | 60 |   |
|   Recoveries                                             |   |                                      | 1      |                                    |   | 4 |   |   | 1 |   |   | 19 |   |
|   (Recovery)                provision charged to expense |   |                                      | (138   | )                                       |   | -- |   |   | 130 |   |   | -- |   |
| Ending                balance                                      |   | $                                         | 4,680  |                                    | $      | 4,454 |   | $ | 4,680 |   | $ | 4,454 |   |
|                                                               |   |                                      |   |                                    |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses to non-                   |   |                                      |   |                                    |   |   |   |   |   |   |   |   |   |
|   performing                loans                        |   |                                      |   |                                    |   |   |   |   | 53.91 | % |   | 98.67 | % |
| Allowance                for loan losses to loans                  |   |                                      |   |                                    |   |   |   |   |   |   |   |   |   |
|   receivable,                net                         |   |                                      |   |                                    |   |   |   |   | 0.08 | % |   | 0.09 | % |

----

**Mortgage-Related      Securities. **

|                                        |                                                  | For                the Three Months Ended |
|---------------------------------------------|-------------------------------------------------------|-------------------------------------------|
|                                        |                                                  | March                31, 2006             |   | December                31, 2005 |   | September                30, 2005 |   | June                30, 2005 |
|                                        |                                                  | Amount                                    | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |
| Mortgage-related                securities: | (Dollars                in thousands)                 |
|                                        | Beginning                balance                      |  $ 1,967,564               | 3.84 | % | 3.43 |   |  $ 2,145,254  | 3.71 | % | 3.38 |   |  $ 2,369,765  | 3.78 | % | 2.98 |   |  $ 2,546,091  | 3.81 | % | 3.39 |
|                                        | Maturities                and repayments              | (127,409)                                 |   |   |   |   | (175,734) |   |   |   |   | (221,101) |   |   |   |   | (194,009) |   |   |   |
|                                        | Net                amortization of premiums/discounts | (1,662)                                   |   |   |   |   | (2,439) |   |   |   |   | (3,150) |   |   |   |   | (2,893) |   |   |   |
|                                        | Purchases:                                            |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Fixed                                     | 983                                  | 5.65 |   | 7.88 |   |  --  | -- |   | -- |   | 1,903  | 5.28 |   | 6.20 |   | 17,812  | 5.41 |   | 5.72 |
|                                        | Adjustable-rate                                       |  --                             | -- |   | -- |   |  --  | -- |   | -- |   |  --  | -- |   | -- |   |  --  | -- |   | -- |
|                                        | Change                in valuation on AFS securities  | 117                                  |   |   |   |   | 483  |   |   |   |   | (2,163) |   |   |   |   | 2,764  |   |   |   |
|                                        | Ending                balance                         |  $ 1,839,593               | 4.01 | % | 3.30  |   |  $ 1,967,564  | 3.84 | % | 3.43 |   |  $ 2,145,254  | 3.71 | % | 3.38 |   |  $ 2,369,765  | 3.78 | % | 2.98 |
|                                        |                                                  |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                  | For                the Six Months Ended   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                  | March                31, 2006             |   | March                31, 2005 |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                  | Amount                                    | Yield |   | WAL |   | Amount | Yield |   | WAL |   |   |   |   |   |   |   |   |   |   |
| Mortgage-related                securities: | (Dollars                in thousands)                 |                                      |   |   |   |   |   |   |   |   |   |
|                                        | Beginning                balance                      |  $ 2,145,254               | 3.71 | % | 3.38 |   |  $ 2,648,708  | 3.57 | % | 3.35 |   |   |   |   |   |   |   |   |   |   |
|                                        | Maturities                and repayments              | (303,143)                                 |   |   |   |   | (382,819) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Net                amortization of premiums/discounts | (4,101)                                   |   |   |   |   | (6,110) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Purchases:                                            |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   Fixed                                     | 983                                  | 5.65 |   | 7.88 |   | 99,228  | 4.36 |   | 4.54 |   |   |   |   |   |   |   |   |   |   |
|                                        |   Adjustable-rate                           |  --                             | -- |   | -- |   | 190,563  | 4.50 |   | 9.82 |   |   |   |   |   |   |   |   |   |   |
|                                        | Change                in valuation on AFS securities  | 600                                  |   |   |   |   | (3,479) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Ending                balance                         |  $ 1,839,593               | 4.01 | % | 3.30 |   |  $ 2,546,091  | 3.81 | % | 3.39 |   |   |   |   |   |   |   |   |   |   |

----

**Investment      securities**

|                                  |                                                  | For                the Three Months Ended    |
|---------------------------------------|-------------------------------------------------------|----------------------------------------------|
|                                  |                                                  | March                31, 2006                |   | December                31, 2005 |   | September                30, 2005 |   | June                30, 2005 |
|                                  |                                                  | Amount                                       | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |   | Amount | Yield |   | WAL |
| Investment                securities: | (Dollars                in thousands)                 |
|                                  | Beginning                balance                      |  $    430,517  | 4.54 | % | 2.73 |   |  $    430,499  | 4.54 | % | 2.48 |   |  $    455,497  | 4.59 | % | 1.63 |   |  $    505,617  | 4.65 | % | 3.01 |
|                                  | Maturities                and calls                   | (50,000)                                     |   |   |   |   |  --  |   |   |   |   | (25,000) |   |   |   |   | (50,000) |   |   |   |
|                                  | Net                amortization of premiums/discounts | 1                                       |   |   |   |   | 18  |   |   |   |   | 2  |   |   |   |   | (120) |   |   |   |
|                                  | Ending                balance                         |  $    380,518  | 4.41 | % | 2.84  |   |  $    430,517  | 4.54 | % | 2.73 |   |  $    430,499  | 4.54 | % | 2.48 |   |  $    455,497  | 4.59 | % | 1.63 |
|                                  |                                                  |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | For                the Six Months Ended      |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | March                31, 2006                |   | March                31, 2005 |   |   |   |   |   |   |   |   |   |   |
|                                  |                                                  | Amount                                       | Yield |   | WAL |   | Amount | Yield |   | WAL |   |   |   |   |   |   |   |   |   |   |
| Investment                securities: | (Dollars                in thousands)                 |                                         |   |   |   |   |   |   |   |   |   |
|                                  | Beginning                balance                      |  $    430,499  | 4.54 | % | 2.48 |   |  $    638,079  | 4.89 | % | 1.73 |   |   |   |   |   |   |   |   |   |   |
|                                  | Maturities                and calls                   | (50,000)                                     |   |   |   |   | (132,000) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Net                amortization of premiums/discounts | 19                                      |   |   |   |   | (462) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Ending                balance                         |  $    380,518  | 4.41 | % | 2.84 |   |  $    505,617  | 4.65 | % | 3.01 |   |   |   |   |   |   |   |   |   |   |

----

**Liabilities.**

|                                   |   | At                                    |      |  At                               |   |  At                                |   |  At                           |   |
|----------------------------------------|--------|---------------------------------------|-----------|----------------------------------------|--------|-----------------------------------------|--------|------------------------------------|--------|
|                                   |   | March                31, 2006         |      |  December                31, 2005 |   |  September                30, 2005 |   |  June                30, 2005 |   |
|                                   |   |                                  |      | Average                                |   |  %                of               |   |                          |   | Average |   |  %                of |   |    |   | Average |   |  %                of |   |    |   | Average |   |  %                of |   |
|                                   |   | Amount                                |      | Cost                                   |   |  Total                             |   |  Amount                       |   | Cost |   |  Total |   |  Amount |   | Cost |   |  Total |   |  Amount |   | Cost |   |  Total |   |
|                                   |   | (Dollars                in thousands) |      |
| Checking                               |   | $                                     | 433,913   |                                   |   | 0.21                                    | %      |                               | 10.81  | % | $ | 423,148 |   |   | 0.21 | % |   | 10.75 | % | $ | 398,490 |   |   | 0.21 | % |   | 10.06 | % | $ | 398,493 |   |   | 0.21 | % |   | 9.98 | % |
| Passbook                & passcard |   |                                  | 118,582   |                                   |   | 0.65                                    |   |                               | 2.95   |   |   | 115,075 |   |   | 0.65 |   |   | 2.92 |   |   | 121,133 |   |   | 0.65 |   |   | 3.06 |   |   | 125,209 |   |   | 0.65 |   |   | 3.14 |   |
| Money                market            |   |                                  | 854,350   |                                   |   | 2.53                                    |   |                               | 21.28  |   |   | 869,398 |   |   | 2.32 |   |   | 22.08 |   |   | 873,570 |   |   | 2.06 |   |   | 22.06 |   |   | 908,997 |   |   | 1.94 |   |   | 22.77 |   |
| Certificates                           |   |                                  | 2,608,283 |                                   |   | 3.83                                    |   |                               | 64.96  |   |   | 2,529,616 |   |   | 3.59 |   |   | 64.25 |   |   | 2,567,104 |   |   | 3.35 |   |   | 64.82 |   |   | 2,558,790 |   |   | 3.16 |   |   | 64.11 |   |
| Total                deposits          |   | $                                     | 4,015,128 |                                   |   | 3.07                                    | %      |                               | 100.00 | % | $ | 3,937,237 |   |   | 2.86 | % |   | 100.00 | % | $ | 3,960,297 |   |   | 2.67 | % |   | 100.00 | % | $ | 3,991,489 |   |   | 2.51 | % |   | 100.00 | % |

----

**Stockholders’      Equity. **

| Total                voting shares outstanding at September 30, 2005                                                     |   |            74,286,889  |
|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
| Treasury                stock acquisitions                                                                               |   |                                                                               | (306,837) |
| RRP                grants, net                                                                                           |   |                                                                               | 22,500 |
| Options                exercised, net                                                                                    |   |                                                                               | 141,300 |
| Total                voting shares outstanding at March 31, 2006                                                         |   |            74,143,852  |
| Unvested                shares in ESOP                                                                                   |   |                                                                               | (1,613,108) |
| Shares                held by MHC                                                                                        |   |                                                                               | (52,192,817) |
| Total                shares eligible to receive dividends at March 31, 2006 (“public                shares”) |   |            20,337,927  |

----

|                                                     |   | Calendar                Year                                    |       |
|----------------------------------------------------------|--------|-----------------------------------------------------------------|------------|
|                                                     |   | 2006                                                            |       | 2005 |   | 2004 |   |
|                                                     |   | (Dollars                in thousands, except per share amounts) |       |
| Quarter                ended March 31                    |   |                                                            |       |   |   |   |   |   |   |   |
| Number                of dividend shares                 |   |                                                            | 20,457,283 |   |   | 20,634,728 |   |   | 19,220,972 |   |
| Dividend                per share                        |   | $                                                               | 0.50       |   | $ | 0.50 |   | $ | 0.50 |   |
| Total                dividends paid                      |   | $                                                               | 10,229     |   | $ | 10,317 |   | $ | 9,610 |   |
| Quarter                ended June 30                     |   |                                                            |       |   |   |   |   |   |   |   |
| Number                of dividend shares                 |   |                                                            | 20,252,820 |   |   | 20,393,519 |   |   | 19,633,381 |   |
| Dividend                per share                        |   | $                                                               | 0.50       |   | $ | 0.50 |   | $ | 0.50 |   |
| Total                dividends paid                      |   | $                                                               | 10,126     |   | $ | 10,197 |   | $ | 9,817 |   |
| Quarter                ended September 30                |   |                                                            |       |   |   |   |   |   |   |   |
| Number                of dividend shares                 |   |                                                            |       |   |   | 20,363,619 |   |   | 19,777,200 |   |
| Dividend                per share                        |   |                                                            |       |   | $ | 0.50 |   | $ | 0.50 |   |
| Total                dividends paid                      |   |                                                            |       |   | $ | 10,182 |   | $ | 9,889 |   |
| Quarter                ended December 31                 |   |                                                            |       |   |   |   |   |   |   |   |
| Number                of dividend shares                 |   |                                                            |       |   |   | 20,483,464 |   |   | 20,051,788 |   |
| Dividend                per share                        |   |                                                            |       |   | $ | 0.50 |   | $ | 0.50 |   |
| Total                dividends paid                      |   |                                                            |       |   | $ | 10,242 |   | $ | 10,026 |   |
| Special                year end dividend                 |   |                                                            |       |   |   |   |   |   |   |   |
| Number                of dividend shares                 |   |                                                            |       |   |   | 20,483,464 |   |   |   |   |
| Dividend                per share                        |   |                                                            |       |   | $ | 0.30 |   | $ | -- |   |
| Total                dividends paid                      |   |                                                            |       |   | $ | 6,145 |   | $ | -- |   |
|                                                     |   |                                                            |       |   |   |   |   |   |   |   |
| Calendar                year-to-date dividends per share |   | $                                                               | 1.00       |   | $ | 2.30 |   | $ | 2.00 |   |

----

|                                                                     |   | For                the Three Months Ended |      |
|--------------------------------------------------------------------------|--------|-------------------------------------------|-----------|
|                                                                     |   | March                31, 2006             |      | December                31, 2005 |   | September                30, 2005 |   | March                31, 2005 |   |
|                                                                     |   | Average                                   |      |   |   | Average |   |   |   | Average |   |   |   | Average |   |   |   |
|                                                                     |   | Outstanding                               |      | Yield/ |   | Outstanding |   | Yield/ |   | Outstanding |   | Yield/ |   | Outstanding |   | Yield/ |   |
|                                                                     |   | Balance                                   |      | Rate |   | Balance |   | Rate |   | Balance |   | Rate |   | Balance |   | Rate |   |
| Assets:                                                                  |   | (Dollars                in thousands)     |      |
|   Interest-earning                assets:                      |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Loans                receivable (1)        |   | $                                         | 5,538,579 |   |   | 5.46 | % | $ | 5,544,057 |   |   | 5.42 | % | $ | 5,315,738 |   |   | 5.40 | % | $ | 4,955,593 |   |   | 5.42 | % |
|      Mortgage-related                securities |   |                                      | 1,914,287 |   |   | 3.96 |   |   | 2,067,450 |   |   | 3.74 |   |   | 2,276,926 |   |   | 3.59 |   |   | 2,622,631 |   |   | 3.71 |   |
|      Investment                securities       |   |                                      | 397,463   |   |   | 4.45 |   |   | 430,505 |   |   | 4.55 |   |   | 434,297 |   |   | 4.56 |   |   | 553,954 |   |   | 4.74 |   |
|      Cash                and cash equivalents   |   |                                      | 57,048    |   |   | 4.30 |   |   | 8,658 |   |   | 3.62 |   |   | 56,697 |   |   | 3.29 |   |   | 52,738 |   |   | 2.34 |   |
|      Capital                stock of FHLB       |   |                                      | 184,670   |   |   | 5.43 |   |   | 182,262 |   |   | 5.19 |   |   | 180,143 |   |   | 4.71 |   |   | 175,984 |   |   | 4.49 |   |
|   Total                interest-earning assets (1)             |   |                                      | 8,092,047 |   |   | 5.05 |   |   | 8,232,932 |   |   | 4.95 |   |   | 8,263,801 |   |   | 4.83 |   |   | 8,360,900 |   |   | 4.80 |   |
|   Other                noninterest-earning assets              |   |                                      | 152,641   |   |   |   |   |   | 142,423 |   |   |   |   |   | 155,077 |   |   |   |   |   | 175,421 |   |   |   |   |
| Total                assets                                              |   | $                                         | 8,244,688 |   |   |   |   | $ | 8,375,355 |   |   |   |   | $ | 8,418,878 |   |   |   |   | $ | 8,536,321 |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and stockholders' equity:                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                liabilities:                 |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                   |   | $                                         | 3,953,841 |   |   | 2.97 |   | $ | 3,898,896 |   |   | 2.77 |   | $ | 3,968,963 |   |   | 2.60 |   | $ | 4,106,217 |   |   | 2.33 |   |
|      FHLB                advances (2)           |   |                                      | 3,268,757 |   |   | 4.68 |   |   | 3,441,450 |   |   | 4.53 |   |   | 3,436,204 |   |   | 4.37 |   |   | 3,441,798 |   |   | 4.09 |   |
|      Borrowings,                other           |   |                                      | 53,193    |   |   | 7.47 |   |   | 53,415 |   |   | 6.99 |   |   | 53,401 |   |   | 6.45 |   |   | 53,372 |   |   | 5.50 |   |
|   Total                interest-bearing liabilities            |   |                                      | 7,275,791 |   |   | 3.77 |   |   | 7,393,761 |   |   | 3.62 |   |   | 7,458,568 |   |   | 3.44 |   |   | 7,601,387 |   |   | 3.15 |   |
|   Other                noninterest-bearing liabilities         |   |                                      | 105,852   |   |   |   |   |   | 116,026 |   |   |   |   |   | 95,046 |   |   |   |   |   | 83,399 |   |   |   |   |
|   Stockholders'                equity                          |   |                                      | 863,045   |   |   |   |   |   | 865,568 |   |   |   |   |   | 865,264 |   |   |   |   |   | 851,535 |   |   |   |   |
| Total                liabilities and                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       stockholders'                equity  |   | $                                         | 8,244,688 |   |   |   |   | $ | 8,375,355 |   |   |   |   | $ | 8,418,878 |   |   |   |   | $ | 8,536,321 |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Net                interest rate spread                                            |   |   |    |   |   | 1.28   | %      |   |    |   |   | 1.33   | %      |   |    |   |   | 1.39   | %      |   |    |   |   | 1.65   | %      |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| Net                interest-earning assets                                         |   | $      | 816,256 |   |   |   |   | $      | 839,171 |   |   |   |   | $      | 805,233 |   |   |   |   | $      | 759,513 |   |   |   |   |
| Net                interest margin                                                 |   |   |    |   |   | 1.67   | %      |   |    |   |   | 1.64   | %      |   |    |   |   | 1.68   | %      |   |    |   |   | 1.95   | %      |
| Ratio                of interest-earning assets                                    |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |
|       to                interest-bearing liabilities |   |   |    |   |   | 1.11   |   |   |    |   |   | 1.11   |   |   |    |   |   | 1.11   |   |   |    |   |   | 1.10   |   |
|                                                                               |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |
| Selected                performance ratios:                                        |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |   |    |   |   |   |   |
|   Return                on average assets (annualized)                   |   |   |    |   |   | 0.66   | %      |   |    |   |   | 0.64   | %      |   |    |   |   | 0.61   | %      |   |    |   |   | 0.82   | %      |
|   Return                on average equity (annualized)                   |   |   |    |   |   | 6.30   | %      |   |    |   |   | 6.15   | %      |   |    |   |   | 5.94   | %      |   |    |   |   | 8.21   | %      |
|   Average                equity to average assets                        |   |   |    |   |   | 10.47  | %      |   |    |   |   | 10.33  | %      |   |    |   |   | 10.28  | %      |   |    |   |   | 9.98   | %      |

----

|                                                                       |   | For                  the Three Months Ended                       |    |
|----------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                                       |   | March                  31,                                        |    | December                  31, |   | September                  30, |   | June                  30, |   | March                  31, |   |
|                                                                       |   | 2006                                                              |    | 2005 |   | 2005 |   | 2005 |   | 2005 |   |
| Selected                  income statement data:                           |   | (Dollars                  in thousands, except per share amounts) |
| Interest                  and dividend income:                             |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loans                  receivable                              |   | $                                                                 | 75,505  |   | $ | 75,160 |   | $ | 71,785 |   | $ | 69,436 |   | $ | 67,028 |   |
|   Mortgage-related                  securities                   |   |                                                              | 18,950  |   |   | 19,344 |   |   | 20,462 |   |   | 22,656 |   |   | 24,353 |   |
|   Investment                  securities                         |   |                                                              | 4,425   |   |   | 4,894 |   |   | 4,947 |   |   | 5,784 |   |   | 6,563 |   |
|   Other                  interest and                            |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     dividend                  income                   |   |                                                              | 3,078   |   |   | 2,462 |   |   | 2,610 |   |   | 2,447 |   |   | 2,252 |   |
|      Total                  interest and          |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        dividend                  income |   |                                                              | 101,958 |   |   | 101,860 |   |   | 99,804 |   |   | 100,323 |   |   | 100,196 |   |
|                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense:                                         |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits                                                       |   |                                                              | 28,974  |   |   | 27,245 |   |   | 26,016 |   |   | 24,267 |   |   | 23,644 |   |
|   FHLB                  advances                                 |   |                                                              | 38,176  |   |   | 39,804 |   |   | 38,197 |   |   | 36,496 |   |   | 34,961 |   |
|   Other                  borrowings                              |   |                                                              | 993     |   |   | 955 |   |   | 880 |   |   | 808 |   |   | 734 |   |
|      Total                  interest expense      |   |                                                              | 68,143  |   |   | 68,004 |   |   | 65,093 |   |   | 61,571 |   |   | 59,339 |   |
|                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Recovery)                  provision for loan losses                      |   |                                                              | (138    | ) |   | 268 |   |   | 215 |   |   | -- |   |   | -- |   |
|                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest and                                          |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      dividend                  income             |   |                                                              | 33,953  |   |   | 33,588 |   |   | 34,496 |   |   | 38,752 |   |   | 40,857 |   |
|                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income                                              |   |                                                              | 6,022   |   |   | 5,850 |   |   | 5,939 |   |   | 6,076 |   |   | 5,502 |   |
| Other                  expenses                                            |   |                                                              | 17,943  |   |   | 17,600 |   |   | 19,281 |   |   | 18,770 |   |   | 18,010 |   |
| Income                  tax expense                                        |   |                                                              | 8,445   |   |   | 8,525 |   |   | 8,310 |   |   | 9,898 |   |   | 10,867 |   |
|      Net                  income                  |   | $                                                                 | 13,587  |   | $ | 13,313 |   | $ | 12,844 |   | $ | 16,160 |   | $ | 17,482 |   |
|                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share                                  |   | $                                                                 | 0.19    |   | $ | 0.18 |   | $ | 0.18 |   | $ | 0.22 |   | $ | 0.24 |   |
| Diluted                  earnings per share                                |   | $                                                                 | 0.19    |   | $ | 0.18 |   | $ | 0.18 |   | $ | 0.22 |   | $ | 0.24 |   |
| Dividends                  declared per public share                       |   | $                                                                 | 0.50    |   | $ | 0.80 |   | $ | 0.50 |   | $ | 0.50 |   | $ | 0.50 |   |

----

**Comparison      of Operating Results for the Three Months Ended March 31, 2006 and      2005**

----

----

|                                              |   | Quarter                Ended March 31,      |   |
|---------------------------------------------------|--------|---------------------------------------------|--------|
|                                              |   | 2006                vs. 2005                |   |
|                                              |   | Increase                (Decrease) Due to   |   |
|                                              |   |                                        |   |   |   |   |   |
|                                              |   | Volume                                      |   | Rate |   | Total |   |
|                                              |   | (Dollars                in thousands)  |
| Interest-earning                assets:           |   |                                        |   |   |   |   |   |   |   |   |
| Loans                receivable, net              |   | $                                           | 7,856  |   | $ | 621 |   | $ | 8,477 |   |
| Mortgage-related                securities        |   |                                        | (7,153 | ) |   | 1,750 |   |   | (5,403 | ) |
| Investment                securities              |   |                                        | (1,762 | ) |   | (376 | ) |   | (2,138 | ) |
| Capital                stock of FHLB              |   |                                        | 100    |   |   | 425 |   |   | 525 |   |
| Cash                equivalents                   |   |                                        | 26     |   |   | 275 |   |   | 301 |   |
| Total                interest-earning assets      |   | $                                           | (933   | ) | $ | 2,695 |   | $ | 1,762 |   |
|                                              |   |                                        |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:      |   |                                        |   |   |   |   |   |   |   |   |
| Passbook                and passcard              |   | $                                           | (16    | ) | $ | 3 |   | $ | (13 | ) |
| Checking                and money market          |   |                                        | (220   | ) |   | 1,067 |   |   | 847 |   |
| Certificates                                      |   |                                        | (492   | ) |   | 4,988 |   |   | 4,496 |   |
| FHLB                advances and other borrowings |   |                                        | (1,813 | ) |   | 5,287 |   |   | 3,474 |   |
| Total                interest-bearing liabilities |   | $                                           | (2,541 | ) | $ | 11,345 |   | $ | 8,804 |   |
|                                              |   |                                        |   |   |   |   |   |   |   |   |
| Net                change in net interest income  |   | $                                           | 1,608  |   | $ | (8,650 | ) | $ | (7,042 | ) |

----

**Comparison      of Operating Results for the Three Months Ended March 31, 2006 and December      31,      2005**

----

----

|                                              |   | Quarter                Ended                        |   |
|---------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                              |   | March                31, 2006 vs. December 31, 2005 |   |
|                                              |   | Increase                (Decrease) Due to           |   |
|                                              |   |                                                |   |   |   |   |   |
|                                              |   | Volume                                              |   | Rate |   | Total |   |
|                                              |   | (Dollars                in thousands)               |   |
| Interest-earning                assets:           |   |                                                |   |   |   |   |   |
| Loans                receivable, net              |   | $                                                   | (45    | ) | $ | 390 |   | $ | 345 |   |
| Mortgage-related                securities        |   |                                                | (1,817 | ) |   | 1,423 |   |   | (394 | ) |
| Investment                securities              |   |                                                | (370   | ) |   | (99 | ) |   | (469 | ) |
| Capital                stock of FHLB              |   |                                                | 20     |   |   | 69 |   |   | 89 |   |
| Cash                equivalents                   |   |                                                | 509    |   |   | 18 |   |   | 527 |   |
| Total                interest-earning assets      |   | $                                                   | (1,703 | ) | $ | 1,801 |   | $ | 98 |   |
|                                              |   |                                                |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:      |   |                                                |   |   |   |   |   |   |   |   |
| Passbook                and passcard              |   | $                                                   | (4     | ) | $ | 17 |   | $ | 13 |   |
| Checking                and money market          |   |                                                | (7     | ) |   | 143 |   |   | 136 |   |
| Certificates                                      |   |                                                | 375    |   |   | 1,205 |   |   | 1,580 |   |
| FHLB                advances and other borrowings |   |                                                | (1,935 | ) |   | 345 |   |   | (1,590 | ) |
| Total                interest-bearing liabilities |   | $                                                   | (1,571 | ) | $ | 1,710 |   | $ | 139 |   |
|                                              |   |                                                |   |   |   |   |   |   |   |   |
| Net                change in net interest income  |   | $                                                   | (132   | ) | $ | 91 |   | $ | (41 | ) |

**Comparison      of Operating Results for the Six Months Ended March 31, 2006 and      2005**

----

----

|                                                                               |   | For                the Six Months Ended |      |
|------------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|
|                                                                               |   | March                31, 2006           |      | March                31, 2005 |   |
|                                                                               |   | Average                                 |      |   |   | Average |   |   |   |
|                                                                               |   | Outstanding                             |      | Yield/ |   | Outstanding |   | Yield/ |   |
|                                                                               |   | Balance                                 |      | Rate |   | Balance |   | Rate |   |
| Assets:                                                                            |   | (Dollars                in thousands)   |
|   Interest-earning                assets:                                |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
|      Loans                receivable (1)                  |   | $                                       | 5,541,348 |   |   | 5.44 | % | $ | 4,885,452 |   |   | 5.44 | % |
|      Mortgage-related                securities           |   |                                    | 1,991,710 |   |   | 3.85 |   |   | 2,663,854 |   |   | 3.65 |   |
|      Investment                securities                 |   |                                    | 414,166   |   |   | 4.50 |   |   | 593,411 |   |   | 4.82 |   |
|      Cash                and cash equivalents             |   |                                    | 32,587    |   |   | 4.21 |   |   | 50,864 |   |   | 2.02 |   |
|      Capital                stock of FHLB                 |   |                                    | 183,453   |   |   | 5.31 |   |   | 175,055 |   |   | 4.34 |   |
|   Total                interest-earning assets (1)                       |   |                                    | 8,163,264 |   |   | 5.00 |   |   | 8,368,636 |   |   | 4.78 |   |
|   Other                noninterest-earning assets                        |   |                                    | 145,106   |   |   |   |   |   | 183,262 |   |   |   |   |
| Total                assets                                                        |   | $                                       | 8,308,370 |   |   |   |   | $ | 8,551,898 |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and stockholders' equity:                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                liabilities:                           |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                             |   | $                                       | 3,926,067 |   |   | 2.87 |   | $ | 4,117,983 |   |   | 2.28 |   |
|      FHLB                advances (2)                     |   |                                    | 3,356,052 |   |   | 4.60 |   |   | 3,446,028 |   |   | 4.02 |   |
|      Borrowings,                other                     |   |                                    | 53,305    |   |   | 7.23 |   |   | 53,366 |   |   | 5.21 |   |
|   Total                interest-bearing liabilities                      |   |                                    | 7,335,424 |   |   | 3.69 |   |   | 7,617,377 |   |   | 3.09 |   |
|   Other                noninterest-bearing liabilities                   |   |                                    | 108,344   |   |   |   |   |   | 88,972 |   |   |   |   |
|   Stockholders'                equity                                    |   |                                    | 864,602   |   |   |   |   |   | 845,549 |   |   |   |   |
| Total                liabilities and stockholders' equity                          |   | $                                       | 8,308,370 |   |   |   |   | $ | 8,551,898 |   |   |   |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
| Net                interest rate spread                                            |   |                                    |      |   |   | 1.31 | % |   |   |   |   | 1.69 | % |
| Net                interest-earning assets                                         |   | $                                       | 827,840   |   |   |   |   | $ | 751,259 |   |   |   |   |
| Net                interest margin                                                 |   |                                    |      |   |   | 1.66 | % |   |   |   |   | 1.97 | % |
| Ratio                of interest-earning assets                                    |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
|       to                interest-bearing liabilities |   |                                    |      |   |   | 1.11 |   |   |   |   |   | 1.10 |   |
|                                                                               |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
| Selected                Performance Ratios:                                        |   |                                    |      |   |   |   |   |   |   |   |   |   |   |
|   Return                on average assets (annualized)                   |   |                                    |      |   |   | 0.65 | % |   |   |   |   | 0.84 | % |
|   Return                on average equity (annualized)                   |   |                                    |      |   |   | 6.22 | % |   |   |   |   | 8.53 | % |
|   Average                equity to average assets                        |   |                                    |      |   |   | 10.41 | % |   |   |   |   | 9.89 | % |

----

|                                              |   | For                the Six Months Ended          |    |
|---------------------------------------------------|--------|--------------------------------------------------|---------|
|                                              |   | March                31, 2006 vs. March 31, 2005 |    |
|                                              |   | Increase                (Decrease) Due to        |    |
|                                              |   |                                             |    |   |   |   |   |
|                                              |   | Volume                                           |    | Rate |   | Total |   |
|                                              |   | (Dollars                in thousands)            |    |
| Interest-earning                assets:           |   |                                             |    |   |   |   |   |   |   |   |
| Loans                receivable, net              |   | $                                                | 17,621  |   | $ | 293 |   | $ | 17,914 |   |
| Mortgage-related                securities        |   |                                             | (13,195 | ) |   | 2,865 |   |   | (10,330 | ) |
| Investment                securities              |   |                                             | (4,086  | ) |   | (903 | ) |   | (4,989 | ) |
| Capital                stock of FHLB              |   |                                             | 189     |   |   | 883 |   |   | 1,072 |   |
| Cash                equivalents                   |   |                                             | (86     | ) |   | 257 |   |   | 171 |   |
| Total                interest-earning assets      |   | $                                                | 443     |   | $ | 3,395 |   | $ | 3,838 |   |
|                                              |   |                                             |    |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:      |   |                                             |    |   |   |   |   |   |   |   |
| Passbook                and passcard              |   | $                                                | (27     | ) | $ | (6 | ) | $ | (33 | ) |
| Checking                and money market          |   |                                             | (371    | ) |   | 2,467 |   |   | 2,096 |   |
| Certificates                                      |   |                                             | (1,618  | ) |   | 9,058 |   |   | 7,440 |   |
| FHLB                advances and other borrowings |   |                                             | (2,164  | ) |   | 11,271 |   |   | 9,107 |   |
| Total                interest-bearing liabilities |   | $                                                | (4,180  | ) | $ | 22,790 |   | $ | 18,610 |   |
|                                              |   |                                             |    |   |   |   |   |   |   |   |
| Net                change in net interest income  |   | $                                                | 4,623   |   | $ | (19,395 | ) | $ | (14,772 | ) |

**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 |   |
|                                                               |   | (Dollars                in thousands) |      |
| FHLB                advances                                       |   | $                                     | 3,250,000 |   | $ | 200,000 |   | $ | 1,975,000 |   | $ | 1,075,000 |   | $ | -- |   |
|                                                               |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates                of deposit                             |   |                                  | 2,608,283 |   |   | 1,474,420 |   |   | 1,024,502 |   |   | 94,650 |   |   | 14,711 |   |
|                                                               |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments                to originate and                        |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     purchase                mortgage loans     |   |                                  | 156,009   |   |   | 156,009 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                               |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments                to fund unused                          |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     home                equity lines of credit |   |                                  | 275,264   |   |   | 275,264 |   |   | -- |   |   | -- |   |   | -- |   |
|                                                               |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unadvanced                portion of                               |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     construction                loans          |   |                                  | 15,720    |   |   | 15,720 |   |   | -- |   |   | -- |   |   | -- |   |

**Contingencies**

----

**Capital**

|                                     |   |   |   | Regulatory                               |   |
|------------------------------------------|--------|--------|--------|------------------------------------------|--------|
|                                     |   |   |   | Requirement                              |   |
|                                     |   | Bank   |   | For                “Well           |   |
|                                     |   | Ratios |   | Capitalized”                Status |   |
| Core                capital              |   |   | 9.5    | %                                        |   | 5.0 | % |
| Tier                I risk-based capital |   |   | 21.8   |                                     |   | 6.0 |   |
| Total                risk-based capital  |   |   | 21.7   |                                     |   | 10.0 |   |

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

----

| **Percentage                  Change in Net Interest Income (next four                  quarters)** |
|-----------------------------------------------------------------------------------------------------|
| Change                                                                                              |   | At |
| (in                  Basis Points)                                                                  |   | March                  31, |   | December                  31, |   | September                  30, |   | June                  30, |   | March                  31, |
| in                  Interest Rates(1)                                                          |   | 2006 |   | 2005 |   | 2005 |   | 2005 |   | 2005 |
| -300                  bp                                                                            |   | n/m(2) |   | n/m(2) |   | n/m(2) |   | n/m(2) |   | n/m(2) |
| -200                  bp                                                                            |   | 3.51 |   | 4.12 |   | 1.53 |   | -2.31 |   | n/m(2) |
| -100                  bp                                                                            |   | 4.88 |   | 5.87 |   | 4.48 |   | 1.83 |   | 4.10 |
| 0                  bp                                                                               |   | -- |   | -- |   | -- |   | -- |   | -- |
| +100                  bp                                                                  |   | -6.66 |   | -9.11 |   | -8.97 |   | -7.74 |   | -8.45 |
| +200                  bp                                                                  |   | -14.76 |   | -19.80 |   | -19.47 |   | -17.37 |   | -18.11 |
| +300                  bp                                                                  |   | -23.43 |   | -31.26 |   | -30.76 |   | -27.94 |   | -28.37 |

----

| **Percentage                Change in MVPE** |   |                     |   |                        |   |                         |
|----------------------------------------------|--------|--------------------------|--------|-----------------------------|--------|------------------------------|
| Change                                       |   | At                       |
| (in                Basis Points)             |   | March                31, |   | December                31, |   | September                30, |   | June                30, |   | March                31, |
| in                Interest Rates(1)     |   | 2006                     |   | 2005                        |   | 2005                         |   | 2005 |   | 2005 |
| -300                bp                       |   | n/m(2)                   |   | n/m(2)                      |   | n/m(2)                       |   | n/m(2) |   | n/m(2) |
| -200                bp                       |   | 5.43                     |   | 1.84                        |   | -3.08                        |   | -10.71 |   | n/m(2) |
| -100                bp                       |   | 7.81                     |   | 6.30                        |   | 2.89                         |   | -2.70 |   | 2.09 |
| 0                bp                          |   | --                       |   | --                          |   | --                           |   | -- |   | -- |
| +100                bp             |   | -12.48                   |   | -13.09                      |   | -11.68                       |   | -8.60 |   | -9.90 |
| +200                bp             |   | -26.77                   |   | -28.60                      |   | -26.22                       |   | -20.91 |   | -21.66 |
| +300                bp             |   | -42.78                   |   | -45.47                      |   | -41.87                       |   | -34.89 |   | -34.47 |

----

**Gap      Table**

|                                                                               |   | 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                                                                      |
|------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------------------------------------|
|                                                                               |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Interest-earning                    assets(1):                                     |   |                                                                       |                                                                       | (Dollars                    in thousands)                                  |                                                                       |                                                                       |                                                                       |
|    Loans                    receivable(2):                          |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
|         Mortgage                    loans: |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Fixed                                                                              |   |  $         167,210  |  $         410,542  |  $         851,527  |  $         611,179  |  $      1,347,379                  |  $      3,387,837                  |
| Adjustable                                                                         |   | 176,722                                                               | 521,820                                                               | 671,962                                                               | 551,459                                                               | 10,532                                                                | 1,932,495                                                             |
|         Other                    loans     |   | 164,526                                                               | 5,521                                                                 | 8,839                                                                 | 5,341                                                                 | 29,984                                                                | 214,211                                                               |
| Securities:                                                                        |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Non-mortgage(3)                                                                    |   | 140,518                                                               |  --                                                         | 190,000                                                               |  --                                                         | 50,000                                                                | 380,518                                                               |
| Mortgage-related                    securities(4)                                  |   | 153,190                                                               | 439,933                                                               | 662,176                                                               | 323,031                                                               | 261,263                                                               | 1,839,593                                                             |
| Other                    interest-earning assets                                   |   | 166,200                                                               |  --                                                         |  --                                                         |  --                                                         |  --                                                         | 166,200                                                               |
| Total                    interest-earning assets                                   |   | 968,366                                                               | 1,377,816                                                             | 2,384,504                                                             | 1,491,010                                                             | 1,699,158                                                             | 7,920,854                                                             |
|                                                                               |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Interest-bearing                    liabilities:                                   |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Deposits:                                                                          |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Passbook                    and passcard(5)                                        |   | 2,461                                                                 | 7,382                                                                 | 19,922                                                                | 16,721                                                                | 72,096                                                                | 118,582                                                               |
| Checking                    (5)                                                    |   | 9,455                                                                 | 28,366                                                                | 71,355                                                                | 59,469                                                                | 265,268                                                               | 433,913                                                               |
| Money                    market (5)                                                |   | 37,805                                                                | 113,415                                                               | 204,190                                                               | 156,915                                                               | 342,025                                                               | 854,350                                                               |
| Certificates                                                                       |   | 585,102                                                               | 889,318                                                               | 1,024,502                                                             | 94,650                                                                | 14,711                                                                | 2,608,283                                                             |
| Borrowings                                                                         |   | 800,000                                                               | 200,000                                                               | 1,450,000                                                             | 800,000                                                               | 16,780                                                                | 3,266,780                                                             |
| Total                    interest-bearing liabilities                              |   | 1,434,823                                                             | 1,238,481                                                             | 2,769,969                                                             | 1,127,755                                                             | 710,880                                                               | 7,281,908                                                             |
|                                                                               |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Excess                    (deficiency) of interest-earning assets over             |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
|   interest-bearing                    liabilities                        |   |  $       (466,457)                 |  $         139,335  |  $       (385,465)                 |  $         363,255  |  $         988,278  |  $         638,946  |
|                                                                               |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Cumulative                    excess (deficiency) of interest-earning              |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
|   assets                    over interest-bearing liabilities            |   |  $       (466,457)                 |  $       (327,122)                 |  $       (712,587)                 |  $       (349,332)                 |  $         638,946  |                                                                       |
|                                                                               |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
| Cumulative                    excess (deficiency) of interest-earning              |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
|   assets                    over interest-bearing liabilities as a       |   |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |                                                                       |
|   percent                    of total assets at March 31, 2006           |   | (5.65)%                                                                    | (3.96)%                                                                    | (8.64)%                                                                    | (4.23)%                                                                    | 7.74%                                                                      |                                                                       |
| Cumulative                    one-year gap at September 30, 2005                   |   |                                                                       | (4.01)                                                      |                                                                       |                                                                       |                                                                       |                                                                       |
| Cumulative                    one-year gap at September 30, 2004                   |   |                                                                       | (5.54)                                                      |                                                                       |                                                                       |                                                                       |                                                                       |

----

|     |   | March                31, 2006         |    |
|----------|--------|---------------------------------------|---------|
|     |   |                                  |    |   |   | 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     |   | $                                     | (8,466  | ) | $ | 225,000 |   |   | 4.63 | % |   | 2.41 | % |   | 7.04 | % |   | 5.68 | % |   | (1.36 | )% |
| 2010     |   |                                  | (28,192 | ) |   | 575,000 |   |   | 4.63 |   |   | 2.51 |   |   | 7.14 |   |   | 6.35 |   |   | (0.79 | ) |
|     |   | $                                     | (36,658 | ) | $ | 800,000 |   |   | 4.63 | % |   | 2.48 | % |   | 7.11 | % |   | 6.16 | % |   | (0.95 | )% |

----

**Changes      in portfolio composition.**

|                                                               |   | For                the Three Months Ended |    |  For                the Three Months Ended |   |
|--------------------------------------------------------------------|--------|-------------------------------------------|---------|-------------------------------------------------|--------|
|                                                               |   | March                31, 2006             |    |  March                31, 2005             |   |
|                                                               |   | Amount                                    |    | Rate                                            |   | %                of Total |   |  Amount |   | Rate |   | %                of Total |   |
| Fixed-rate:                                                        |   | (Dollars                in thousands)     |    |
|    One-                to four-family               |   |                                      |    |                                            |   |   |   |    |   |   |   |   |   |
|       <=                15 years  |   | $                                         | 16,946  |                                            |   | 5.65 | % |   | 8.28 | % | $ | 35,264 |   |   | 5.00 | % |   | 9.36 | % |
|       >                15 years   |   |                                      | 79,795  |                                            |   | 6.05 |   |   | 38.99 |   |   | 64,515 |   |   | 5.59 |   |   | 17.12 |   |
|    Other                real estate                 |   |                                      | 640     |                                            |   | 6.25 |   |   | 0.31 |   |   | 2,858 |   |   | 6.65 |   |   | 0.76 |   |
|    Consumer                                         |   |                                      | 10,530  |                                            |   | 7.57 |   |   | 5.15 |   |   | 4,999 |   |   | 6.94 |   |   | 1.33 |   |
|     Total                fixed-rate            |   |                                      | 107,911 |                                            |   | 6.14 |   |   | 52.73 |   |   | 107,636 |   |   | 5.49 |   |   | 28.57 |   |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate:                                                   |   |                                      |    |                                            |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
|    One-                to four-family               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                36 months |   |                                      | 7,410   |                                            |   | 5.21 |   |   | 3.62 |   |   | 50,329 |   |   | 4.64 |   |   | 13.36 |   |
|       >                36 months  |   |                                      | 65,394  |                                            |   | 5.41 |   |   | 31.95 |   |   | 194,114 |   |   | 4.80 |   |   | 51.53 |   |
|    Consumer                                         |   |                                      | 23,942  |                                            |   | 8.30 |   |   | 11.70 |   |   | 24,635 |   |   | 6.21 |   |   | 6.54 |   |
|     Total                adjustable-rate       |   |                                      | 96,746  |                                            |   | 6.11 |   |   | 47.27 |   |   | 269,078 |   |   | 4.90 |   |   | 71.43 |   |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loan originations and purchases               |   | $                                         | 204,657 |                                            |   | 6.12 | % |   | 100.00 | % | $ | 376,714 |   |   | 5.07 | % |   | 100.00 | % |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchased                loans included above:                     |   |                                      |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fixed-rate                purchased loans              |   | $                                         | 11,793  |                                            |   | 6.12 | % |   |   |   | $ | 14,611 |   |   | 5.35 | % |   |   |   |
|   Adjustable-rate                purchased loans         |   | $                                         | 42,124  |                                            |   | 5.34 | % |   |   |   | $ | 199,940 |   |   | 4.82 | % |   |   |   |

----

|                                                               |   | For                the Six-Months Ended |    |  For                the Six-Months Ended |   |
|--------------------------------------------------------------------|--------|-----------------------------------------|---------|-----------------------------------------------|--------|
|                                                               |   | March                31, 2006           |    |  March                31, 2005           |   |
|                                                               |   | Amount                                  |    | Rate                                          |   | %                of Total |   |  Amount |   | Rate |   | %                of Total |   |
| Fixed-Rate:                                                        |   | (Dollars                in thousands)   |    |
|    One-                to four-family               |   |                                    |    |                                          |   |   |   |    |   |   |   |   |   |
|       <=                15 years  |   | $                                       | 56,607  |                                          |   | 5.46 | % |   | 10.28 | % | $ | 139,812 |   |   | 5.01 | % |   | 18.52 | % |
|       >                15 years   |   |                                    | 192,631 |                                          |   | 5.92 |   |   | 35.00 |   |   | 162,629 |   |   | 5.59 |   |   | 21.54 |   |
|    Other                real estate                 |   |                                    | 6,697   |                                          |   | 6.28 |   |   | 1.22 |   |   | 5,358 |   |   | 6.53 |   |   | 0.71 |   |
|    Consumer                                         |   |                                    | 19,851  |                                          |   | 7.50 |   |   | 3.61 |   |   | 10,602 |   |   | 6.87 |   |   | 1.40 |   |
|     Total                fixed-rate            |   |                                    | 275,786 |                                          |   | 5.95 |   |   | 50.11 |   |   | 318,401 |   |   | 5.40 |   |   | 42.17 |   |
|                                                               |   |                                    |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-Rate:                                                   |   |                                    |    |                                          |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
|    One-                to four-family               |   |                                    |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       <=                36 months |   |                                    | 48,529  |                                          |   | 4.75 |   |   | 8.82 |   |   | 92,228 |   |   | 4.43 |   |   | 12.22 |   |
|       >                36 months  |   |                                    | 175,881 |                                          |   | 5.20 |   |   | 31.96 |   |   | 290,144 |   |   | 4.81 |   |   | 38.44 |   |
|    Consumer                                         |   |                                    | 50,118  |                                          |   | 8.00 |   |   | 9.11 |   |   | 54,109 |   |   | 5.94 |   |   | 7.17 |   |
|     Total                adjustable-rate       |   |                                    | 274,528 |                                          |   | 5.63 |   |   | 49.89 |   |   | 436,481 |   |   | 4.87 |   |   | 57.83 |   |
|                                                               |   |                                    |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loan originations and purchases               |   | $                                       | 550,314 |                                          |   | 5.79 | % |   | 100.00 | % | $ | 754,882 |   |   | 5.09 | % |   | 100.00 | % |
|                                                               |   |                                    |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchased                loans included above:                     |   |                                    |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fixed-rate                purchased loans              |   | $                                       | 45,875  |                                          |   | 5.76 | % |   |   |   | $ | 92,744 |   |   | 5.11 | % |   |   |   |
|   Adjustable-rate                purchased loans         |   | $                                       | 158,034 |                                          |   | 5.03 | % |   |   |   | $ | 291,982 |   |   | 4.78 | % |   |   |   |

----

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

|                                  |                                                                                 | March                31, 2006         |   | December                31, 2005 |   | September                30, 2005 |
|---------------------------------------|--------------------------------------------------------------------------------------|---------------------------------------|--------|----------------------------------|--------|-----------------------------------|
|                                  |                                                                                 | Amount                                |   | Rate                             |   |                              | %                of Total |   | Amount |   | Rate |   |   | %                of Total |   | Amount |   | Rate |   |   | %                of Total |
|                                  |                                                                                 | (Dollars                in thousands) |
| Fixed-rate                loans:      |                                                                                 |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | One-                to four- family real estate:                                     |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |       <=                15 years                (1) | $                1,250,761            |   | 5.28                             | %      |                              | 22.52 | % |   | $                1,284,489 |   | 5.28 | % |   | 22.94 | % |   | $                1,300,342 |   | 5.28 | % |   | 23.67 | % |
|                                  |       >                15 years (1)                 | 2,072,941                             |   | 5.88                             |   |                              | 37.32 |   |   | 2,035,421 |   | 5.88 |   |   | 36.34 |   |   | 1,973,285 |   | 5.89 |   |   | 35.91 |   |
|                                  | Other                real estate                                                     | 78,916                                |   | 6.18                             |   |                              | 1.42 |   |   | 80,331 |   | 6.15 |   |   | 1.43 |   |   | 75,405 |   | 6.12 |   |   | 1.38 |   |
|                                  | Consumer                                                                             | 51,401                                |   | 7.29                             |   |                              | 0.92 |   |   | 44,775 |   | 7.19 |   |   | 0.80 |   |   | 39,687 |   | 7.05 |   |   | 0.72 |   |
|                                  |      Total                fixed-rate loans                  | 3,454,019                             |   | 5.69                             |   |                              | 62.18 |   |   | 3,445,016 |   | 5.68 |   |   | 61.51 |   |   | 3,388,719 |   | 5.67 |   |   | 61.68 |   |
|                                  |                                                                                 |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate                loans: |                                                                                 |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | One-                to four- family real estate:                                     |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |       <=                36 months(2)                | 834,587                               |   | 4.70                             |   |                              | 15.02 |   |   | 855,523 |   | 4.66 |   |   | 15.28 |   |   | 825,473 |   | 4.63 |   |   | 15.02 |   |
|                                  |       >                36 months (2)                | 1,086,415                             |   | 4.84                             |   |                              | 19.56 |   |   | 1,112,510 |   | 4.81 |   |   | 19.86 |   |   | 1,089,906 |   | 4.77 |   |   | 19.84 |   |
|                                  | Other                real estate                                                     | 16,600                                |   | 4.94                             |   |                              | 0.30 |   |   | 18,903 |   | 4.71 |   |   | 0.34 |   |   | 19,470 |   | 4.67 |   |   | 0.35 |   |
|                                  | Consumer                                                                             | 163,070                               |   | 8.38                             |   |                              | 2.94 |   |   | 168,426 |   | 7.88 |   |   | 3.01 |   |   | 170,819 |   | 7.58 |   |   | 3.11 |   |
|                                  |      Total                adjustable-rate loans             | 2,100,672                             |   | 5.06                             |   |                              | 37.82 |   |   | 2,155,362 |   | 4.99 |   |   | 38.49 |   |   | 2,105,668 |   | 4.94 |   |   | 38.32 |   |
|                                  |         Total                loans           | 5,554,691                             |   | 5.45                             | %      |                              | 100.00 | % |   | 5,600,378 |   | 5.41 | % |   | 100.00 | % |   | 5,494,387 |   | 5.39 | % |   | 100.00 | % |
|                                  |                                                                                 |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Less:                                                                                |                                  |   |                             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   Loans                in process                                          | 15,720                                |   |                             |   |                              |   |   |   | 19,738 |   |   |   |   |   |   |   | 14,803 |   |   |   |   |   |   |
|                                  |   Deferred                fees and discounts                               | 11,466                                |   |                             |   |                              |   |   |   | 10,731 |   |   |   |   |   |   |   | 10,856 |   |   |   |   |   |   |
|                                  |   Allowance                for loan losses                                 | 4,680                                 |   |                             |   |                              |   |   |   | 4,832 |   |   |   |   |   |   |   | 4,598 |   |   |   |   |   |   |
|                                  |      Total                loans receivable, net             | $                5,522,825            |   |                             |   |                              |   |   |   | $                5,565,077 |   |   |   |   |   |   |   | $                5,464,130 |   |   |   |   |   |   |

| (1)   | Loans                are reported based on their remaining term to maturity as of the                date                indicated. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------|

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

----

|                                                                             |   | March                31, 2006         |      |  December                31, 2005 |   |  September                30, 2005 |   |
|----------------------------------------------------------------------------------|--------|---------------------------------------|-----------|----------------------------------------|--------|-----------------------------------------|--------|
|                                                                             |   | Balance                               |      | Rate                                   |   | Yield                                   |   |  Balance |   | Rate |   | Yield |   |  Balance |   | Rate |   | Yield |   |
|                                                                             |   | (Dollars                in thousands) |      |
| Fixed-rate                investments:                                           |   |                                  |      |                                   |   |                                    |   |    |   |   |   |   |   |    |   |   |   |   |   |
| Agency                bonds                                                      |   | $                                     | 380,518   |                                   |   | 4.42                                    | %      |   | 4.41 | % | $ | 430,517 |   |   | 4.53 | % |   | 4.54 | % | $ | 430,499 |   |   | 4.53 | % |   | 4.54 | % |
| Mortgage-related                securities, at cost                              |   |                                  | 711,309   |                                   |   | 4.54                                    |   |   | 4.57 |   |   | 738,900 |   |   | 4.54 |   |   | 4.57 |   |   | 775,464 |   |   | 4.55 |   |   | 4.57 |   |
|    Total                fixed-rate investments                    |   |                                  | 1,091,827 |                                   |   | 4.50                                    |   |   | 4.51 |   |   | 1,169,417 |   |   | 4.54 |   |   | 4.56 |   |   | 1,205,963 |   |   | 4.54 |   |   | 4.56 |   |
|      WAL                (in years)                      |   |                                  |      |                                   |   | 3.86                                    |   |   |   |   |   | 3.84 |   |   |   |   |   |   |   |   | 3.75 |   |   |   |   |   |   |   |
|                                                                             |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable-rate                investments:                                      |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-related                securities, at cost                              |   |                                  | 1,133,757 |                                   |   | 4.37                                    |   |   | 3.66 |   |   | 1,234,253 |   |   | 4.29 |   |   | 3.40 |   |   | 1,375,862 |   |   | 4.18 |   |   | 3.22 |   |
|    Total                adjustable-rate investments               |   |                                  | 1,133,757 |                                   |   | 4.37                                    |   |   | 3.66 |   |   | 1,234,253 |   |   | 4.29 |   |   | 3.40 |   |   | 1,375,862 |   |   | 4.18 |   |   | 3.22 |   |
|      WAL                (in years)                      |   |                                  |      |                                   |   | 2.61                                    |   |   |   |   |   | 2.79 |   |   |   |   |   |   |   |   | 2.78 |   |   |   |   |   |   |   |
|      Total                investment portfolio, at cost |   | $                                     | 2,225,584 |                                   |   | 4.43                                    | %      |   | 4.08 | % | $ | 2,403,670 |   |   | 4.41 | % |   | 3.96 | % | $ | 2,581,825 |   |   | 4.35 | % |   | 3.85 | % |

|                                         |   | March                31, 2006         |      |  December                31, 2005 |   |  September                30, 2005 |   |
|----------------------------------------------|--------|---------------------------------------|-----------|----------------------------------------|--------|-----------------------------------------|--------|
|                                         |   | Amount                                |      | Rate                                   |   |  Amount                            |   | Rate |   |  Amount |   | Rate |   |
|                                         |   | (Dollars                in thousands) |      |
| Certificates                maturing within: |   |                                  |      |                                   |   |                                    |   |   |   |    |   |   |   |
| 0                to 3 months                 |   | $                                     | 585,102   |                                   |   | 3.57                                    | %      | $ | 489,620 |   |   | 3.41 | % | $ | 495,367 |   |   | 3.04 | % |
| 3                to 6 months                 |   |                                  | 299,494   |                                   |   | 3.66                                    |   |   | 433,208 |   |   | 3.21 |   |   | 398,471 |   |   | 3.15 |   |
| 6                months to one year          |   |                                  | 589,824   |                                   |   | 3.89                                    |   |   | 547,920 |   |   | 3.69 |   |   | 604,548 |   |   | 3.19 |   |
| One                year to two years         |   |                                  | 834,002   |                                   |   | 4.00                                    |   |   | 696,012 |   |   | 3.82 |   |   | 681,637 |   |   | 3.74 |   |
| After                two years               |   |                                  | 299,861   |                                   |   | 3.91                                    |   |   | 362,856 |   |   | 3.70 |   |   | 387,081 |   |   | 3.53 |   |
| Total                certificates            |   | $                                     | 2,608,283 |                                   |   | 3.83                                    | %      | $ | 2,529,616 |   |   | 3.59 | % | $ | 2,567,104 |   |   | 3.35 | % |
|                                         |   |                                  |      |                                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                maturity (in years)   |   |                                  | 1.03      |                                   |   |                                    |   |   | 1.06 |   |   |   |   |   | 1.07 |   |   |   |   |

----

|                       |              |                                         | Actual                rates |                         | Effective                 |   |
|----------------------------|-------------------|----------------------------------------------|-----------------------------|------------------------------|---------------------------|--------|
|                       |              |                                         | without                     |                         | rates                with |   |
| Maturity                by |              | interest                rate                 |                        | interest                rate |                      |
| Fiscal                year | Amount            | swaps                                        |                        | swaps                        |                      |
|                       |              | (Dollars                in thousands)        |                        |                         |                      |   |
|                       | 2007              | $      750,000 | 3.52                        |                         | 3.52                      |   |
|                       | 2008              | 1,125,000                                    | 4.23                        |                         | 4.50                      |   |
|                       | 2009              | 600,000                                      | 4.24                        |                         | 4.24                      |   |
|                       | 2010              | 775,000                                      | 5.90                        |                         | 6.49                      |   |
|                       |   Total | $                3,250,000                   | 4.47                        | %                            | 4.70                      | %      |

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

**Part II -   OTHER      INFORMATION**

**Item      1.  Legal Proceedings**

----

**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(1) | Announced                Plans     | Under                the Plan     |
| January                1, 2006 through             |                     |                        |                               |                              |
|    January                31, 2006  | 20,042                   | 33.19                       | 20,042                             | 432,931                           |
| February                1, 2006 through            |                     |                        |                               |                              |
|    February                28, 2006 | 99,366                   | 32.65                       | 99,366                             | 333,565                           |
| March                1, 2006 through               |                     |                        |                               |                              |
|    March                31, 2006    | 132,190                  | 32.54                       | 132,190                            | 201,375                           |
|      Total                | 251,598                  | 32.64                       | 251,598                            | 201,375                           |

**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 |
|      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 |
|    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) |
|    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) |
|    10.4              |           | Deferred                Incentive Bonus Plan filed on December 31, 2001 as Exhibit 10.4 to                the                Annual Report on |
|                                |           | Form                10-K |
|    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 |
|    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 |
|    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 |
|    10.8              |           | Description                of Named Executive Officer Salary and Bonus Arrangements filed on                December                14, |
|                                |           | 2005                as Exhibit 10.8 to the Annual Report on Form 10-K |
|    10.9              |           | Description                of Director Fee Arrangements filed on February 6, 2006 as Exhibit                10.9 to                the December 31, 2005 Form 10-Q |
|    10.10             |           | Short-term                Performance Plan filed on December 14, 2005 as Exhibit 10.10 to the                Annual |
|                                |           | Report                on Form 10-K |
|    11                |           | Statement                re: computation of earnings per share** |
|    14                |           | Code                of Ethics*** |
|    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, Chief Executive                Officer, and Kent G. Townsend, Chief Financial Officer and Treasurer |

----

----