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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006   OR
 o
    
    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: 0-21231
 UNITED WESTERN BANCORP, INC.
  Colorado
(State or other jurisdiction of incorporation or organization)
    
    84-1233716
(I.R.S. Employer Identification No.)
 700 17th Street, Suite 2100, Denver, Colorado
(Address of principal executive offices)
    
    80202
(Zip Code)
 (303) 595-9898
 None
  Common Stock, par value $.0001 per share
Preferred Share Purchase Rights
 o þ
 þ o
 o
 o þ o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    18Item 1B.
    
    Unresolved Staff Comments
    
    
    26Item 2.
    
    Properties
    
    
    26Item 3.
    
    Legal Proceedings
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    28Item 6.
    
    Selected Financial Data
    
    
    30Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    58Item 8.
    
    Financial Statements and Supplementary Data
    
    
    59Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
    
    
    59Item 9A.
    
    Controls and Procedures
    
    
    59Item 9B.
    
    Other Information
    
    
    59PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    59Item 11.
    
    Executive Compensation
    
    
    59Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    59Item 13.
    
    Certain
Relationships and Related Transactions, and Director Independence
    
    
    59Item 14.
    
    Principal Accountant Fees and Services
    
    
    59PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    59Exhibit 3.2Exhibit 3.3Exhibit 21Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 32.1Exhibit 32.2Exhibit 32.3




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PART I
 
 Item 1. Business
 United Western Bancorp, Inc.
 General.
  Establishment of Community Banking Identity
    Shareholder Value Strategies
  
    
    During the year, we earned fees of approximately $2.2 million for outright
monetization of the $45 million of New Market Tax Credits awarded to the Company in
2004 and we deployed approximately $21 million of such credits into United Western
Bank.
  3




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
    
    During the quarter ended September 30, 2006, we sold the United Western Financial
Center, a high-rise office tower located in downtown Denver, Colorado, for cash to a
third party. We realized a net deferred economic gain of $11.2 million on this sale.
Concurrently with the sale, we leased back office space in the building for a 10 year
period. In accordance with FASB Statement No. 98, the Company will recognize the gain
over the 10-year term of the lease at an anticipated rate of approximately $1.1 million
annually, as a reduction in lease expense. This $1.1 million annual deferred gain
amortization is substantially offset by the rental income that was previously earned by
Matrix Tower Holdings, LLC. Therefore, although the building was sold and rental
receipts will no longer be reflected in future periods, the impact on future operating
results is positive.
    
    In the fourth quarter 2006, we realized a gain of $2.7 million from the exercise of
our put option with respect to our remaining 25% ownership interest in Matrix Asset
Management, LLC.
    
    During the first half of 2006, we divested certain non-core subsidiaries, including
a sale of the assets of Matrix Bancorp Trading, from which we realized a gain included
in income from discontinued operations of $3.9 million, and MTXC Realty, from which we
realized a gain included in gain on sale of assets of $100,000, and the sale of ABS
School Services, LLC, from which we realized a loss included in income from
discontinued operations of $1 million.
 Business Strategy
    The Subsidiaries
  United Western Bank
   4




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Sterling Trust Company.
 Matrix Financial Services Corporation .
 First Matrix Investment Services Corp.
  Lending Activities
 General.
    5




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Community Bank Lending
 Commercial Real Estate Lending.
  Residential and Commercial Construction and Development Lending.
 Commercial Lending.
 Small Business Administration Lending.
  6




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New Market Tax Credits Lending.
 Consumer Lending.
 Wholesale Lending
 Single-family Residence Lending.
   7




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Purchased SBA Guaranteed Loans.
   Other Activities Related to Lendin g
 Sales of Loans.
 Self-Directed Trust and Custody Activities
 Self-Directed Trust and Custody Services.
   8




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Brokerage Services
 First Matrix Investment Services Corp.
 Mortgage Servicing Activities
 Residential Mortgage Loan Servicing.
   9




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Competition
     10




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Employees
  Regulation and Supervision
   United Western Bancorp.
  Change in Bank Control Act.
  11




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Gramm-Leach-Bliley.
  Anti-Money Laundering and USA Patriot Act.
 Office of Foreign Assets Control Regulation.
 Sarbanes-Oxley Act.
  12




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Federal Savings Bank Operations.
 
    
    establishes a comprehensive framework of activities in which United Western Bank can engage;
    
    limits the types and amounts of investments permissible for United Western Bank;
    
    limits the ability of United Western Bank to extend credit to any given borrower;
    
    significantly limits the transactions in which United Western Bank may engage with its affiliates;
    
    requires United Western Bank to meet a qualified thrift lender test that requires United
Western Bank to invest in qualified thrift investments, which include primarily residential
mortgage loans and related investments;
    
    places limitations on capital distributions by savings associations, such as United
Western Bank, including cash dividends;
    
    imposes assessments to the OTS to fund their operations;
    
    establishes a continuing and affirmative obligation, consistent with United Western
Banks safe and sound operation, to help meet the credit needs of its community, including
low and moderate income neighborhoods;
    
    requires United Western Bank to maintain certain noninterest-bearing reserves against
its transaction accounts;
    
    establishes various capital categories resulting in various levels of regulatory
scrutiny applied to the institutions in a particular category; and
    
    establishes standards for safety and soundness.
  United Western Banks Capital Ratios.
 
    
    well capitalized if it has a total risk-based capital ratio of 10% or greater and a
leverage ratio of 5% or greater;
    
    adequately capitalized if it has a total risk-based capital ratio of 8% or greater, a
Tier I risk-based capital ratio of 4% or greater and generally a leverage ratio of 4% or
greater;
    
    undercapitalized if it has a total risk-based capital ratio of less than 8%, a Tier I
risk-based capital ratio of less than 4%, or generally a leverage ratio of less than 4%;
    
    significantly undercapitalized if it has a total risk-based capital ratio of less than
6%, a Tier I risk-based capital ratio of less than 3%, or a leverage ratio of less than 3%;
and
    
    critically undercapitalized if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%.
   13




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As of December 31, 2006Core
    
    
    Risk-BasedCapital
    
    
    Capital(Dollars in thousands)Shareholders equity/GAAP capital
    
    $
    146,912
    
    
    $
    146,912Disallowed assets
    
    
    (941
    )
    
    
    (941
    )Unrealized gain on available for sale securities
    
    
    (166
    )
    
    
    (166
    )Additional capital items:General valuation allowances
    
    
    
    
    
    
    7,997Low-level recourse and residual interests
    
    
    
    
    
    
    (282
    )Regulatory capital as reported to the OTS
    
    
    145,805
    
    
    
    153,520Minimum capital requirement as reported to the OTS
    
    
    85,574
    
    
    
    78,249Regulatory capitalexcess
    
    $
    60,231
    
    
    $
    75,271Capital ratios
    
    
    6.82
    %
    
    
    15.70
    %Well capitalized requirement
    
    
    5.00
    %
    
    
    10.00
    %
 Transactions with Affiliates.
 Insurance of Accounts and Regulation by the Federal Deposit Insurance Corporation
  14




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Deposit Insurance Reform .
  
    
    merging the Savings Association Insurance Fund and Bank Insurance Fund, which became
effective March 31, 2006;
    
    maintaining basic deposit and municipal account insurance coverage at $100,000 but
providing for a new basic insurance coverage for retirement accounts of $250,000. Insurance
coverage for basic deposit and retirement accounts could be increased for inflation every
five years in $10,000 increments beginning in 2011;
    
    providing the FDIC with the ability to set the designated reserve ratio within a range
of between 1.15% and 1.50%, rather than maintaining 1.25% at all times regardless of
prevailing economic conditions;
    
    providing a one-time assessment credit of $4.7 billion to banks and savings associations
in existence on December 31, 1996, which may be used to offset future premiums with certain
limitations; and
    
    requiring the payment of dividends of 100% of the amount the insurance fund exceeds 1.5%
of the estimated insured deposits and the payment of 50% of the amount that the insurance
fund exceeds 1.35% of the estimated insured deposits (when the reserve is greater than
1.35% but no more than 1.5%).
   15




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FHLBank System.
 Brokered Deposits.
 Federal Reserve System .
 Mortgage Banking Operations.
 Regulation of Sterling Trust Company.
 
    
    purchase, sell, discount and negotiate notes, drafts, checks and other evidences of indebtedness;
    
    purchase and sell securities;
    
    issue subordinated debentures and promissory notes; and
    
    exercise powers incidental to the enumerated powers of Texas trust companies as set
forth in the Texas Banking Act.
  16




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Limitation on Capital Distributions.
 Investments.
 Branching.
 Transactions with Related Parties.
 Enforcement.
  
    
    the Texas Banking Commissioner determines that the Texas trust company is in a hazardous
condition and that the continuation of business would be hazardous to the public or to the
shareholders or creditors of the Texas trust company;
    
    the Texas Banking Commissioner determines that the Texas trust company has exceeded its powers;
    
    the Texas trust company has violated the law; or
    
    the Texas trust company gives written consent to supervision or conservatorship.
  Capital Requirements.
   17




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Regulation of First Matrix Investment Services Corp.
  Company Website
 www.uwbancorp.com
 
 Item 1A. Risk Factors
  Risks Relating to Ownership of Our Common Stock
 The trading volume of our stock is low and shareholders may not be able to resell shares at or
above the price shareholders paid for them.
 The issuance of additional shares may cause dilution
  18




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Our Board of Directors may authorize the repurchase of common shares that may result in
dilution.
 Control by our executive officers and directors will limit individual ability to influence the
outcome of matters requiring shareholder approval and could discourage a potential acquisition by
third parties.
 We may not have the ability to pay dividends in the future.
 Risks Related to our Business Strategy
 We may be unable to fully implement our community banking business strategy.
 
    
    attract sufficient commercial business deposits;
    
    attract and maintain business banking relationships with businesses in the Colorado Front Range market;
    
    attract and retain experienced and successful commercial and community bankers;
    
    identify and pursue suitable opportunities for opening new branches in the Colorado Front Range market;
    
    maintain adequate regulatory capital and comply with applicable federal and state regulations; and
    
    originate community bank loans and maintain adequate asset quality.
  We may not be able to effectively manage our proposed growth
  19




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Our ability to attract and retain management and key personnel may adversely affect future
growth and earnings.
 Changes in economic conditions in the Colorado Front Range market could have a material
adverse effect on the implementation and success of our business strategy.
 Our past operating results and financial condition will likely not be representative of our
future results and financial condition.
 We may elect to divest other non-core businesses, which could have an adverse effect on our
results.
 Risks Related to Our Business
 United Western Bank relies on institutional deposits.
 United Western Bank relies on wholesale funding sources for secondary and contingent liquidity
sources.
  20




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We must effectively manage our credit risk.
 Our business is subject to interest rate risk, and variations in interest rates may negatively
affect our financial performance .
 We have invested in loan portfolios, pooled securities and mortgage backed obligations, which
may lead to volatility in cash flow and market risk.
 The carrying value of our residential mortgage loan servicing rights and our loan servicing
income derived from residential mortgage loan servicing rights may be adversely affected during
periods of declining interest rates.
  21




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We may have fluctuations in our quarterly results.
 Our loan portfolio remains concentrated in real estate loans.
 We face strong competition from financial service companies and other companies that offer
banking services, which could hurt our business.
 The allowance for loan losses may not be adequate to cover actual losses and must be managed
to provide sufficient reserves to absorb probable losses in our loan portfolio.
   22




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The mortgage loans that we hold are subject to risks of delinquency, foreclosure and loss,
which could result in losses to us.
 
    
    property location and condition;
    
    competition and demand for comparable properties;
    
    changes in zoning laws for the property or its surrounding area;
    
    environmental contamination at the property;
    
    the occurrence of any uninsured casualty at the property;
    
    changes in national, regional or local economic conditions;
    
    declines in regional or local real estate values;
    
    increases in interest rates and/or real estate tax rates;
    
    changes in governmental rules, regulations and fiscal policies, including environmental legislation
and tax laws; and
    
    other events such as acts of God, natural disasters, war, terrorism, social unrest and civil disturbances.
   We are exposed to risk of environmental liabilities with respect to properties to which we
take title.
 If we sell mortgage loans or mortgage servicing rights and the underlying loan defaults, we
may be liable to the purchaser for unpaid principal and interest on the loan.
  23




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If a loan originator or seller of mortgage loans and mortgage servicing rights breaches its
representations and warranties to us, we may be at risk if such seller does not have the financial
capacity to pay for damages we incur as a result of such breach or to repurchase any such loan.
 Curtailment of government guaranteed loan programs could affect our SBA business.
 Failure in our automated systems and controls could subject us to increased operating costs as
well as litigation and other liabilities.
  Any failure to prevent breaches of our computer and network security systems may result in
customer information being compromised and/or identity theft, which would have a material adverse
effect upon our business.
  24




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We operate in a highly regulated environment and may be adversely affected by changes in laws
and regulations.
  Sterling Trust is subject to regulation as a trust company and could be the subject of third
party actions as a result of the trust services it provides.
  Our ability to service our debt and pay dividends is subject to our ability to receive
dividends from our subsidiaries.
 Significant legal actions could subject the Company to substantial liabilities.
  25




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Risks Associated with General Economic Conditions
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  Square
    
    
    
    
    
    Monthly Rent orLocation
    
    Feet/Acres
    
    Owned/Leased
    
    Occupant
    
    Mortgage PaymentDenver, CO
    
    
    62,487
    
    
    Leased through October 31, 2016(1)
    
    United Western Bancorp and various of
its subsidiaries
    
    $
    102,499Phoenix, AZ
    
    
    17,421
    
    
    Leased through August 31, 2007
    
    Matrix Financial
    
    $
    8,885Highlands Ranch, CO
    
    
    18
    
    
    Leased Month to Month
    
    United Western Bancorp
    
    $
    2,400Dallas, TX
    
    
    6
    
    
    Leased through April 6, 2007
    
    United Western Bancorp
    
    $
    875Thornton, CO
    
    
    2,950
    
    
    Leased through April 2007 then month to month
    
    United Western Bank
    
    $
    3,000Waco, TX
    
    
    11,294
    
    
    Leased through June 30, 2011
    
    Sterling
    
    $
    13,553Waco, TX
    
    
    8,116
    
    
    Leased through June 30, 2011
    
    Sterling
    
    $
    7,304St. Louis, MO
    
    
    6,144
    
    
    Leased through June 30, 2012
    
    Equi-Mor Holdings, Inc.
    
    $
    14,125St. Louis, MO
    
    
    5,500
    
    
    Owned
    
    Equi-Mor Holdings, Inc.
    
    
    N/ASt. Louis, MO
    
    
    42,000
    
    
    Owned
    
    Equi-Mor Holdings, Inc.
    
    
    N/AFt. Lupton, CO
    
    389 Lots
    
    Owned
    
    Matrix Funding Corp.
    
    
    N/ADenver, CO
    
    
    6,492
    
    
    Leased (land lease)
    
    United Western Bank  Cherry Creek Bank
    
    $
    2,500Boulder, CO
    
    
    5,492
    
    
    Leased (land lease)
    
    United Western Bank  Boulder Bank
    
    $
    1,356Fort Collins, CO
    
    
    2,272
    
    
    Leased
    
    United Western Bank  Fort Collins office
    
    $
    5,364Fort Collins, CO
    
    1.27 Acres
    
    Owned
    
    Vacant Land
    
    
    N/A
 (1)
    
    The Company guarantees an additional 23,171 square feet of office
space at the Denver location (700 17th Street, Denver, CO 80202) pursuant to the sale
and leaseback of the building, which closed on September 29, 2006. See note 21 to the
consolidated financial statements in this report.
 
 Item 3. Legal Proceedings
 General.
   26




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United Western Bancorp. Roderick Adderley, et al. v. Guy A.
Gibson, et al. Roderick Adderley, et al. v. Advance Financial Services, Inc., et al. (Adderley I)
 Munoz
 United Western Bank In re Apponline.com, Inc. and Island Mortgage Network,
Inc.
 Sterling. Roderick
Adderley, et al. v. Advanced Financial Services, Inc., et al.
 Douglas
Wheeler, et al. v. Pacific Air Transport, et al.; Paul C. Jared, et al. v. South Mountain Resort
and Spa, Inc., et al.; Lawrence Rehrig, et al. v. Caffe Diva, et al.; Merrill B. Christman, et al.
v. Millennium 2100, Inc., et al.; David M. Veneziale, et al. v. Sun Broadcasting Systems, Inc., et
al.; and Don Glazer, et al. v. Technical Support Servs., Inc., et al. Munoz
  27




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Heraclio A. Munoz, et al. v. Sterling Trust Company, et. al.
 
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Issuer Purchases of Equity Securities
 Total Number of
    
    
    Maximum NumberTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    of Shares that mayof Shares
    
    
    Average Price
    
    
    part of Publicly
    
    
    yet be purchasedPurchased
    
    
    Paid per Share
    
    
    Announced Plan
    
    
    under the PlanJanuary 1 through
January 31, 2006
    
    
    4,184,277
    
    
    $
    19.00
    
    
    
    4,184,277
    (1)
    
    
    February 1 through
November 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 1 through
December 31, 2006
    
    
    300,000
    
    
    $
    19.50
    
    
    
    300,000
    (2)
    
    
    77,829Total
    
    
    4,484,277
    
    
    $
    19.03
    
    
    
    4,484,277
    
    
    
    77,829
 (1)
    
    Purchase of common stock was made pursuant to the Private Placement and Tender Offer
announced December 9, 2005 and discussed further in Item 1. Establishment of Community
Banking Identity above. The repurchase was limited to the net funds of the private
placement offering. The tender offer was completed January 23, 2006. There will be no
further repurchases of stock under the announced private placement and tender offer.(2)
    
    Purchase of 300,000 shares of common stock was made pursuant to the Companys announced
open market stock repurchase plan. On November 13, 2006, the Companys Board of Directors
authorized the repurchase of up to five percent of the Companys outstanding common stock.
There were 7,556,573 shares outstanding at the time the repurchase was approved.
Management intends to repurchase the remaining available shares from time to time in the
marketplace based on the price of our common stock, our capital ratios, liquidity and other
relevant factors.
  Market PriceQuarter Ended:
    
    High
    
    
    LowDecember 31, 2006
    
    $
    21.28
    
    
    $
    19.00September 30, 2006
    
    
    23.89
    
    
    
    21.28June 30, 2006
    
    
    23.89
    
    
    
    21.25March 31, 2006
    
    
    23.90
    
    
    
    18.70December 31, 2005
    
    $
    19.43
    
    
    $
    12.52September 30, 2005
    
    
    13.79
    
    
    
    12.50June 30, 2005
    
    
    13.59
    
    
    
    11.75March 31, 2005
    
    
    12.90
    
    
    
    12.00
  28




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Number of securities
    
    
    
    
    
    
    Number of securities remainingto be issued upon
    
    
    Weighted average
    
    
    available for future issuance underexercise of outstanding
    
    
    exercise price of
    
    
    equity compensation plansoptions, warrants and
    
    
    outstanding options,
    
    
    (excluding securities reflected inPlan Category
    
    rights
    
    
    warrants and rights
    
    
    column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders (1)
    
    
    730,674
    
    
    $
    20.07
    
    
    
    647,091
   29




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Performance Graph
  
 Period EndedIndex
    
    12/31/01
    
    
    12/31/02
    
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06United Western Bancorp, Inc.
    
    $
    100.00
    
    
    $
    90.14
    
    
    $
    88.1
    
    
    $
    119.14
    
    
    $
    179.14
    
    
    $
    190.38SNL $1B-$5B Thrift Index
    
    
    100.00
    
    
    
    128.06
    
    
    
    192.07
    
    
    
    217.67
    
    
    
    215.77
    
    
    
    248.17Russell 2000
    
    
    100.00
    
    
    
    79.52
    
    
    
    117.09
    
    
    
    138.55
    
    
    
    144.86
    
    
    
    171.47
 
 Item 6. Selected Financial Data
 SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
OF UNITED WESTERN BANCORP, INC.
    30




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As of and for theYear Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Dollars in thousands, except per share data)Statement of Operations DataNet interest income before provision for credit losses
    
    $
    55,517
    
    
    $
    44,630
    
    
    $
    39,802
    
    
    $
    37,399
    
    
    $
    38,794Provision for credit losses
    
    
    2,341
    
    
    
    1,490
    
    
    
    2,914
    
    
    
    3,591
    
    
    
    1,791Net interest income after provision for credit losses
    
    
    53,176
    
    
    
    43,140
    
    
    
    36,888
    
    
    
    33,808
    
    
    
    37,003Noninterest income:Loan administration
    
    
    7,749
    
    
    
    10,103
    
    
    
    15,253
    
    
    
    21,668
    
    
    
    27,359Brokerage
    
    
    583
    
    
    
    1,737
    
    
    
    3,657
    
    
    
    4,457
    
    
    
    2,372Custodial and administration services
    
    
    6,833
    
    
    
    7,217
    
    
    
    7,853
    
    
    
    6,781
    
    
    
    5,345Real estate disposition services
    
    
    168
    
    
    
    1,391
    
    
    
    7,786
    
    
    
    6,624
    
    
    
    4,153Gain on sale of loans and securities
    
    
    685
    
    
    
    2,002
    
    
    
    6,586
    
    
    
    14,267
    
    
    
    5,419Gain on sale of assets
    
    
    3,100
    
    
    
    300
    
    
    
    31,767
    
    
    
    
    
    
    
    Gain on sale of mortgage servicing rights, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    675Litigation settlements
    
    
    2,550
    
    
    
    764
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    7,347
    
    
    
    4,753
    
    
    
    5,650
    
    
    
    6,839
    
    
    
    4,361Total noninterest income
    
    
    29,015
    
    
    
    28,267
    
    
    
    78,552
    
    
    
    60,636
    
    
    
    49,684Noninterest expense
    
    
    68,685
    
    
    
    73,683
    
    
    
    84,620
    
    
    
    95,147
    
    
    
    98,337Income (loss) from continuing operations before
income taxes
    
    
    13,506
    
    
    
    (2,276
    )
    
    
    30,820
    
    
    
    (703
    )
    
    
    (11,650
    )Income tax expense(benefit)
    
    
    3,593
    
    
    
    (2,414
    )
    
    
    10,817
    
    
    
    (690
    )
    
    
    (4,951
    )Income (loss) from continuing operations
    
    $
    9,913
    
    
    $
    138
    
    
    $
    20,003
    
    
    $
    (13
    )
    
    $
    (6,699
    )Income (loss) from continuing operations per share
assuming dilution(1)
    
    $
    1.27
    
    
    $
    0.02
    
    
    $
    3.02
    
    
    $
    
    
    
    $
    (1.04
    )Weighted average common shares assuming dilution
    
    
    7,791,516
    
    
    
    7,036,128
    
    
    
    6,630,006
    
    
    
    6,539,195
    
    
    
    6,462,272Balance Sheet DataTotal assets
    
    $
    2,156,548
    
    
    $
    2,079,388
    
    
    $
    1,888,860
    
    
    $
    1,723,924
    
    
    $
    1,701,405Securities
    
    
    838,979
    
    
    
    540,194
    
    
    
    316,367
    
    
    
    152,508
    
    
    
    29,073Total loans, net
    
    
    1,155,721
    
    
    
    1,353,385
    
    
    
    1,369,539
    
    
    
    1,344,256
    
    
    
    1,393,810Mortgage servicing rights, net
    
    
    15,399
    
    
    
    20,708
    
    
    
    26,574
    
    
    
    39,744
    
    
    
    63,200Deposits(2)
    
    
    1,345,681
    
    
    
    1,124,044
    
    
    
    1,119,159
    
    
    
    974,059
    
    
    
    933,957Custodial escrow balances
    
    
    40,017
    
    
    
    49,385
    
    
    
    51,598
    
    
    
    85,466
    
    
    
    151,790FHLBank borrowings
    
    
    519,431
    
    
    
    615,028
    
    
    
    506,118
    
    
    
    458,204
    
    
    
    385,785Other borrowings
    
    
    116,216
    
    
    
    90,953
    
    
    
    93,408
    
    
    
    114,495
    
    
    
    125,903Total shareholders equity(3)
    
    
    107,753
    
    
    
    180,728
    
    
    
    92,315
    
    
    
    69,684
    
    
    
    66,936Operating Ratios and Other Selected DataReturn from continuing operations on average
total assets(4)
    
    
    0.46
    %
    
    
    0.01
    %
    
    
    1.11
    %
    
    
    0.00
    %
    
    
    (0.40
    )%Return from continuing operations on average
equity(4)
    
    
    8.92
    
    
    
    0.14
    
    
    
    24.70
    
    
    
    (0.02
    )
    
    
    (9.69
    )Average equity to average total assets(4)
    
    
    5.12
    
    
    
    5.07
    
    
    
    4.48
    
    
    
    3.99
    
    
    
    4.13Net interest margin(4)(5)
    
    
    2.74
    
    
    
    2.44
    
    
    
    2.57
    
    
    
    2.58
    
    
    
    2.78Operating efficiency ratio(6)
    
    
    74.71
    
    
    
    92.05
    
    
    
    58.27
    
    
    
    66.91
    
    
    
    67.75Total amount of loans purchased for sale
    
    $
    217,760
    
    
    $
    1,167,953
    
    
    $
    1,738,181
    
    
    $
    1,636,986
    
    
    $
    1,127,632Balance of owned servicing portfolio (end of period)
    
    
    1,313,064
    
    
    
    1,717,998
    
    
    
    2,258,840
    
    
    
    3,183,536
    
    
    
    5,333,627Trust assets under administration (end of period)
    
    
    3,795,317
    
    
    
    3,079,117
    
    
    
    18,195,726
    
    
    
    13,280,435
    
    
    
    7,876,329Ratios of Earnings to Fixed Charges(7)Including interest on deposits
    
    
    1.22x
    
    
    
    0.95x
    
    
    
    1.97x
    
    
    
    0.98x
    
    
    
    0.72xExcluding interest on deposits
    
    
    1.35x
    
    
    
    0.92x
    
    
    
    2.45x
    
    
    
    0.96x
    
    
    
    0.42xLoan Performance Ratios and DataAllowance for credit losses
    
    $
    8,762
    
    
    $
    9,997
    
    
    $
    11,172
    
    
    $
    9,789
    
    
    $
    9,343Nonperforming loans(8)
    
    
    8,398
    
    
    
    16,894
    
    
    
    31,345
    
    
    
    31,450
    
    
    
    30,818Nonperforming loans/total loans(8)
    
    
    0.72
    %
    
    
    1.24
    %
    
    
    2.27
    %
    
    
    2.32
    %
    
    
    2.20
    %Nonperforming assets/total assets(8)
    
    
    0.64
    
    
    
    1.03
    
    
    
    1.82
    
    
    
    2.32
    
    
    
    2.30Net loan charge-offs/average loans(4)
    
    
    0.29
    
    
    
    0.20
    
    
    
    0.14
    
    
    
    0.23
    
    
    
    0.21Allowance for credit losses/
total loans
    
    
    0.75
    
    
    
    0.73
    
    
    
    0.81
    
    
    
    0.72
    
    
    
    0.67Allowance for credit losses/
nonperforming loans
    
    
    104.33
    
    
    
    59.17
    
    
    
    35.64
    
    
    
    31.13
    
    
    
    30.32
 
 (1)
    
    Net income (loss) per common share assuming dilution is based on the weighted average
number of common shares outstanding during each period and the dilutive effect, if any, of
stock options and warrants outstanding. There are no other dilutive securities.  31




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##### Table of Contents



(2)
    
    At December 31, 2006, 2005, 2004, 2003 and 2002, the total balance of brokered deposits was
$25.7 million, $42.5 million, $247.9 million, $104.6 million, and $327.3 million respectively.(3)
    
    Total Shareholders Equity at December 31, 2005 includes approximately $87.0 million in
proceeds from the private offering. The Company used approximately $79.5 million of the
proceeds in January 2006 to complete the issuer tender offer and purchase shares of the
Companys common stock. This use of proceeds reduced total shareholders equity in January
2006. See further discussion at Item 1., Establishment of Community Banking Identity.(4)
    
    Calculations are based on average daily balances where available and monthly averages
otherwise.(5)
    
    Net interest margin has been calculated by dividing net interest income from continuing
operations before provision for credit losses by average interest-earning assets.(6)
    
    The operating efficiency ratio has been calculated by dividing noninterest expense from
continuing operations, excluding amortization of mortgage servicing rights, by operating
income from continuing operations. Operating income from continuing operations is equal to
net interest income before provision for credit losses plus noninterest income.(7)
    
    For purposes of calculating the ratio of earnings to fixed charges, earnings consist of
income from continuing operations before taxes plus interest and rent expense. Fixed charges
consist of interest and rent expense.(8)
    
    See Managements Discussion and Analysis of Financial Condition and Results of
OperationsAsset Quality for a discussion of the level of nonperforming loans. Fourth Quarter Results
        32




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following is a discussion and analysis of our financial position and results of operations
and should be read in conjunction with the information set forth under Item 1A. Risk Factors, and
our consolidated financial statements and notes thereto included in Item 8 in this report.
 Overview
     Critical Accounting Policies
   33




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##### Table of Contents



Allowance for Credit Losses.
 i.e.
  i.e
      34




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##### Table of Contents



Litigation.
 Valuation of Mortgage Servicing Rights and Loans Held for Sale.
   Recent Accounting Pronouncements
   35




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##### Table of Contents



Results of Operations
   Net Interest Income
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)AssetsInterest-earning assets:Single-family loans receivable
    
    $
    723,314
    
    
    $
    35,223
    
    
    
    4.87
    %
    
    $
    1,033,872
    
    
    $
    43,040
    
    
    
    4.16
    %
    
    $
    918,044
    
    
    $
    39,669
    
    
    
    4.32
    %Multi-family
    
    
    60,618
    
    
    
    3,638
    
    
    
    6.00
    
    
    
    71,170
    
    
    
    4,133
    
    
    
    5.81
    
    
    
    76,380
    
    
    
    4,529
    
    
    
    5.93Construction
    
    
    31,339
    
    
    
    2,861
    
    
    
    9.13
    
    
    
    30,817
    
    
    
    2,451
    
    
    
    7.95
    
    
    
    20,966
    
    
    
    1,364
    
    
    
    6.51Commercial real estate
    
    
    89,062
    
    
    
    6,076
    
    
    
    6.82
    
    
    
    36,907
    
    
    
    2,661
    
    
    
    7.21
    
    
    
    26,554
    
    
    
    1,532
    
    
    
    5.77Commercial
    
    
    10,619
    
    
    
    857
    
    
    
    8.07
    
    
    
    7,448
    
    
    
    377
    
    
    
    5.06
    
    
    
    20,425
    
    
    
    1,042
    
    
    
    5.10Purchased SBA loans and securities
    
    
    282,421
    
    
    
    17,435
    
    
    
    6.17
    
    
    
    204,104
    
    
    
    11,100
    
    
    
    5.44
    
    
    
    180,782
    
    
    
    5,877
    
    
    
    3.25Originated SBA loans
    
    
    99,992
    
    
    
    9,541
    
    
    
    9.54
    
    
    
    99,043
    
    
    
    7,754
    
    
    
    7.83
    
    
    
    96,558
    
    
    
    6,156
    
    
    
    6.38Land and other
    
    
    18,989
    
    
    
    1,770
    
    
    
    9.32
    
    
    
    11,045
    
    
    
    917
    
    
    
    8.30
    
    
    
    9,237
    
    
    
    711
    
    
    
    7.70Mortgage-backed securities
    
    
    669,085
    
    
    
    34,519
    
    
    
    5.16
    
    
    
    290,999
    
    
    
    12,722
    
    
    
    4.37
    
    
    
    170,113
    
    
    
    8,630
    
    
    
    5.07Interest-earning deposits
    
    
    21,253
    
    
    
    1,066
    
    
    
    4.95
    
    
    
    13,340
    
    
    
    420
    
    
    
    3.15
    
    
    
    3,694
    
    
    
    35
    
    
    
    0.95FHLBank stock
    
    
    40,677
    
    
    
    2,314
    
    
    
    5.69
    
    
    
    33,460
    
    
    
    1,521
    
    
    
    4.55
    
    
    
    30,817
    
    
    
    1,028
    
    
    
    3.34Total interest-earning assets
    
    $
    2,047,369
    
    
    $
    115,300
    
    
    
    5.63
    %
    
    $
    1,832,205
    
    
    $
    87,096
    
    
    
    4.75
    %
    
    $
    1,553,570
    
    
    $
    70,573
    
    
    
    4.54
    %Noninterest-earning assets:Cash
    
    $
    15,360
    
    
    
    
    
    
    
    
    
    
    $
    35,681
    
    
    
    
    
    
    
    
    
    
    $
    51,197Allowance for credit losses
    
    
    (8,988
    )
    
    
    
    
    
    
    
    
    
    
    (9,247
    )
    
    
    
    
    
    
    
    
    
    
    (8,800
    )Premises and equipment
    
    
    15,341
    
    
    
    
    
    
    
    
    
    
    
    18,197
    
    
    
    
    
    
    
    
    
    
    
    22,341Other assets
    
    
    100,375
    
    
    
    
    
    
    
    
    
    
    
    100,683
    
    
    
    
    
    
    
    
    
    
    
    125,946Total noninterest-earning assets
    
    
    122,088
    
    
    
    
    
    
    
    
    
    
    
    145,314
    
    
    
    
    
    
    
    
    
    
    
    190,684Total assets
    
    $
    2,169,457
    
    
    
    
    
    
    
    
    
    
    $
    1,977,519
    
    
    
    
    
    
    
    
    
    
    $
    1,744,254Liabilities and Shareholders EquityInterest-bearing liabilities:Passbook accounts
    
    $
    211
    
    
    $
    3
    
    
    
    1.42
    %
    
    $
    395
    
    
    $
    6
    
    
    
    1.27
    %
    
    $
    3,014
    
    
    $
    38
    
    
    
    1.26
    %Money market and NOW accounts
    
    
    1,052,600
    
    
    
    20,350
    
    
    
    1.93
    
    
    
    881,219
    
    
    
    11,789
    
    
    
    1.34
    
    
    
    619,835
    
    
    
    4,764
    
    
    
    0.77Certificates of deposit
    
    
    56,320
    
    
    
    2,389
    
    
    
    4.24
    
    
    
    119,857
    
    
    
    4,088
    
    
    
    3.41
    
    
    
    188,097
    
    
    
    5,862
    
    
    
    3.12FHLBank borrowings
    
    
    630,229
    
    
    
    30,275
    
    
    
    4.74
    
    
    
    574,982
    
    
    
    20,305
    
    
    
    3.53
    
    
    
    502,740
    
    
    
    12,391
    
    
    
    2.46Borrowed money and junior subordinated debentures
    
    
    80,897
    
    
    
    6,766
    
    
    
    8.25
    
    
    
    77,211
    
    
    
    6,278
    
    
    
    8.02
    
    
    
    98,064
    
    
    
    7,716
    
    
    
    7.76Total interest-bearing liabilities
    
    $
    1,820,257
    
    
    $
    59,783
    
    
    
    3.26
    %
    
    $
    1,653,664
    
    
    $
    42,466
    
    
    
    2.56
    %
    
    $
    1,411,750
    
    
    $
    30,771
    
    
    
    2.17
    %Noninterest-bearing liabilities:Demand deposits (including custodial escrow
balances)
    
    $
    214,068
    
    
    
    
    
    
    
    
    
    
    $
    216,131
    
    
    
    
    
    
    
    
    
    
    $
    253,605Other liabilities
    
    
    24,048
    
    
    
    
    
    
    
    
    
    
    
    7,570
    
    
    
    
    
    
    
    
    
    
    
    2,408Total noninterest-bearing liabilities
    
    
    238,116
    
    
    
    
    
    
    
    
    
    
    
    223,701
    
    
    
    
    
    
    
    
    
    
    
    256,013Shareholders equity
    
    
    111,084
    
    
    
    
    
    
    
    
    
    
    
    100,154
    
    
    
    
    
    
    
    
    
    
    
    76,491Total liabilities and shareholders equity
    
    $
    2,169,457
    
    
    
    
    
    
    
    
    
    
    $
    1,977,519
    
    
    
    
    
    
    
    
    
    
    $
    1,744,254Net interest income before provision for credit losses
    
    
    
    
    
    $
    55,517
    
    
    
    
    
    
    
    
    
    
    $
    44,630
    
    
    
    
    
    
    
    
    
    
    $
    39,802Interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.37
    %
    
    
    
    
    
    
    
    
    
    
    2.19
    %
    
    
    
    
    
    
    
    
    
    
    2.37
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.74
    %
    
    
    
    
    
    
    
    
    
    
    2.44
    %
    
    
    
    
    
    
    
    
    
    
    2.57
    %Ratio of average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    112.48
    %
    
    
    
    
    
    
    
    
    
    
    110.80
    %
    
    
    
    
    
    
    
    
    
    
    110.05
    %
  36




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Volume and Rate Analysis of Net Interest Income
  Year end 12/31/06 versus 12/31/05
    
    
    Year end 12/31/05 versus 12/31/04Increase (Decrease) Due to Change in
    
    
    Increase (Decrease) Due to Change inVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest-earning assets:
    
    (dollars in thousands)
    
    
    (dollars in thousands)Single-family loans receivable
    
    $
    (14,331
    )
    
    $
    6,514
    
    
    $
    (7,817
    )
    
    $
    4,863
    
    
    $
    (1,492
    )
    
    $
    3,371Multi-family
    
    
    (629
    )
    
    
    134
    
    
    
    (495
    )
    
    
    (304
    )
    
    
    (92
    )
    
    
    (396
    )Construction
    
    
    43
    
    
    
    367
    
    
    
    410
    
    
    
    737
    
    
    
    350
    
    
    
    1,087Commercial real estate
    
    
    3,565
    
    
    
    (150
    )
    
    
    3,415
    
    
    
    688
    
    
    
    441
    
    
    
    1,129Commercial
    
    
    201
    
    
    
    279
    
    
    
    480
    
    
    
    (657
    )
    
    
    (8
    )
    
    
    (665
    )Purchased SBA loans and securities
    
    
    4,685
    
    
    
    1,650
    
    
    
    6,335
    
    
    
    840
    
    
    
    4,383
    
    
    
    5,223Originated SBA loans
    
    
    75
    
    
    
    1,712
    
    
    
    1,787
    
    
    
    162
    
    
    
    1,436
    
    
    
    1,598Land and other
    
    
    728
    
    
    
    125
    
    
    
    853
    
    
    
    147
    
    
    
    59
    
    
    
    206Mortgage-backed securities
    
    
    19,144
    
    
    
    2,653
    
    
    
    21,797
    
    
    
    5,423
    
    
    
    (1,331
    )
    
    
    4,092Interest-earning deposits
    
    
    329
    
    
    
    317
    
    
    
    646
    
    
    
    204
    
    
    
    181
    
    
    
    385FHLBank stock
    
    
    366
    
    
    
    427
    
    
    
    793
    
    
    
    94
    
    
    
    399
    
    
    
    493Total interest-earning assets
    
    
    14,176
    
    
    
    14,028
    
    
    
    28,204
    
    
    
    12,197
    
    
    
    4,326
    
    
    
    16,523Interest-bearing liabilities:Regular savings
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    (32
    )
    
    
    
    
    
    
    (32
    )Money Market
    
    
    2,603
    
    
    
    5,958
    
    
    
    8,561
    
    
    
    2,542
    
    
    
    4,483
    
    
    
    7,025Certificates of deposit
    
    
    (2,529
    )
    
    
    830
    
    
    
    (1,699
    )
    
    
    (2,285
    )
    
    
    511
    
    
    
    (1,774
    )FHLB borrowings
    
    
    2,192
    
    
    
    7,778
    
    
    
    9,970
    
    
    
    1,975
    
    
    
    5,939
    
    
    
    7,914Borrowed money
    
    
    305
    
    
    
    182
    
    
    
    487
    
    
    
    (1,682
    )
    
    
    245
    
    
    
    (1,437
    )Total interest-bearing liabilities
    
    
    2,568
    
    
    
    14,748
    
    
    
    17,316
    
    
    
    518
    
    
    
    11,178
    
    
    
    11,696Change in net interest income
    
    $
    11,608
    
    
    $
    (720
    )
    
    $
    10,888
    
    
    $
    11,679
    
    
    $
    (6,852
    )
    
    $
    4,827
 Net Interest Income .
  37




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Provision for Credit Losses.
 Loan Administration.
  Brokerage Fees.
   38




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##### Table of Contents



Custodial and Administration Services.
  Real Estate Disposition Services
  Gain on Sale of Loans and Securities.
  39




---



##### Table of Contents



Gain on Sale of Assets.
  Litigation Settlements.
 Other Income.
   40




---



##### Table of Contents



Noninterest Expense.
 Year EndedDecember 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Compensation and employee benefits
    
    $
    22,309
    
    
    $
    25,843
    
    
    $
    26,282Amortization of mortgage servicing rights
    
    
    5,810
    
    
    
    7,764
    
    
    
    16,100Occupancy and equipment
    
    
    3,781
    
    
    
    3,883
    
    
    
    4,882Postage and communication
    
    
    1,063
    
    
    
    1,176
    
    
    
    1,833Professional fees
    
    
    2,322
    
    
    
    2,656
    
    
    
    2,794Mortgage servicing rights subservicing fees
    
    
    2,488
    
    
    
    3,073
    
    
    
    1,367Data processing
    
    
    804
    
    
    
    903
    
    
    
    1,595Subaccounting fees
    
    
    21,013
    
    
    
    13,447
    
    
    
    7,738Recovery of mortgage servicing rights
    
    
    (276
    )
    
    
    (1,180
    )
    
    
    (444
    )Other general and administrative
    
    
    9,371
    
    
    
    16,118
    
    
    
    22,473Total
    
    $
    68,685
    
    
    $
    73,683
    
    
    $
    84,620
      41




---



##### Table of Contents



Income Taxes.
  42




---



##### Table of Contents



Balance Sheet
      Investment Securities.
   43




---



##### Table of Contents



December 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004(Dollars in thousands)Due after FiveYears through
    
    
    Due after
    
    
    Due after
    
    
    Due afterTen Years
    
    
    Ten Years
    
    
    Ten Years
    
    
    Ten YearsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    YieldAvailable for sale
Mortgage-backed
securities  agency
    
    $
    
    
    
    
    
    %
    
    $
    5,019
    
    
    
    6.47
    %
    
    $
    13,706
    
    
    
    5.02
    %
    
    $
    22,434
    
    
    
    4.40
    %Mortgage-backed
securities -
private
    
    
    
    
    
    
    
    
    
    
    47,639
    
    
    
    5.74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Collateralized
Mortgage
Obligations 
private
    
    
    
    
    
    
    
    
    
    
    88,878
    
    
    
    5.80
    
    
    
    
    
    
    
    
    
    
    
    95,076
    
    
    
    5.15SBA Securities
    
    
    
    
    
    
    
    
    
    
    610
    
    
    
    5.76
    
    
    
    756
    
    
    
    4.39
    
    
    
    927
    
    
    
    2.38Total  available
for sale
    
    
    
    
    
    
    
    
    
    
    142,146
    
    
    
    5.80
    
    
    
    14,462
    
    
    
    4.99
    
    
    
    118,437
    
    
    
    4.99Held to Maturity
Mortgage-backed
securities 
private
    
    
    
    
    
    
    
    
    
    
    228,059
    
    
    
    5.39
    
    
    
    156,979
    
    
    
    5.16
    
    
    
    32,326
    
    
    
    4.95Collateralized
Mortgage
Obligations 
private
    
    
    
    
    
    
    
    
    
    
    384,280
    
    
    
    5.27
    
    
    
    264,031
    
    
    
    4.87
    
    
    
    39,229
    
    
    
    5.22SBA Securities
    
    
    8,669
    
    
    
    8.29
    
    
    
    75,825
    
    
    
    7.55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total  held to
maturity
    
    
    8,669
    
    
    
    8.29
    
    
    
    688,164
    
    
    
    5.56
    
    
    
    421,010
    
    
    
    4.98
    
    
    
    71,555
    
    
    
    5.10Total AFS and HTM
Securities
    
    $
    8,669
    
    
    
    8.29
    %
    
    $
    830,310
    
    
    
    5.60
    %
    
    $
    435,472
    
    
    
    4.98
    %
    
    $
    189,992
    
    
    
    5.03
    %
  44




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##### Table of Contents



Loan Portfolio.
 As of December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Residential
    
    $
    606,693
    
    
    
    52.49
    %
    
    $
    885,740
    
    
    
    65.44
    %
    
    $
    999,202
    
    
    
    72.96
    %
    
    $
    903,186
    
    
    
    67.19
    %
    
    $
    1,001,885
    
    
    
    71.88
    %Commercial real
estate
    
    
    279,493
    
    
    
    24.19
    
    
    
    200,992
    
    
    
    14.85
    
    
    
    155,482
    
    
    
    11.35
    
    
    
    144,036
    
    
    
    10.71
    
    
    
    140,375
    
    
    
    10.07Guaranteed SBA
    
    
    163,479
    
    
    
    14.15
    
    
    
    204,928
    
    
    
    15.15
    
    
    
    140,893
    
    
    
    10.29
    
    
    
    180,283
    
    
    
    13.42
    
    
    
    123,964
    
    
    
    8.89Commercial
    
    
    24,905
    
    
    
    2.15
    
    
    
    12,235
    
    
    
    0.90
    
    
    
    19,847
    
    
    
    1.45
    
    
    
    46,234
    
    
    
    3.44
    
    
    
    36,869
    
    
    
    2.65Construction and
Development
    
    
    87,068
    
    
    
    7.53
    
    
    
    35,206
    
    
    
    2.60
    
    
    
    34,307
    
    
    
    2.51
    
    
    
    30,579
    
    
    
    2.27
    
    
    
    46,189
    
    
    
    3.31Consumer
    
    
    2,845
    
    
    
    0.25
    
    
    
    243
    
    
    
    0.02
    
    
    
    578
    
    
    
    0.04
    
    
    
    2,962
    
    
    
    0.22
    
    
    
    4,311
    
    
    
    0.31School financing
    
    
    
    
    
    
    
    
    
    
    24,038
    
    
    
    1.78
    
    
    
    30,402
    
    
    
    2.22
    
    
    
    46,765
    
    
    
    3.48
    
    
    
    49,560
    
    
    
    3.56Total loans
    
    
    1,164,483
    
    
    
    100.76
    
    
    
    1,363,382
    
    
    
    100.74
    
    
    
    1,380,711
    
    
    
    100.82
    
    
    
    1,354,045
    
    
    
    100.73
    
    
    
    1,403,153
    
    
    
    100.67Less allowance for
credit losses
    
    
    8,762
    
    
    
    0.76
    
    
    
    9,997
    
    
    
    0.74
    
    
    
    11,172
    
    
    
    0.82
    
    
    
    9,789
    
    
    
    0.73
    
    
    
    9,343
    
    
    
    0.67Loans receivable,
net
    
    $
    1,155,721
    
    
    
    100.00
    %
    
    $
    1,353,385
    
    
    
    100.00
    %
    
    $
    1,369,539
    
    
    
    100.00
    %
    
    $
    1,344,256
    
    
    
    100.00
    %
    
    $
    1,393,810
    
    
    
    100.00
    %
   As of December 31, 2006Less than
    
    
    One to
    
    
    Over FiveOne Year
    
    
    Five Years
    
    
    Years
    
    
    Total(Dollars in thousands)Residential
    
    $
    1,192
    
    
    $
    8,908
    
    
    $
    632,197
    
    
    $
    642,297Multifamily, commercial real estate and commercial
    
    
    37,694
    
    
    
    79,385
    
    
    
    348,455
    
    
    
    465,534Construction
    
    
    39,842
    
    
    
    13,110
    
    
    
    834
    
    
    
    53,786Consumer
    
    
    889
    
    
    
    366
    
    
    
    1,611
    
    
    
    2,866Total loans
    
    $
    79,617
    
    
    $
    101,769
    
    
    $
    983,097
    
    
    $
    1,164,483
  As of December 31, 2006Less than
    
    
    One to
    
    
    Over FiveOne Year
    
    
    Five Years
    
    
    Years
    
    
    Total(Dollars in thousands)Fixed
    
    $
    82
    
    
    $
    1,275
    
    
    $
    29,105
    
    
    $
    30,462Adjustable
    
    
    424
    
    
    
    1,482
    
    
    
    414,283
    
    
    
    416,189Total loans
    
    $
    506
    
    
    $
    2,757
    
    
    $
    443,388
    
    
    $
    446,651
  45




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##### Table of Contents



As of December 31, 2006Less than
    
    
    One to
    
    
    Over FiveOne Year
    
    
    Five Years
    
    
    Years
    
    
    Total(Dollars in thousands)Fixed
    
    $
    3,535
    
    
    $
    37,737
    
    
    $
    120,989
    
    
    $
    162,261Adjustable
    
    
    75,576
    
    
    
    61,274
    
    
    
    418,721
    
    
    
    555,571Total loans
    
    $
    79,111
    
    
    $
    99,011
    
    
    $
    539,710
    
    
    $
    717,832
 Asset Quality.
 As of December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Dollars in thousands)Nonaccrual residential mortgage loans
    
    $
    5,859
    
    
    $
    8,903
    
    
    $
    12,157
    
    
    $
    19,599
    
    
    $
    15,123Nonaccrual commercial real estate
    
    
    140
    
    
    
    3,045
    
    
    
    8,256
    
    
    
    2,476
    
    
    
    3,144Nonaccrual guaranteed SBA
    
    
    1,595
    
    
    
    4,206
    
    
    
    4,092
    
    
    
    6,249
    
    
    
    6,663Nonaccrual commercial
    
    
    159
    
    
    
    373
    
    
    
    1,076
    
    
    
    146
    
    
    
    725Nonaccrual construction and development
    
    
    645
    
    
    
    120
    
    
    
    158
    
    
    
    
    
    
    
    890Nonaccrual consumer
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    46Nonaccrual school financing
    
    
    
    
    
    
    247
    
    
    
    5,566
    
    
    
    2,980
    
    
    
    4,227Total nonperforming loans
    
    
    8,398
    
    
    
    16,894
    
    
    
    31,345
    
    
    
    31,450
    
    
    
    30,818Foreclosed real estate
    
    
    5,403
    
    
    
    4,526
    
    
    
    2,955
    
    
    
    8,538
    
    
    
    8,343Total nonperforming assets
    
    $
    13,801
    
    
    $
    21,420
    
    
    $
    34,300
    
    
    $
    39,988
    
    
    $
    39,161Total nonperforming loans to total loans
    
    
    0.72
    %
    
    
    1.24
    %
    
    
    2.27
    %
    
    
    2.32
    %
    
    
    2.20
    %Total nonperforming assets to total assets
    
    
    0.64
    %
    
    
    1.03
    %
    
    
    1.82
    %
    
    
    2.32
    %
    
    
    2.30
    %Ratio of allowance for credit losses
to total nonperforming loans
    
    
    104.33
    %
    
    
    59.17
    %
    
    
    35.64
    %
    
    
    31.13
    %
    
    
    30.32
    %Interest on nonperforming loans not included in
interest income
    
    $
    700
    
    
    $
    875
    
    
    $
    652
    
    
    $
    1,084
    
    
    $
    926
    46




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##### Table of Contents



Allowance for Credit Losses.
   As of and for the Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Dollars in thousands)Allowance for credit losses, beginning of year$
    9,997
    
    
    $
    11,172
    
    
    $
    9,789
    
    
    $
    9,343
    
    
    $
    9,338Charge-offs:Real estate  mortgage
    
    
    527
    
    
    
    2,053
    
    
    
    1,099
    
    
    
    1,998
    
    
    
    1,239Real estate  construction
    
    
    500
    
    
    
    244
    
    
    
    
    
    
    
    74
    
    
    
    Commercial loans and school financing
    
    
    1,166
    
    
    
    691
    
    
    
    870
    
    
    
    1,319
    
    
    
    1,482Consumer
    
    
    3
    
    
    
    64
    
    
    
    80
    
    
    
    139
    
    
    
    276Total charge-offs
    
    
    2,196
    
    
    
    3,052
    
    
    
    2,049
    
    
    
    3,530
    
    
    
    2,997Recoveries:Real estate  mortgage
    
    
    38
    
    
    
    112
    
    
    
    109
    
    
    
    101
    
    
    
    97Real estate  construction
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial loans and school financing
    
    
    311
    
    
    
    92
    
    
    
    40
    
    
    
    110
    
    
    
    17Consumer
    
    
    12
    
    
    
    8
    
    
    
    14
    
    
    
    124
    
    
    
    67Total recoveries
    
    
    411
    
    
    
    212
    
    
    
    163
    
    
    
    335
    
    
    
    181Net charge-offs
    
    
    1,785
    
    
    
    2,840
    
    
    
    1,886
    
    
    
    3,195
    
    
    
    2,816School financing  allowance sold
    
    
    1,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for credit losses charged to
operations
    
    
    2,341
    
    
    
    1,665
    
    
    
    3,269
    
    
    
    3,641
    
    
    
    2,821Balance at end of year
    
    $
    8,762
    
    
    $
    9,997
    
    
    $
    11,172
    
    
    $
    9,789
    
    
    $
    9,343Ratio of net charge-offs to average loans
    
    
    0.29
    %
    
    
    0.20
    %
    
    
    0.14
    %
    
    
    0.23
    %
    
    
    0.21
    %Average loans outstanding during the year
    
    $
    1,219,892
    
    
    $
    1,411,974
    
    
    $
    1,373,246
    
    
    $
    1,376,723
    
    
    $
    1,333,390
  47




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##### Table of Contents



As of December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentageof Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans ineach
    
    
    
    
    
    
    each
    
    
    
    
    
    
    each
    
    
    
    
    
    
    each
    
    
    
    
    
    
    eachCategory to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category toTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)Residential
    
    $
    2,469
    
    
    
    52.10
    %
    
    $
    3,377
    
    
    
    64.97
    %
    
    $
    4,350
    
    
    
    72.38
    %
    
    $
    3,818
    
    
    
    66.71
    %
    
    $
    2,989
    
    
    
    71.41
    %Commercial real
estate
    
    
    4,074
    
    
    
    24.00
    
    
    
    3,626
    
    
    
    14.74
    
    
    
    3,694
    
    
    
    11.26
    
    
    
    2,207
    
    
    
    10.64
    
    
    
    1,430
    
    
    
    10.00Guaranteed SBA
    
    
    77
    
    
    
    14.04
    
    
    
    99
    
    
    
    15.03
    
    
    
    153
    
    
    
    10.20
    
    
    
    55
    
    
    
    13.31
    
    
    
    
    
    
    
    8.83Commercial
    
    
    429
    
    
    
    2.14
    
    
    
    245
    
    
    
    0.90
    
    
    
    393
    
    
    
    1.44
    
    
    
    997
    
    
    
    3.41
    
    
    
    1,033
    
    
    
    2.63Construction and
development
    
    
    1,110
    
    
    
    7.48
    
    
    
    398
    
    
    
    2.58
    
    
    
    418
    
    
    
    2.48
    
    
    
    499
    
    
    
    2.26
    
    
    
    634
    
    
    
    3.29Consumer
    
    
    53
    
    
    
    0.24
    
    
    
    11
    
    
    
    0.02
    
    
    
    15
    
    
    
    0.04
    
    
    
    26
    
    
    
    0.22
    
    
    
    24
    
    
    
    0.31School financing
    
    
    
    
    
    
    
    
    
    
    1,791
    
    
    
    1.76
    
    
    
    1,792
    
    
    
    2.20
    
    
    
    1,766
    
    
    
    3.45
    
    
    
    2,810
    
    
    
    3.53Unallocated
    
    
    550
    
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    357
    
    
    
    
    
    
    
    421
    
    
    
    
    
    
    
    423
    
    
    
    Total
    
    $
    8,762
    
    
    
    100.00
    %
    
    $
    9,997
    
    
    
    100.00
    %
    
    $
    11,172
    
    
    
    100.00
    %
    
    $
    9,789
    
    
    
    100.00
    %
    
    $
    9,343
    
    
    
    100.00
    %
  48




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##### Table of Contents



Mortgage Servicing Rights.
 As of December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)FHA insured/VA guaranteed residential
    
    $
    509,789
    
    
    $
    645,903
    
    
    $
    887,281Conventional loans
    
    
    773,715
    
    
    
    1,019,964
    
    
    
    1,326,648Other loans
    
    
    29,560
    
    
    
    52,131
    
    
    
    44,911Total mortgage servicing portfolio
    
    $
    1,313,064
    
    
    $
    1,717,998
    
    
    $
    2,258,840Fixed rate loans
    
    $
    1,005,716
    
    
    $
    1,287,506
    
    
    $
    1,757,427Adjustable rate loans
    
    
    307,348
    
    
    
    430,492
    
    
    
    501,413Total mortgage servicing portfolio
    
    $
    1,313,064
    
    
    $
    1,717,998
    
    
    $
    2,258,840
   49




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##### Table of Contents



As of December 31,2006
    
    
    2005
    
    
    2004Number
    
    
    Percentage
    
    
    Number
    
    
    Percentage
    
    
    Number
    
    
    Percentageof
    
    
    of Servicing
    
    
    of
    
    
    of Servicing
    
    
    of
    
    
    of ServicingLoans
    
    
    Portfolio
    
    
    Loans
    
    
    Portfolio
    
    
    Loans
    
    
    PortfolioLoans delinquent for:30-59 days
    
    
    1,270
    
    
    
    5.41
    %
    
    
    1,615
    
    
    
    5.48
    %
    
    
    2,389
    
    
    
    6.29
    %60-89 days
    
    
    308
    
    
    
    1.31
    
    
    
    465
    
    
    
    1.58
    
    
    
    693
    
    
    
    1.8390 days and over
    
    
    1,256
    
    
    
    5.35
    
    
    
    1,088
    
    
    
    3.69
    
    
    
    1,225
    
    
    
    3.23Total delinquencies
    
    
    2,834
    
    
    
    12.07
    %
    
    
    3,168
    
    
    
    10.75
    %
    
    
    4,307
    
    
    
    11.35
    %Foreclosures
    
    
    481
    
    
    
    2.05
    %
    
    
    444
    
    
    
    1.51
    %
    
    
    362
    
    
    
    0.95
    %
  As of December 31,2006
    
    
    2005
    
    
    2004Percentage
    
    
    
    
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    
    
    
    
    PercentageNumber
    
    
    Aggregate
    
    
    of Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    of Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    of Aggregateof
    
    
    Principal
    
    
    Principal
    
    
    of
    
    
    Principal
    
    
    Principal
    
    
    of
    
    
    Principal
    
    
    PrincipalLoans
    
    
    Balance
    
    
    Balance
    
    
    Loans
    
    
    Balance
    
    
    Balance
    
    
    Loans
    
    
    Balance
    
    
    BalanceRate
    
    (Dollars in thousands)Less than 7.00%
    
    
    7,135
    
    
    $
    610,594
    
    
    
    46.50
    %
    
    
    11,605
    
    
    $
    973,689
    
    
    
    56.68
    %
    
    
    14,228
    
    
    $
    1,201,651
    
    
    
    53.20
    %7.00%  7.99%
    
    
    6,235
    
    
    
    391,229
    
    
    
    29.80
    
    
    
    5,533
    
    
    
    365,046
    
    
    
    21.24
    
    
    
    7,356
    
    
    
    516,887
    
    
    
    22.888.00%  8.99%
    
    
    3,726
    
    
    
    150,343
    
    
    
    11.45
    
    
    
    4,335
    
    
    
    164,194
    
    
    
    9.56
    
    
    
    5,915
    
    
    
    238,491
    
    
    
    10.569.00%  9.99%
    
    
    2,561
    
    
    
    60,241
    
    
    
    4.59
    
    
    
    3,363
    
    
    
    82,616
    
    
    
    4.81
    
    
    
    4,523
    
    
    
    119,447
    
    
    
    5.2910.00% and over
    
    
    3,809
    
    
    
    100,657
    
    
    
    7.66
    
    
    
    4,641
    
    
    
    132,453
    
    
    
    7.71
    
    
    
    5,936
    
    
    
    182,364
    
    
    
    8.07Total
    
    
    23,466
    
    
    $
    1,313,064
    
    
    
    100.00
    %
    
    
    29,477
    
    
    $
    1,717,998
    
    
    
    100.00
    %
    
    
    37,958
    
    
    $
    2,258,840
    
    
    
    100.00
    %


As of December 31,2006
    
    
    2005
    
    
    2004Percentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PercentageNumber
    
    
    Percentage
    
    
    Unpaid
    
    
    Unpaid
    
    
    Number
    
    
    Percentage
    
    
    Unpaid
    
    
    Unpaid
    
    
    Number
    
    
    Percentage
    
    
    Unpaid
    
    
    Unpaidof
    
    
    of Number
    
    
    Principal
    
    
    Principal
    
    
    of
    
    
    of Number
    
    
    Principal
    
    
    Principal
    
    
    of
    
    
    of Number
    
    
    Principal
    
    
    PrincipalMaturity
    
    Loans
    
    
    of Loans
    
    
    Amount
    
    
    Amount
    
    
    Loans
    
    
    of Loans
    
    
    Amount
    
    
    Amount
    
    
    Loans
    
    
    of Loans
    
    
    Amount
    
    
    Amount(Dollars in thousands)15 years
    
    
    5,222
    
    
    
    22.25
    %
    
    $
    49,625
    
    
    
    3.78
    %
    
    
    7,200
    
    
    
    24.43
    %
    
    $
    88,183
    
    
    
    5.13
    %
    
    
    9,057
    
    
    
    23.86
    %
    
    $
    123,858
    
    
    
    5.48
    %610 years
    
    
    3,005
    
    
    
    12.81
    
    
    
    95,884
    
    
    
    7.30
    
    
    
    2,840
    
    
    
    9.63
    
    
    
    86,265
    
    
    
    5.02
    
    
    
    3,199
    
    
    
    8.43
    
    
    
    99,337
    
    
    
    4.401115 years
    
    
    3,314
    
    
    
    14.12
    
    
    
    169,894
    
    
    
    12.94
    
    
    
    4,547
    
    
    
    15.43
    
    
    
    231,723
    
    
    
    13.49
    
    
    
    5,596
    
    
    
    14.74
    
    
    
    286,816
    
    
    
    12.701620 years
    
    
    2,591
    
    
    
    11.04
    
    
    
    167,741
    
    
    
    12.77
    
    
    
    3,101
    
    
    
    10.52
    
    
    
    197,970
    
    
    
    11.52
    
    
    
    4,141
    
    
    
    10.91
    
    
    
    257,277
    
    
    
    11.392125 years
    
    
    4,962
    
    
    
    21.15
    
    
    
    365,830
    
    
    
    27.86
    
    
    
    3,905
    
    
    
    13.25
    
    
    
    268,121
    
    
    
    15.61
    
    
    
    4,260
    
    
    
    11.22
    
    
    
    302,877
    
    
    
    13.41More than 25 years
    
    
    4,372
    
    
    
    18.63
    
    
    
    464,090
    
    
    
    35.35
    
    
    
    7,884
    
    
    
    26.74
    
    
    
    845,736
    
    
    
    49.23
    
    
    
    11,705
    
    
    
    30.84
    
    
    
    1,188,675
    
    
    
    52.62Total
    
    
    23,466
    
    
    
    100.00
    %
    
    $
    1,313,064
    
    
    
    100.00
    %
    
    
    29,477
    
    
    
    100.00
    %
    
    $
    1,717,998
    
    
    
    100.00
    %
    
    
    37,958
    
    
    
    100.00
    %
    
    $
    2,258,840
    
    
    
    100.00
    %


50




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##### Table of Contents



For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Quarter ended:December 31
    
    
    20.5
    %
    
    
    23.9
    %
    
    
    23.6
    %September 30
    
    
    21.0
    
    
    
    26.9
    
    
    
    26.6June 30
    
    
    24.3
    
    
    
    24.1
    
    
    
    32.4March 31
    
    
    21.1
    
    
    
    19.8
    
    
    
    27.4Annual average
    
    
    21.7
    %
    
    
    23.7
    %
    
    
    27.5
    %
 Sales of Servicing Rights.
 Valuation of Servicing Rights.
   Sources of Funds.
  51




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##### Table of Contents



Deposits.
    December 31, 2006
    
    
    December 31, 2005Percent of
    
    
    Weighted
    
    
    
    
    
    
    Percent of
    
    
    WeightedTotal
    
    
    Average
    
    
    
    
    
    
    Total
    
    
    AverageAmount
    
    
    Deposits
    
    
    Rate
    
    
    Amount
    
    
    Deposits
    
    
    Rate(Dollars in thousands)Passbook accounts
    
    $
    115
    
    
    
    0.01
    %
    
    
    1.28
    %
    
    $
    405
    
    
    
    0.04
    %
    
    
    1.26
    %NOW accounts
    
    
    604,821
    
    
    
    44.95
    
    
    
    0.63
    
    
    
    495,260
    
    
    
    44.06
    
    
    
    0.49Money market accounts
    
    
    705,371
    
    
    
    52.41
    
    
    
    2.78
    
    
    
    581,704
    
    
    
    51.75
    
    
    
    1.69Subtotal
    
    
    1,310,307
    
    
    
    97.37
    
    
    
    1.79
    
    
    
    1,077,369
    
    
    
    95.85
    
    
    
    1.18Certificate accounts
    
    
    35,374
    
    
    
    2.63
    
    
    
    3.87
    
    
    
    46,675
    
    
    
    4.15
    
    
    
    3.66Total Deposits
    
    $
    1,345,681
    
    
    
    100.00
    %
    
    
    1.84
    %
    
    $
    1,124,044
    
    
    
    100.00
    %
    
    
    1.27
    %
   Weighted AverageAmount
    
    
    Rate Paid(Dollars in thousands)Three months or less
    
    $
    544
    
    
    
    3.80
    %Over three months through six months
    
    
    912
    
    
    
    4.91Over six months through twelve months
    
    
    4,296
    
    
    
    5.65Over twelve months
    
    
    801
    
    
    
    4.57Total
    
    $
    6,553
    
    
    
    5.26
    %
  52




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##### Table of Contents



Short-term Borrowings.
  AverageAmount
    
    
    Amount
    
    
    Maximum
    
    
    Weighted
    
    
    WeightedOutstanding
    
    
    Outstanding
    
    
    Outstanding
    
    
    Average Interest
    
    
    Average Interestat
    
    
    During the
    
    
    at any
    
    
    Rate During
    
    
    Rate atYear-End
    
    
    Year(1)
    
    
    Month-End
    
    
    the Year
    
    
    Year-End(Dollars in thousands)At or for the year ended December 31, 2006:FHLBank borrowings(2)
    
    $
    519,431
    
    
    $
    630,229
    
    
    $
    736,020
    
    
    
    4.74
    %
    
    
    5.03
    %Repurchase Agreements
    
    
    50,000
    
    
    
    9,315
    
    
    
    50,000
    
    
    
    4.95
    
    
    
    4.94Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    School financing
    
    
    
    
    
    
    5,302
    
    
    
    16,305
    
    
    
    6.06
    
    
    
    At or for the year ended December 31, 2005:FHLBank borrowings(3)
    
    $
    615,028
    
    
    $
    574,982
    
    
    $
    650,066
    
    
    
    3.53
    %
    
    
    4.12
    %Revolving lines of credit
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    6.86
    
    
    
    School financing
    
    
    16,364
    
    
    
    14,844
    
    
    
    17,032
    
    
    
    6.06
    
    
    
    6.27At or for the year ended December 31, 2004:FHLBank borrowings(4)
    
    $
    506,118
    
    
    $
    502,740
    
    
    $
    601,147
    
    
    
    2.46
    %
    
    
    2.95
    %Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    School financing
    
    
    15,572
    
    
    
    24,835
    
    
    
    30,350
    
    
    
    4.14
    
    
    
    5.70
 
 (1)
    
    Calculations are based on daily averages where available and monthly averages otherwise.(2)
    
    A total of $136.0 million of the FHLBank borrowings outstanding at December 31, 2006 were
borrowed under short option advance agreements with the FHLBank. The interest rates on the
short option advance borrowings ranged from 3.27% to 5.63% at December 31, 2006 and their
possible call dates varied from January 2007 to September 2009. A total of $10.0 million of
the FHLBank borrowings outstanding at December 31, 2006 were borrowed under fixed rate advance
agreements with the FHLBank. The interest rate on the fixed rate advance was 3.92% at
December 31, 2006, and the maturity date is May 2008. Additionally, $931,000 of the FHLBank
borrowings outstanding at December 31, 2006 are fixed-term/rate advances, which were borrowed
from the FHLBank to offset specific loans originated by United Western Bank. The principal
amount of these fixed-term/rate advances adjusts monthly based on an amortization schedule.
The interest rate on the fixed-term/rate advances was 5.84%, and their maturity date is June
2014.(3)
    
    A total of $286.0 million of the FHLBank borrowings outstanding at December 31, 2005 were
borrowed under short option advance agreements with the FHLBank. The interest rates on the
short option advance borrowings ranged from 3.62% to 5.63% at December 31, 2005 and their
possible call dates varied from January 2006 to August 2007. A total of $20.0 million of the
FHLBank borrowings outstanding at December 31, 2005 were borrowed under fixed rate advance
agreements with the FHLBank. The interest rates on the advances ranged from 3.28% to 3.92% at
December 31, 2005, and their maturity dates ranged from November 2006 to May 2008.
Additionally, $1.0 million of the FHLBank borrowings outstanding at December 31, 2005 are
fixed-term/rate advances, which were borrowed from the FHLBank to offset specific loans
originated by United Western Bank. The principal amount of these fixed-term/rate advances
adjusts monthly based on an amortization schedule. The interest rate on the fixed-term/rate
advances was 5.84%, and their maturity date is June 2014.(4)
    
    A total of $176.0 million of the FHLBank borrowings outstanding at December 31, 2004 were
borrowed under short option advance agreements with the FHLBank. The interest rates on the
short option advance borrowings ranged from 2.69% to 5.63% at December 31, 2004 and their
possible call dates varied from January 2005 to November 2006. A total of $40.0 million of
the FHLBank borrowings outstanding at December 31, 2004 were borrowed under fixed rate advance
agreements with the FHLBank. The interest rates on the advances ranged from 2.87% to 3.92% at
December 31, 2004, and their maturity dates ranged from November 2005 to May 2008.
Additionally, $1.1 million of the FHLBank borrowings outstanding at December 31, 2004 are
fixed-term/rate advances, which were borrowed from the FHLBank to offset specific loans
originated by United Western Bank. The principal amount of these fixed-term/rate advances
adjusts monthly based on an amortization schedule. The interest rate on the fixed-term/rate
advances was 5.84%, and their maturity date is June 2014.  53




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##### Table of Contents



Other Borrowings.
 Liquidity
 Bank Liquidity .
    Company Liquidity.
    54




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##### Table of Contents



Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet
Arrangements.
 As of December 31, 2006Note
    
    
    1 Year
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Reference
    
    
    or Less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalContractual Obligations
    
    (Dollars in thousands)Deposits (passbook, NOW
and money market)
    
    
    14
    
    
    $
    1,310,307
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,310,307Certificate accounts
    
    
    14
    
    
    
    19,580
    
    
    
    15,598
    
    
    
    196
    
    
    
    
    
    
    
    35,374FHLBank borrowings
    
    
    17
    
    
    
    498,500
    
    
    
    10,000
    
    
    
    10,931
    
    
    
    
    
    
    
    519,431Borrowed money
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000Junior subordinated
debentures owed to
unconsolidated
subsidiary trusts
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,216
    
    
    
    56,216Sale leaseback commitment
    
    
    21
    
    
    
    1,367
    
    
    
    2,734
    
    
    
    2,734
    
    
    
    6,496
    
    
    
    13,331Other operating leases
    
    
    21
    
    
    
    582
    
    
    
    1,107
    
    
    
    970
    
    
    
    973
    
    
    
    3,632
  55




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##### Table of Contents



As of December 31,2006
    
    
    2005Commitments
    
    (Dollars in thousands)Commitments to extend credit:Loans secured by mortgages
    
    $
    74,450
    
    
    $
    49,732Construction loans
    
    
    122,526
    
    
    
    48,860Commercial lines of credit
    
    
    14,627
    
    
    
    854Commercial loans
    
    
    28,641
    
    
    
    1,569Consumer loans
    
    
    246
    
    
    
    278Standby letters of credit
    
    
    791
    
    
    
    429Commitments to purchase USDA and SBA loans
    
    
    
    
    
    
    39,660
     Capital.
    56




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##### Table of Contents



Statement of Cash Flows
 Operating Activities
 Investing Activities
 Financing Activities
 Inflation and Changing Prices
  Forward Looking Statements
   57




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk.
 Asset Liability Management.
 Interest Rate Risk.
       58




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 
 Item 11. Executive Compensation
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 
 Item 14. Principal Accountant Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
        59




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##### Table of Contents



SIGNATURES
 th
 UNITED WESTERN BANCORP, INC.Dated: March 16, 2007
    /s/ Scot T. WetzelScot T. WetzelPresident and Chief Executive Officer
(Principal Executive Officer)Dated: March 16, 2007
    /s/ William D. SniderWilliam D. SniderChief Financial Officer
(Principal Financial Officer)Dated: March 16, 2007
    /s/ Benjamin C. HirshBenjamin C. HirshChief Accounting Officer
(Principal Accounting Officer)  Signatures
    
    Title
    
    Date/s/ Scot T. Wetzel

Scot T. Wetzel
    
    President, Chief Executive
Officer and a Director
(Principal Executive Officer)
    
    March 16, 2007/s/ Guy A. Gibson

Guy A. Gibson
    
    Chairman of the Board
    
    March 16, 2007/s/ William D. Snider

William D. Snider
    
    Vice Chairman, Chief Financial
Officer and a Director
(Principal Financial Officer)
    
    March 16, 2007/s/ Robert T. Slezak

Robert T. Slezak
    
    Director
    
    March 16, 2007/s/ Lester Ravitz

Lester Ravitz
    
    Director
    
    March 16, 2007/s/ Dr. James Bullock

Dr. James Bullock
    
    Director
    
    March 16, 2007/s/ Jeffrey R. Leeds

Jeffrey R. Leeds
    
    Director
    
    March 16, 2007
  60




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##### Table of Contents



INDEX TO EXHIBITS
 3.1
    
    Articles of Amendment to the Articles of Incorporation, filed as
Exhibit 3.1 to Registrants annual report on Form 10-K for the
fiscal year ended December 31, 2002 filed by the Registrant with the
Commission.3.2*
    
    Articles of Amendment to the Articles of Incorporation.3.3*
    
    Bylaws, as amended, of the Registrant4.1
    
    Specimen Certificate for Common Stock of the Registrant, filed as
Exhibit 4.1 to Registrants registration statement on Form S-1 (No.
333-10223), filed by the Registrant with the Commission on August
15, 1996.4.2
    
    1996 Amended and Restated Employee Stock Option Plan, incorporated
by reference to Appendix III of the Proxy Statement filed by the
Registrant for the annual meeting of shareholders held on June 15,
2006, filed with the Commission as Exhibit 4.1 to Registrants Form
S-8 Registration statement on June 30, 2006.4.3
    
    Form of Non-Qualified Stock Option Agreement, filed as Exhibit 99.1
to Registrants report on Form 8-K filed by the Registrant with the
Commission on February 16, 2005.4.4
    
    Form of Director Non-Qualified Stock Option Agreement, filed as
Exhibit 99.2 to Registrants report on Form 8-K filed by the
Registrant with the Commission on February 16, 2005.4.5
    
    1996 Employee Stock Purchase Plan, incorporated by reference to
Appendix II of the Proxy Statement filed by the Registrant for the
annual meeting of shareholders held on June 15, 2006, filed with the
Commission as Exhibit 4.2 to Registrants Form S-8 Registration
statement on June 30, 2006.4.6
    
    Indenture by and among the Registrant and State Street Bank and
Trust Company, as trustee, relating to the 10% Junior Subordinated
Debentures due 2029, filed as Exhibit 4.7 to Registrants
registration statement on Form S-1 (No. 333-79731), filed by the
Registrant with the Commission on June 1, 1999.4.7
    
    Form of Junior Subordinated Debentures, filed as Exhibit 4.8 to
Registrants registration statement on Form S-1 (No. 333-79731),
filed by the Registrant with the Commission on June 1, 1999.4.8
    
    Certificate of Trust of Matrix Bancorp Capital Trust I, filed as
Exhibit 4.9 to Registrants registration statement on Form S-1 (No.
333-79731), filed by the Registrant with the Commission on June 1,
1999.4.9
    
    Amended and Restated Trust Agreement of Matrix Bancorp Capital Trust
I, filed as Exhibit 4.10 to Registrants registration statement on
Form S-1 (No. 333-79731), filed by the Registrant with the
Commission on June 1, 1999.4.10
    
    Preferred Security Certificate for Matrix Bancorp Capital Trust I,
filed as Exhibit 4.11 to Registrants registration statement on Form
S-1 (No. 333-79731), filed by the Registrant with the Commission on
June 1, 1999.4.11
    
    Preferred Securities Guarantee Agreement of the Company relating to
the Preferred Securities, filed as Exhibit 4.12 to Registrants
registration statement on Form S-1 (No. 333-79731), filed by the
Registrant with the Commission on June 1, 1999.4.12
    
    Agreement as to the Expenses and Liabilities, filed as Exhibit 4.13
to Registrants registration statement on Form S-1 (No. 333-79731),
filed by the Registrant with the Commission on June 1, 1999.4.13
    
    Indenture between the Registrant and Wilmington Trust Company, as
debenture trustee, dated as of March 28, 2001, relating to the
10.18% junior subordinated deferrable interest debentures due June
8, 2031, filed as Exhibit 10.5 to Registrants quarterly report on
Form 10-Q for the quarter ended March 31, 2001, filed by the
Registrant with the Commission.4.14
    
    Amended and Restated Declaration of Trust of Matrix Bancorp Capital
Trust II, dated as of March 28, 2001, filed as Exhibit 10.6 to
Registrants quarterly report on Form 10-Q for the quarter ended
March 31, 2001, filed by the Registrant with the Commission.4.15
    
    Common Securities Guarantee Agreement of the Registrant, dated as of
March 28, 2001, filed as Exhibit 10.7 to Registrants quarterly
report on Form 10-Q for the quarter ended March 31, 2001, filed by
the Registrant with the Commission.4.16
    
    Capital Securities Guarantee Agreement of the Registrant, dated as
of March 28, 2001, filed as Exhibit 10.8 to Registrants quarterly
report on Form 10-Q for the quarter ended March 31, 2001, filed by
the Registrant with the Commission.4.17
    
    Indenture between the Registrant and The Bank of New York, as
debenture trustee, dated as of July 16, 2001, relating to the 10.25%
junior subordinated deferrable interest debentures due July 25,
2031, filed as Exhibit 10.3 to Registrants quarterly report on Form
10-Q for the quarter ended June 30, 2001, filed by the Registrant
with the Commission.4.18
    
    Amended and Restated Declaration of Trust of Matrix Bancorp Capital
Trust III, dated as of July 16, 2001, filed as Exhibit 10.4 to
Registrants quarterly report on Form 10-Q for the quarter ended
June 30, 2001, filed by the Registrant with the Commission.
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##### Table of Contents



4.19
    
    Common Securities Subscription Agreement of the Registrant, dated as
of July 16, 2001, filed as Exhibit 10.5 to Registrants quarterly
report on Form 10-Q for the quarter ended June 30, 2001, filed by
the Registrant with the Commission.4.20
    
    Capital Securities Agreement of the Registrant, dated as of June 28,
2001, filed as Exhibit 10.6 to Registrants quarterly report on Form
10-Q for the quarter ended June 30, 2001, filed by the Registrant
with the Commission.4.21
    
    Indenture between the Registrant and Wilmington Trust Company, as
trustee, dated as of November 28, 2001, relating to Floating Rate
Junior Subordinated Debt Securities due 2031, filed as Exhibit 4.26
to Registrants annual report on Form 10-K for the fiscal year ended
December 31, 2001, filed by the Registrant with the Commission.4.22
    
    Amended and Restated Declaration of Trust of Matrix Bancorp Capital
Trust IV, dated as of November 28, 2001, filed as Exhibit 4.27 to
Registrants annual report on Form 10-K for the fiscal year ended
December 31, 2001, filed by the Registrant with the Commission.4.23
    
    Guarantee Agreement of the Registrant, dated as of November 28,
2001, filed as Exhibit 4.28 to Registrants annual report on Form
10-K for the fiscal year ended December 31, 2001, filed by the
Registrant with the Commission.4.24
    
    Junior Indenture between the Registrant and The Bank of New York, as
trustee, dated as of July 25, 2002, relating to Floating Rate Junior
Subordinated Debt Securities, due July 25, 2032, filed as Exhibit
4.1 to Registrants quarterly report on Form 10-Q for the quarter
ended September 30, 2002, filed by the Registrant with the
Commission.4.25
    
    Amended and Restated Trust Agreement of Matrix Bancorp Capital Trust
V, dated as of July 25, 2002, filed as Exhibit 4.2 to Registrants
quarterly report on Form 10-Q for the quarter ended September 30,
2002, filed by the Registrant with the Commission.4.26
    
    Guarantee Agreement of Matrix Bancorp Capital Trust V, dated as of
July 25, 2002, filed as Exhibit 4.3 to Registrants quarterly report
on Form 10-Q for the quarter ended September 30, 2002, filed by the
Registrant with the Commission.4.27
    
    Amended and Restated Trust Agreement of Matrix Bancorp Capital Trust
VI, dated as of August 30, 2004, filed as Exhibit 10.1 to
Registrants quarterly report on Form 10-Q for the quarter ended
September 30, 2004, filed by the Registrant with the Commission.4.28
    
    Guarantee Agreement of Matrix Bancorp Capital Trust VI, dated as of
August 30, 2004, filed as Exhibit 10.2 to Registrants quarterly
report on Form 10-Q for the quarter ended September 30, 2004, filed
by the Registrant with the Commission.4.29
    
    Junior Indenture between the Registrant and Deutsche Bank Trust
Company Americas, dated as of August 30, 2004, relating to Junior
Subordinated Debt Securities, due October 18, 2034, filed as Exhibit
10.3 to Registrants quarterly report on Form 10-Q for the quarter
ended September 30, 2004, filed by the Registrant with the
Commission.4.30
    
    Indenture between the Registrant and Wells Fargo Bank, National
Association, as debenture trustee, dated as of June 30, 2005, filed
as Exhibit 10.1 to Registrants quarterly report on Form 10-Q for
the quarter ended June 30, 2005, filed by the Registrant with the
Commission.4.31
    
    Amended and Restated Declaration of Trust Agreement of Matrix
Bancorp Capital Trust VIII, dated as of June 30, 2005, filed as
Exhibit 10.2 to Registrants quarterly report on Form 10-Q for the
quarter ended June 30, 2005, filed by the Registrant with the
Commission.4.32
    
    Guarantee Agreement of Matrix Bancorp Capital Trust VIII, dated as
of June 30, 2005, filed as Exhibit 10.3 to Registrants quarterly
report on Form 10-Q for the quarter ended June 30, 2005, filed by
the Registrant with the Commission.4.33
    
    Rights Agreement dated as of November 4, 2002, between Matrix
Bancorp, Inc. and Computershare Trust Company, which includes the
form of Articles of Amendment to State Terms of Series A Junior
Participating Preferred Stock, $0.01 par value, the form of Right
Certificate and the Summary of Rights, filed as Exhibit 4.1 to
Registrants report on Form 8-K filed by the Registrant with the
Commission on November 6, 2002.4.34
    
    Indenture, dated February 13, 2004, between Registrant and Wells
Fargo Bank, as Trustee, relating to Floating Rate Subordinated Debt
Security due 2014, filed as Exhibit 4.32 to Registrants annual
report on Form 10-K for the fiscal year ended December 31, 2003,
filed by the Registrant with the Commission.4.35
    
    2006 Employee Stock Option Plan, incorporated by reference to
Appendix IV of the Proxy Statement filed by the Registrant for the
annual meeting of shareholders held on June 15, 2006, filed with the
Commission as Exhibit 4.1 to Registrants Form S-8 Registration
statement on June 30, 2006.10.1
    
    Assignment and Assumption Agreement, dated as of June 28, 1996, by
and among Mariano C. DeCola, William M. Howdon, R. James Nicholson
and Matrix Funding Corp., filed as Exhibit 10.30 to Registrants
registration statement on Form S-1 (No. 333-10223), filed by the
Registrant with the Commission on August 15, 1996.
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##### Table of Contents



10.2
    
    Amendment to Assignment and Assumption Agreement, dated as of August
13, 2002, by and among Mariano C. DeCola, William M. Howdon, R.
James Nicholson and Matrix Funding Corp. filed with Registrants
annual report on Form 10-K for the fiscal year ended December 31,
2002, filed by the Registrant with the Commission.10.3
    
    Development Management Agreement, dated as of June 28, 1996, by and
among Matrix Funding Corp. and Nicholson Enterprises, Inc., filed as
Exhibit 10.31 to Registrants registration statement on Form S-1
(No. 333-10223), filed by the Registrant with the Commission on
August 15, 1996.10.4
    
    Coyote Creek Planned Unit Development Agreement, dated as of July 1,
1998, by and among Fort Lupton, L.L.C. and Matrix Funding Corp.,
filed as Exhibit 10.12 to Registrants annual report on Form 10-K
for the fiscal year ended December 31, 1998, filed by the Registrant
with the Commission.10.5
    
    Fort Lupton Golf Course Residential and Planned Unit Development
Agreement, dated as of November 28, 1995, filed as Exhibit 10.36 to
Registrants registration statement on Form S-1 (No. 333-10223),
filed by the Registrant with the Commission on August 15, 1996.10.6
    
    Credit Agreement, dated as of December 27, 2000, by and between
Registrant, as borrower, and U.S. Bank National Association, as
agent, and certain lenders, as lenders, filed as Exhibit 10.15 to
Registrants annual report on Form 10-K for the fiscal year ended
December 31, 2000, filed by the Registrant with the Commission.10.7
    
    First Amendment to Credit Agreement, dated as of March 5, 2001, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.3 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2001, filed by the Registrant with the
Commission.10.8
    
    Second Amendment to Credit Agreement, dated as of July 27, 2001, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.2 to Registrants quarterly report on Form 10-Q for the
quarter ended June 30, 2001, filed by the Registrant with the
Commission.10.9
    
    Third Amendment to Credit Agreement, dated as of December 26, 2001,
by and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.19 to Registrants annual report on Form 10-K for the
fiscal year ended December 31, 2001, filed by the Registrant with
the Commission.10.10
    
    Fourth Amendment to Credit Agreement, dated as of March 31, 2002, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.2 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2002, filed by the Registrant with the
Commission.10.11
    
    Fifth Amendment to Credit Agreement, dated as of March 29, 2003, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.1 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2003, filed by the Registrant with the
Commission.10.12
    
    Sixth Amendment to Credit Agreement, dated as of March 31, 2004, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.1 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2004, filed by the Registrant with the
Commission.10.13
    
    Seventh Amendment to Credit Agreement, dated as of March 31, 2005,
by and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.1 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2005, filed by the Registrant with the
Commission.10.14
    
    Eighth Amendment to Credit Agreement, dated as of March 31, 2006, by
and between Registrant, as borrower, and U.S. Bank National
Association, as agent, and certain lenders, as lenders, filed as
Exhibit 10.1 to Registrants quarterly report on Form 10-Q for the
quarter ended March 31, 2006, filed by the Registrant with the
Commission.10.15
    
    Lease dated as of September 1, 1999, by and between Matrix Financial
Services Corporation and Suncor Development Company, filed as
Exhibit 10.22 to Registrants annual report on Form 10-K for the
fiscal year ended December 31, 2000, filed by the Registrant with
the Commission.10.16
    
    Matrix Bancorp, Inc. Executive Incentive Plan, filed as Exhibit
10.27 to Registrants annual report on Form 10-K for the fiscal year
ended December 31, 2000, filed by the Registrant with the
Commission.10.17
    
    Purchase and Assumption Agreement, dated as of February 28, 2003, by
Matrix Financial Services Corporation, as seller, and AmPro Mortgage
Corporation, as purchaser, filed as Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission on
March 4, 2003.
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##### Table of Contents



10.18
    
    First Amendment to Purchase and Assumption Agreement, dated as of
April 18, 2003, by and Matrix Financial Services Corporation, as
seller, United Western Bank, as parent, and AmPro Mortgage
Corporation, as purchaser, filed as Exhibit 10.2 to Registrants
quarterly report on Form 10-Q for the quarter ended March 31, 2003,
filed by the Registrant with the Commission.10.19
    
    Second Amendment to Purchase and Assumption Agreement, dated as of
July 22, 2003, by and between Matrix Financial Services Corporation,
as seller, Matrix Capital Bank, as parent, and AmPro Mortgage
Corporation, as purchaser, filed as Exhibit 10.1 to Registrants
quarterly report on Form 10-Q for the quarter ended June 30, 2003,
filed by the Registrant with the Commission.10.20
    
    Third Amendment to Purchase and Assumption Agreement, dated as of
August 31, 2003, by and between Matrix Financial Services
Corporation, as seller, Matrix Capital Bank, as parent, and AmPro
Mortgage Corporation, as purchaser, filed as Exhibit 10 to
Registrants report on Form 8-K filed by the Registrant with the
Commission on September 15, 2003.10.21
    
    Branch Purchase and Deposit Assumption Agreement, dated as of
January 30, 2004 by and between Matrix Capital Bank and FirstBank,
filed as Exhibit 10.41 to Registrants annual report on Form 10-K
for the fiscal year ended December 31, 2003, filed by the Registrant
with the Commission.10.22
    
    Branch Purchase and Deposit Assumption Agreement, dated as of July
7, 2004 by and between Matrix Capital Bank and AccessBank, filed as
Exhibit 10.4 to Registrants quarterly report on Form 10-Q for the
quarter ended September 30, 2004, filed by the Registrant with the
Commission.10.23
    
    Contribution and Sale Agreement, dated as of August 31, 2004 by and
among First American Real Estate Solutions LLC, Matrix Bancorp,
Inc., and Matrix Asset Management Corporation, filed as Exhibit 10.1
to Registrants report on Form 8-K filed by the Registrant with the
Commission on September 15, 2004.10.24
    
    Operating Agreement of Matrix Asset Management LLC, dated as of
September 10, 2004, filed as Exhibit 10.5 to Registrants quarterly
report on Form 10-Q for the quarter ended September 30, 2004, filed
by the Registrant with the Commission.10.25
    
    Contribution Agreement, dated as of December 1, 2004 by and among
Bluff Point Associates Corp., McInerney/Gabriele Family Limited
Partnership, R. Clifton DAmato, John H. Moody, MSCS Ventures, Inc.,
Matrix Bancorp, Inc., Matrix Capital Bank, Optech Systems, Inc., Let
Lee and MG Colorado Holdings, Inc., filed as Exhibit 10.1 to
Registrants report on Form 8-K filed by the Registrant with the
Commission on December 6, 2004.10.26
    
    Amendment No. 1 to Contribution and Sale Agreement, dated as of
March 23, 2005 by and among Bluff Point Associates Corp.,
McInerney/Gabriele Family Limited Partnership, R. Clifton DAmato,
John H. Moody, MSCS Ventures, Inc., Matrix Bancorp, Inc., Matrix
Capital Bank, Optech Systems, Inc., Let Lee and MG Colorado
Holdings, Inc., filed as Exhibit 10.1 to Registrants report on Form
8-K filed by the Registrant with the Commission on March 28, 2005.10.27
    
    Amended and Restated Tendering Stockholders Agreement, dated as of
December 2, 2005 by and between Matrix Bancorp, Inc. and Columbia
Management Advisors, LLC, filed as Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission on
December 13, 2005.10.28
    
    Amended and Restated Tendering Stockholders Agreement, dated as of
December 2, 2005 by and between Matrix Bancorp, Inc. and David W.
Kloos, filed as Exhibit 10.2 to Registrants report on Form 8-K
filed by the Registrant with the Commission on December 13, 2005.10.29
    
    Amended and Restated Tendering Stockholders Agreement, dated as of
December 2, 2005 by and between Matrix Bancorp, Inc. and T. Allen
McConnell, filed as Exhibit 10.3 to Registrants report on Form 8-K
filed by the Registrant with the Commission on December 13, 2005.10.30
    
    Amended and Restated Tendering Stockholders Agreement, dated as of
December 2, 2005 by and between Matrix Bancorp, Inc. and Richard V.
Schmitz, filed as Exhibit 10.4 to Registrants report on Form 8-K
filed by the Registrant with the Commission on December 13, 2005.10.31
    
    Amended and Restated Tendering Stockholders Agreement, dated as of
December 2, 2005 by and between Matrix Bancorp, Inc. and D. Mark
Spencer, filed as Exhibit 10.5 to Registrants report on Form 8-K
filed by the Registrant with the Commission on December 13, 2005.10.32
    
    The Registration Rights Agreement, dated as of December 9, 2005, by
and between Matrix Bancorp, Inc., Friedman, Billings, Ramsey & Co.,
Inc. and the other parties thereto, filed as Exhibit 4.1 to
Registrants report on Form 8-K filed by the Registrant with the
Commission on December 13, 2005.10.33
    
    Final Compromise Settlement Agreement and Release, dated as of
December 22, 2005, filed as Exhibit 10.1 to Registrants report on
Form 8-K filed by the Registrant with the Commission on December 27,
2005.10.34
    
    Retention, Separation and Release Agreement, dated as of
November 7, 2005, by and between Matrix Bancorp, Inc., Matrix Bancorp Trading, Inc.,
First Matrix Investment Services Corp., First Matrix, LLC, ABS School Services, LLC, Matrix Tower
Holdings, LLC, Matrix Funding Corp., MTXC Realty Corp., Equi-Mor Holdings, Inc., MSCS Ventures,
Inc., and Community Development Funding I, LLC and T. Allen McConnell, filed as Exhibit 10.42 to
Registrants Form 10-K filed with the Commission on March 15, 2006.
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10.35
    
    Retention, Separation and Release Agreement, dated as of
November 7, 2005, by and between Matrix Bancorp, Inc., Matrix Capital Bank, Matrix Bancorp
Trading, Inc., First Matrix Investment Services Corp., First Matrix, LLC, ABS School Services, LLC,
Matrix Financial Services Corporation, Matrix Funding Corp., MTXC Realty Corp., Sterling Trust
Company, The Vintage Group, Inc., Vintage Delaware Holdings, Inc., Equi-Mor Holdings, Inc., MSCS
Ventures, Inc., Charter Facilities Funding, LLC, Charter Facilities Funding III, LLC, and
Community Development Funding I, LLC and David W. Kloos, filed as Exhibit 10.43 to Registrants
Form 10-K filed with the Commission on March 15, 2006.10.36
    
    Severance, Separation and Release Agreement, dated as of
November 7, 2005, by and between Matrix Bancorp, Inc., Matrix Capital Bank, Matrix Bancorp
Trading, Inc., First Matrix Investment Services Corp., Matrix Financial Services Corporation,
MTXC Realty Corp., The Vintage Group, Inc., Sterling Trust Company and United Western Funding
Corp. and Richard V. Schmitz, filed as Exhibit 10.44 to Registrants Form 10-K filed with
the Commission on March 15, 2006. 10.37
    
    Severance, Separation and Release Agreement, dated as of
November 7, 2005, by and between Matrix Bancorp, Inc., Matrix Capital Bank, Matrix Bancorp
Trading, Inc., First Matrix Investment Services Corp., ABS School Services, LLC, Matrix Financial
Services Corporation, United Western Insurance Services Corporation, MTXC Realty Corp., United
Western Tower Holdings, LLC, The Vintage Group, Inc., and Equi-Mor Holdings, Inc. and D. Mark
Spencer, filed as Exhibit 10.45 to Registrants Form 10-K filed with the Commission on
March 15, 2006. 10.38
    
    Severance, Separation and Release Agreement, dated as of
November 7, 2005, by and between Matrix Bancorp, Inc. and David Frank, filed as Exhibit 10.46
to Registrants Form 10-K filed with the Commission on March 15, 2006. 10.39
    
    Employment Agreement, dated March 15, 2006, and effective as of
January 11, 2006, by and between Matrix Bancorp, Inc. and Scot T.
Wetzel, filed as Exhibit 10.1 to Registrants Form 8-K filed with
the Commission on March 20, 2006.10.40
    
    Asset Purchase Agreement dated as of March 31, 2006, between Matrix
Bancorp Trading, Inc., SN Capital Markets, LLC, Security National
Holding Company, LLC, and Security National Master Holding Company,
LLC, filed as Exhibit 2.1 to Registrants report on Form 8-K filed
by the Registrant with the Commission on April 6, 2006.10.41
    
    Purchase Agreement dated as of May 5, 2006, between SKS Ventures,
LLC and Equi-Mor Holdings, Inc., filed as Exhibit 10.1 to
Registrants report on Form 8-K filed by the Registrant with the
Commission on May 10, 2006.10.42
    
    Credit Agreement dated as of June 30, 2006 between Matrix Bancorp,
Inc. and Wells Fargo Bank, National Association, relating to a line
of credit in the amount of $12,000,000 and a $5,000,000 term loan,
filed as Exhibit 10.1 to Registrants Form 8-K filed with the
Commission on July 7, 2006.10.43
    
    Agreement for Purchase and Sale dated as of August 11, 2006 between
Matrix Tower Holdings, LLC and Grant Management, A.S., filed as
Exhibit 10.1 to Registrants Form 8-K filed with the Commission on
August 25, 2006.10.44
    
    License Agreement dated as of September 29, 2006, between Legent
Clearing, LLC and United Western Bancorp, Inc., filed as Exhibit
10.1 to Registrants Form 8-K with the Commission on October 5,
2006.10.45
    
    Revolving Loan Agreement dated as of September 29, 2006, between
Legent Group, LLC and United Western Bank, in the amount of
$5,000,000, filed as Exhibit 10.2 to Registrants Form 8-K filed
with the Commission on October 5, 2006.10.46
    
    Form of Office Lease dated as of October 1, 2006, between 700
17th Street Operating, LLC and United Western Bank, filed
as Exhibit 10.3 to Registrants Form 8-K filed with the Commission
on October 5, 2006.12
    
    Statement Re: Computations of Ratios.21*
    
    Subsidiaries of the Registrant.23.1*
    
    Consent of McGladrey & Pullen LLP.23.2*
    
    Consent of KPMG LLP.31.1*
    
    Certification by Scot T. Wetzel pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2*
    
    Certification by William D. Snider pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.3*
    
    Certification by Benjamin C. Hirsh pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1*
    
    Certification by D. Scot T. Wetzel pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.2*
    
    Certification by William D. Snider pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.3*
    
    Certification by Benjamin C. Hirsh pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 
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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Consolidated Financial Statements of United Western Bancorp, Inc. and Subsidiaries
 Report on Managements Assessment of Internal Control over Financial Reporting, December 31, 2006
    
    
    F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting, December 31, 2006
    
    
    F-3Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements, December 31, 2006 and 2005
    
    
    F-5Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements, December 31, 2004
    
    
    F-6Consolidated Balance SheetsDecember 31, 2006 and 2005
    
    
    F-7Consolidated Statements of Incomefor the years ended December 31, 2006, 2005 and 2004
    
    
    F-8Consolidated Statements of Shareholders Equity and Comprehensive Income for the years ended December 31, 2006, 2005 and 2004
    
    
    F-10Consolidated Statements of Cash Flowsfor the years ended December 31, 2006, 2005 and 2004
    
    
    F-11Notes to Consolidated Financial Statements
    
    
    F-13
  F-1




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##### Table of Contents



Report on Managements Assessment of Internal Control over Financial Reporting
    Internal Control-Integrated Framework Internal
Control-Integrated Framework
  /s/ Scot T. Wetzel
    
    /s/ William D. Snider
    
    /s/ Benjamin C. HirshScot T. Wetzel
    
    William D. Snider
    
    Benjamin C. HirshPresident and Chief
Executive Officer
    
    Chief Financial Officer
    
    Chief Accounting Officer
  F-2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting
 
       F-3




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##### Table of Contents



/s/ McGLADREY & PULLEN, LLP
 
  F-4




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
 
      /s/McGLADREY & PULLEN, LLP
 
  F-5




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
 
    KPMG LLP
 
  F-6




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##### Table of Contents



(Dollars in thousands, except share information)
 December 31,
    
    
    December 31,2006
    
    
    2005AssetsCash and due from banks
    
    $
    12,840
    
    
    $
    15,877Interest-earning deposits and federal funds sold
    
    
    10,914
    
    
    
    18,355Total cash and cash equivalents
    
    
    23,754
    
    
    
    34,232Investment securities  available for sale
    
    
    142,146
    
    
    
    14,462Investment securities  held to maturity
    
    
    696,833
    
    
    
    421,010Investment securities  trading
    
    
    
    
    
    
    104,722Loans held for sale, net
    
    
    444,120
    
    
    
    927,442Loans held for investment, net
    
    
    711,601
    
    
    
    425,943FHLBank stock, at cost
    
    
    42,764
    
    
    
    34,002Mortgage servicing rights, net
    
    
    15,399
    
    
    
    20,708Accrued interest receivable
    
    
    11,385
    
    
    
    9,752Other receivables
    
    
    17,123
    
    
    
    19,387Premises and equipment, net
    
    
    8,591
    
    
    
    17,154Bank owned life insurance
    
    
    23,342
    
    
    
    22,454Other assets, net
    
    
    11,711
    
    
    
    19,898Deferred income tax asset and income tax receivable
    
    
    2,376
    
    
    
    3,696Foreclosed real estate, net
    
    
    5,403
    
    
    
    4,526Total assets
    
    $
    2,156,548
    
    
    $
    2,079,388Liabilities and shareholders equityLiabilities:Deposits
    
    $
    1,345,681
    
    
    $
    1,124,044Custodial escrow balances
    
    
    40,017
    
    
    
    49,385FHLBank borrowings
    
    
    519,431
    
    
    
    615,028Borrowed money
    
    
    60,000
    
    
    
    29,581Junior subordinated debentures owed to unconsolidated
subsidiary trusts
    
    
    56,216
    
    
    
    61,372Income tax payable
    
    
    116
    
    
    
    Other liabilities
    
    
    27,334
    
    
    
    19,250Total liabilities
    
    
    2,048,795
    
    
    
    1,898,660Commitments and contingencies (Note 21)
Shareholders equity:Preferred stock, par value $0.0001; 5,000,000 shares
authorized;
no shares outstanding
    
    
    
    
    
    
    Common stock, par value $0.0001; 50,000,000 shares
authorized; issued and
7,256,573 shares at December 31, 2006 and
11,740,850 shares at December 31, 2005 outstanding
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    23,616
    
    
    
    108,395Retained earnings
    
    
    83,970
    
    
    
    72,314Accumulated other comprehensive income
    
    
    166
    
    
    
    18Total shareholders equity
    
    
    107,753
    
    
    
    180,728Total liabilities and shareholders equity
    
    $
    2,156,548
    
    
    $
    2,079,388
 See accompanying notes to consolidated financial statements
  F-7




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##### Table of Contents



(Dollars in thousands, except share information)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Interest and dividend income:Single-family loans
    
    $
    35,223
    
    
    $
    43,040
    
    
    $
    39,669Other loans
    
    
    36,226
    
    
    
    22,266
    
    
    
    20,004Investment securities
    
    
    40,471
    
    
    
    19,849
    
    
    
    9,837Interest-earning deposits
    
    
    3,380
    
    
    
    1,941
    
    
    
    1,063Total interest and dividend income
    
    
    115,300
    
    
    
    87,096
    
    
    
    70,573Interest expense:Deposits
    
    
    22,742
    
    
    
    15,883
    
    
    
    10,665FHLBank advances
    
    
    30,275
    
    
    
    20,305
    
    
    
    12,391Borrowed money and junior subordinated debentures
    
    
    6,766
    
    
    
    6,278
    
    
    
    7,715Total interest expense
    
    
    59,783
    
    
    
    42,466
    
    
    
    30,771Net interest income before provision for credit losses
    
    
    55,517
    
    
    
    44,630
    
    
    
    39,802Provision for credit losses
    
    
    2,341
    
    
    
    1,490
    
    
    
    2,914Net interest income after provision for credit losses
    
    
    53,176
    
    
    
    43,140
    
    
    
    36,888Noninterest income:Loan administration
    
    
    7,749
    
    
    
    10,103
    
    
    
    15,253Brokerage
    
    
    583
    
    
    
    1,737
    
    
    
    3,657Custodial and administrative services
    
    
    6,833
    
    
    
    7,217
    
    
    
    7,853Real estate disposition services
    
    
    168
    
    
    
    1,391
    
    
    
    7,786Gain on sale of loans and securities
    
    
    685
    
    
    
    2,002
    
    
    
    6,586Gain on sale of assets
    
    
    3,100
    
    
    
    300
    
    
    
    31,767Litigation settlements
    
    
    2,550
    
    
    
    764
    
    
    
    Other
    
    
    7,347
    
    
    
    4,753
    
    
    
    5,650Total noninterest income
    
    
    29,015
    
    
    
    28,267
    
    
    
    78,552Noninterest expense:Compensation and employee benefits
    
    
    22,309
    
    
    
    25,843
    
    
    
    26,282Amortization of mortgage servicing rights
    
    
    5,810
    
    
    
    7,764
    
    
    
    16,100Recovery of impairment on mortgage servicing rights
    
    
    (276
    )
    
    
    (1,180
    )
    
    
    (444
    )Occupancy and equipment
    
    
    3,781
    
    
    
    3,883
    
    
    
    4,882Postage and communication
    
    
    1,063
    
    
    
    1,176
    
    
    
    1,833Professional fees
    
    
    2,322
    
    
    
    2,656
    
    
    
    2,794Mortgage servicing rights subservicing fees
    
    
    2,488
    
    
    
    3,073
    
    
    
    1,367Data processing
    
    
    804
    
    
    
    903
    
    
    
    1,595Subaccounting fees
    
    
    21,013
    
    
    
    13,447
    
    
    
    7,738Other general and administrative
    
    
    9,371
    
    
    
    16,118
    
    
    
    22,473Total noninterest expense
    
    
    68,685
    
    
    
    73,683
    
    
    
    84,620
 Continued
  F-8




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##### Table of Contents



(Dollars in thousands, except share information)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Income (loss) from continuing operations before income taxes
    
    
    13,506
    
    
    
    (2,276
    )
    
    
    30,820Income tax provision (benefit)
    
    
    3,593
    
    
    
    (2,414
    )
    
    
    10,817Income from continuing operations
    
    
    9,913
    
    
    
    138
    
    
    
    20,003Discontinued operations:Income from discontinued operations, net of income
tax provision (benefit) of $1,152, $(33), and
$(369), respectively
    
    
    1,743
    
    
    
    1,420
    
    
    
    1,894Net Income
    
    $
    11,656
    
    
    $
    1,558
    
    
    $
    21,897
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Income from continuing operations per share  basic
    
    $
    1.27
    
    
    $
    0.02
    
    
    $
    3.07Income from continuing operations per share  assuming dilution
    
    $
    1.27
    
    
    $
    0.02
    
    
    $
    3.02Income from discontinued operations per share  basic
    
    $
    0.23
    
    
    $
    0.20
    
    
    $
    0.29Income from discontinued operations per share  assuming dilution
    
    $
    0.23
    
    
    $
    0.20
    
    
    $
    0.28Net income per share  basic
    
    $
    1.50
    
    
    $
    0.22
    
    
    $
    3.36Net income per share  assuming dilution
    
    $
    1.50
    
    
    $
    0.22
    
    
    $
    3.30Weighted average shares  basic
    
    
    7,791,516
    
    
    
    6,943,480
    
    
    
    6,520,239Weighted average shares  assuming dilution
    
    
    7,791,516
    
    
    
    7,036,128
    
    
    
    6,630,006
 See accompanying notes to consolidated financial statements.
  F-9




---



##### Table of Contents



(Dollars in thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Total
    
    
    IncomeBalance at December 31, 2003
    
    
    6,518,981
    
    
    $
    1
    
    
    $
    20,615
    
    
    $
    48,859
    
    
    $
    209
    
    
    $
    69,684Issuance of stock related to employee stock purchase
plan and options
    
    
    101,869
    
    
    
    
    
    
    
    817
    
    
    
    
    
    
    
    
    
    
    
    817Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,897
    
    
    
    
    
    
    
    21,897
    
    
    $
    21,897Net unrealized holding losses, net of income tax (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    (83
    )
    
    
    (83
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    21,814Balance at December 31, 2004
    
    
    6,620,850
    
    
    $
    1
    
    
    $
    21,432
    
    
    $
    70,756
    
    
    $
    126
    
    
    $
    92,315Issuance of stock related to private placement offering
    
    
    5,120,000
    
    
    
    
    
    
    
    86,963
    
    
    
    
    
    
    
    
    
    
    
    86,963Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,558
    
    
    
    
    
    
    
    1,558
    
    
    $
    1,558Net unrealized holding losses, net of income tax (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108
    )
    
    
    (108
    )
    
    
    (108
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,450Balance at December 31, 2005
    
    
    11,740,850
    
    
    $
    1
    
    
    $
    108,395
    
    
    $
    72,314
    
    
    $
    18
    
    
    $
    180,728Shares repurchased under Tender Offer
    
    
    (4,184,277
    )
    
    
    
    
    
    
    (79,501
    )
    
    
    
    
    
    
    
    
    
    
    (79,501
    )Stock repurchase
    
    
    (300,000
    )
    
    
    
    
    
    
    (5,853
    )
    
    
    
    
    
    
    
    
    
    
    (5,853
    )Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    575Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,656
    
    
    
    
    
    
    
    11,656
    
    
    $
    11,656Net unrealized holding gains, net of income tax (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    148
    
    
    
    148Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,804Balance at December 31, 2006
    
    
    7,256,573
    
    
    $
    1
    
    
    $
    23,616
    
    
    $
    83,970
    
    
    $
    166
    
    
    $
    107,753(1) Disclosure of reclassification amountUnrealized holding gain arising during the year
ended December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    148Less: reclassification adjustment of gains
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net unrealized holding gain on securities,
net of income tax (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    148(2) Net of income tax (benefit) provision of $(56), $(63)
and $76 for 2004, 2005, and 2006 respectively
 See accompanying notes to consolidated financial statements.
  F-10




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##### Table of Contents



(Dollars in thousands)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows of continuing operating activitiesNet income
    
    $
    11,656
    
    
    $
    1,558
    
    
    $
    21,897Income from discontinued operations, net of income tax provision
    
    
    (1,743
    )
    
    
    (1,420
    )
    
    
    (1,894
    )Adjustments to reconcile income to net cash provided by (used in) continuing
operating activities:Share-based compensation expense
    
    
    575
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    2,105
    
    
    
    2,446
    
    
    
    3,420Provision for loan and valuation losses
    
    
    2,341
    
    
    
    1,490
    
    
    
    2,914Amortization of mortgage servicing rights
    
    
    5,810
    
    
    
    7,764
    
    
    
    16,100Recovery of impairment on mortgage servicing rights
    
    
    (276
    )
    
    
    (1,180
    )
    
    
    (444
    )Gain on sale of loans and securities
    
    
    (685
    )
    
    
    (2,002
    )
    
    
    (6,586
    )Gain on sale of assets
    
    
    (3,100
    )
    
    
    (300
    )
    
    
    (31,767
    )Loss on sale of building and equipment
    
    
    194
    
    
    
    22
    
    
    
    42(Gain) loss on sale of foreclosed real estate
    
    
    (175
    )
    
    
    (63
    )
    
    
    51Tax benefits on stock options exercised
    
    
    
    
    
    
    
    
    
    
    (234
    )Changes in assets and liabilities:Proceeds from the sale of trading securities
    
    
    159,580
    
    
    
    489,822
    
    
    
    179,174Loans originated for sale, net of loans sold
    
    
    (141
    )
    
    
    (28,040
    )
    
    
    7,674Loans purchased for sale
    
    
    (217,760
    )
    
    
    (1,167,954
    )
    
    
    (1,738,181
    )Principal payments on, and proceeds from sale of loans held for sale
    
    
    337,734
    
    
    
    692,634
    
    
    
    627,564Originated mortgage servicing rights, net
    
    
    (135
    )
    
    
    (788
    )
    
    
    (615
    )Decrease in other receivables, other assets, deferred income tax asset
and income taxes receivable
    
    
    13,790
    
    
    
    652
    
    
    
    16,271Decrease in payable for purchase of mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    (199
    )8,557Increase (decrease) in other liabilities and income taxes payable
    
    
    8,557
    
    
    
    (6,817
    )
    
    
    4,941Net cash provided by (used in) continuing operating activities
    
    
    318,327
    
    
    
    (12,176
    )
    
    
    (899,872
    )Cash flows of continuing investing activitiesLoans originated and purchased for investment
    
    
    (300,892
    )
    
    
    (212,032
    )
    
    
    (129,714
    )Principal repayments on loans held for investment
    
    
    174,425
    
    
    
    163,508
    
    
    
    154,869Loans sold in the sale of United Western Bank branches
    
    
    
    
    
    
    
    
    
    
    22,837Purchase of available for sale securities
    
    
    (173,844
    )
    
    
    (16,979
    )
    
    
    (103,615
    )Proceeds from sale of available for sale securities
    
    
    33,571
    
    
    
    97,038
    
    
    
    779,350Proceeds from maturity and prepayment of available for sale securities
    
    
    24,402
    
    
    
    28,425
    
    
    
    30,825Purchase of held to maturity securities
    
    
    (308,676
    )
    
    
    (324,365
    )
    
    
    (42,594
    )Proceeds from the maturity and prepayment of held to maturity securities
    
    
    122,137
    
    
    
    59,427
    
    
    
    11,145Purchase of FHLBank stock, net
    
    
    (7,527
    )
    
    
    (521
    )
    
    
    (2,799
    )Purchases of premises and equipment
    
    
    (8,165
    )
    
    
    (1,592
    )
    
    
    (576
    )Proceeds from the sale of United Western Bank branches premises and equipment
    
    
    
    
    
    
    
    
    
    
    4,788Proceeds from the sale of other assets
    
    
    
    
    
    
    18
    
    
    
    20,302Acquisition of mortgage servicing rights
    
    
    (98
    )
    
    
    
    
    
    
    (871
    )Proceeds from the sale of building and equipment
    
    
    389
    
    
    
    
    
    
    
    Proceeds from sale of foreclosed real estate
    
    
    4,034
    
    
    
    4,698
    
    
    
    11,011Proceeds from sale of mortgage servicing rights
    
    
    8
    
    
    
    70
    
    
    
    Proceeds from the sale of United Western Financial Center
    
    
    26,542
    
    
    
    
    
    
    
    Net cash (used in) provided by continuing investing activities
    
    
    (413,694
    )
    
    
    (202,305
    )
    
    
    754,958
 Continued
  F-11




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##### Table of Contents



(Dollars in thousands)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows of continuing financing activitiesNet increase in deposits
    
    $
    221,637
    
    
    $
    4,885
    
    
    $
    319,034Net deposits sold with sale of United Western Bank branches
    
    
    
    
    
    
    
    
    
    
    (173,934
    )Net decrease in custodial escrow balances
    
    
    (9,368
    )
    
    
    (2,213
    )
    
    
    (33,868
    )Decrease (increase) in FHLBank borrowings, net
    
    
    (95,597
    )
    
    
    108,910
    
    
    
    47,914Borrowed money  proceeds from repurchase agreements
    
    
    50,000
    
    
    
    
    
    
    
    Borrowed money  repayment of notes payable with banks
and revolving lines, net
    
    
    (3,217
    )
    
    
    (2,784
    )
    
    
    (1,985
    )Borrowed money  repayment of senior notes
    
    
    
    
    
    
    
    
    
    
    (9,545
    )Borrowed money  proceeds from issuance of subordinated debt securities
    
    
    
    
    
    
    
    
    
    
    9,760Proceeds from issuance of capital securities of subsidiary trusts
    
    
    
    
    
    
    7,500
    
    
    
    10,000Redemption of debentures and capital securities of subsidiary trusts
    
    
    (5,156
    )
    
    
    (8,195
    )
    
    
    (14,550
    )Proceeds from issuance of private placement common stock shares, net
    
    
    
    
    
    
    86,963
    
    
    
    Proceeds from issuance of common stock related to employee stock
purchase plan and options
    
    
    
    
    
    
    
    
    
    
    583Redemption of common stock shares under tender offer
    
    
    (79,501
    )
    
    
    
    
    
    
    Repurchase of common stock
    
    
    (5,853
    )
    
    
    
    
    
    
    Net cash provided by continuing financing activities
    
    
    72,945
    
    
    
    195,066
    
    
    
    153,409Cash flows of discontinued operationsOperating cash flows
    
    
    28,242
    
    
    
    9,986
    
    
    
    14,505Investing cash flows
    
    
    66
    
    
    
    
    
    
    
    226Financing cash flows
    
    
    (16,364
    )
    
    
    792
    
    
    
    (14,867
    )Net cash provided by (used in) discontinued operations
    
    
    11,944
    
    
    
    10,778
    
    
    
    (136
    )(Decrease) increase in cash and cash equivalents
    
    
    (10,478
    )
    
    
    (8,637
    )
    
    
    8,359Cash and cash equivalents at beginning of the year
    
    
    34,232
    
    
    
    42,869
    
    
    
    34,510Cash and cash equivalents at end of the year
    
    $
    23,754
    
    
    $
    34,232
    
    
    $
    42,869Supplemental disclosure of non-cash activityLoans transferred to foreclosed real estate and other assets
    
    $
    5,855
    
    
    $
    7,605
    
    
    $
    7,938Loans securitized and transferred to securities available for sale
    
    $
    11,283
    
    
    $
    90,054
    
    
    $
    761,384Loans securitized and transferred to trading securities
    
    $
    149,144
    
    
    $
    468,169
    
    
    $
    251,336Trading securities transferred to held to maturity securities
    
    $
    90,074
    
    
    $
    
    
    
    $
    Securities available for sale transferred to held to maturity securities
    
    $
    
    
    
    $
    85,337
    
    
    $
    Loans held for sale transferred to loans held for investment
    
    $
    164,218
    
    
    $
    5,856
    
    
    $
    88,778Loans held for investment transferred to loans held for sale
    
    $
    
    
    
    $
    4,600
    
    
    $
    Note receivable received in sale of assets of discontinued operations
    
    $
    2,567
    
    
    $
    
    
    
    $
    Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    59,991
    
    
    $
    43,665
    
    
    $
    31,487Cash paid for income taxes
    
    $
    6,111
    
    
    $
    3,563
    
    
    $
    11,649
 See accompanying notes to consolidated financial statements.
  F-12




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 1. Organization
  Subsidiaries
       F-13




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Private Placement and Tender Offer
  2. Significant Accounting Policies
 Basis of Presentation
 Use of Estimates.
 Reclassifications.
 Cash and Cash Equivalents.
  F-14




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Concentrations and Restrictions on Cash and Cash Equivalents. .
 Investment Securities.
      F-15




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Loans Held for Sale.
   Loans Held for Investment.
  Allowance for Credit Losses.
  F-16




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 i.e.
  i.e
  i.e
  FHLBank Stock.
  F-17




---



##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Mortgage Servicing Rights.
      Premises and Equipment.
  F-18




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Foreclosed Real Estate.
 Bank Owned Life Insurance.
 Impairment or Disposal of Long-Lived Assets.
 Derivative Instruments and Hedging Activities.
   Repurchase Agreements.
  F-19




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Loan Administration Income.
 Brokerage Income.
 Custodial and Administration Services Income.
 Real Estate Disposition Services Income.
 Stock-Based Compensation
   F-20




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Subaccounting fees.
 Restructuring Charges.
 New Market Tax Credits.
   F-21




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Income from discontinued operations, net of income taxes.
 Income Taxes
  Income Per Common Share
 Comprehensive Income.
 Fair Value of Financial Instruments
  F-22




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Impact of Recently Issued Accounting Standards
 SFAS No. 155, Accounting for Certain Hybrid Financial Instruments  an amendment of FASB
Statements No. 133 and 140.
 SFAS No. 156, Accounting for Servicing of Financial Assets  an amendment of FASB Statement No.
140.
 SFAS No. 157, Fair Value Measurements.
 SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an
amendment of FASB Statement No. 115.
  F-23




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement 109.
  3. Discontinued Operations  Sale of Assets of Matrix Bancorp Trading, Inc.
   F-24




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Years EndedDecember 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands, except share information)Net interest income after provision for credit
losses
    
    $
    
    
    
    $
    
    
    
    $
    8Noninterest income
    
    
    1,346
    
    
    
    8,125
    
    
    
    7,004Noninterest expense
    
    
    1,333
    
    
    
    6,995
    
    
    
    6,030Operating income before taxes from
discontinued operations
    
    
    13
    
    
    
    1,130
    
    
    
    982Income tax provision
    
    
    5
    
    
    
    432
    
    
    
    393Operating income from discontinued operations
    
    
    8
    
    
    
    698
    
    
    
    589Gain on sale of certain assets and operations of
Matrix Bancorp Trading, Inc., net of income tax
provision of $1,435, $0, and $0, respectively
    
    
    2,424
    
    
    
    
    
    
    
    Income from discontinued operations, net of
income taxes
    
    $
    2,432
    
    
    $
    698
    
    
    $
    589Income from discontinued operations of Matrix
Bancorp Trading, Inc. per share  basic
    
    $
    0.31
    
    
    $
    0.10
    
    
    $
    0.09Income from discontinued operations of Matrix
Bancorp Trading, Inc. per share  assuming
dilution
    
    $
    0.31
    
    
    $
    0.10
    
    
    $
    0.09
 4. Discontinued Operations  Sale of ABS School Services, LLC
    F-25




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Years EndedDecember 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands, except share information)Net interest income after provision for
credit losses
    
    $
    580
    
    
    $
    1,918
    
    
    $
    2,463Noninterest income
    
    
    550
    
    
    
    1,690
    
    
    
    2,871Noninterest expense
    
    
    2,107
    
    
    
    3,351
    
    
    
    5,016Operating (loss) income before taxes from
discontinued operations
    
    
    (977
    )
    
    
    257
    
    
    
    318Income tax (benefit)
    
    
    (288
    )
    
    
    (465
    )
    
    
    (851
    )(Loss) income from discontinued operations, net
of
income taxes
    
    $
    (689
    )
    
    $
    722
    
    
    $
    1,169(Loss) income from discontinued operations of
ABS School Services, LLC per share  basic
    
    $
    (0.08
    )
    
    $
    0.10
    
    
    $
    0.18(Loss) income from discontinued operations of
ABS School Services, LLC per share  assuming
dilution
    
    $
    (0.08
    )
    
    $
    0.10
    
    
    $
    0.18
  December 31,2005(Dollars in thousands)Cash
    
    $
    315Loans held for sale, net of allowance of $1,791
    
    
    22,247Other assets
    
    
    9,825Total assets
    
    $
    32,387Other liabilities
    
    $
    358Borrowed money
    
    
    16,364Total liabilities
    
    $
    16,722
   F-26




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 5. Sale of Majority Interest in Real Estate Disposition Services Subsidiary
   6. Sale of Assets of MTXC Realty Corp.
  7. Sale of Interest in Matrix Settlement and Clearances Services, LLC
   
  F-27




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  8. Sale of United Western Bank Branches
   9. Net Income Per Share
  Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Numerator:Income from continuing operations, net of tax effects
    
    $
    9,913
    
    
    $
    138
    
    
    $
    20,003Income from discontinued operations, net of tax effects
    
    
    1,743
    
    
    $
    1,420
    
    
    $
    1,894Net income
    
    $
    11,656
    
    
    $
    1,558
    
    
    $
    21,897Denominator:Weighted average shares outstanding
    
    
    7,791,516
    
    
    
    6,943,480
    
    
    
    6,520,239Effect of dilutive securities:Common stock options
    
    
    
    
    
    
    92,648
    
    
    
    109,767Denominator for net income per share, assuming dilution
    
    
    7,791,516
    
    
    
    7,036,128
    
    
    
    6,630,006
  F-28




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 10. Investment Securities
  December 31, 2006
    
    
    December 31, 2005Gross
    
    
    Gross
    
    
    Estimated
    
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Mortgage-backed
agency securities
    
    $
    5,044
    
    
    $
    14
    
    
    $
    (39
    )
    
    $
    5,019
    
    
    $
    13,714
    
    
    $
    39
    
    
    $
    (47
    )
    
    $
    13,706Mortgage-backed
securities-private
    
    
    47,436
    
    
    
    203
    
    
    
    
    
    
    
    47,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Collateralized
mortgage
obligations
    
    
    88,827
    
    
    
    107
    
    
    
    (56
    )
    
    
    88,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SBA securities
    
    
    607
    
    
    
    3
    
    
    
    
    
    
    
    610
    
    
    
    757
    
    
    
    
    
    
    
    (1
    )
    
    
    756Total
    
    $
    141,914
    
    
    $
    327
    
    
    $
    (95
    )
    
    $
    142,146
    
    
    $
    14,471
    
    
    $
    39
    
    
    $
    (48
    )
    
    $
    14,462
   December 31, 2006
    
    
    December 31, 2005Gross
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)Mortgage-backed
securities-private
    
    $
    228,060
    
    
    $
    345
    
    
    $
    (1,263
    )
    
    $
    227,142
    
    
    $
    156,979
    
    
    $
    171
    
    
    $
    (829
    )
    
    $
    156,321Collateralized
mortgage
obligations
    
    
    384,279
    
    
    
    143
    
    
    
    (4,612
    )
    
    
    379,810
    
    
    
    264,031
    
    
    
    12
    
    
    
    (3,445
    )
    
    
    260,598SBA securities
    
    
    84,494
    
    
    
    51
    
    
    
    (78
    )
    
    
    84,467
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    696,833
    
    
    $
    539
    
    
    $
    (5,953
    )
    
    $
    691,419
    
    
    $
    421,010
    
    
    $
    183
    
    
    $
    (4,274
    )
    
    $
    416,919
  F-29




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Available for Sale
    
    
    Held to MaturityAmortized Cost
    
    
    Estimated Fair Value
    
    
    Amortized Cost
    
    
    Estimated Fair Value(Dollars in thousands)Within 1 year
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Over 1 year through 5 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After 5 years through 10 years
    
    
    
    
    
    
    
    
    
    
    8,669
    
    
    
    8,671Over 10 years
    
    
    607
    
    
    
    610
    
    
    
    75,825
    
    
    
    75,796SBA securities
    
    
    607
    
    
    
    610
    
    
    
    84,494
    
    
    
    84,467Mortgage-backed securities
    
    
    141,307
    
    
    
    141,536
    
    
    
    612,339
    
    
    
    606,952Total
    
    $
    141,914
    
    
    $
    142,146
    
    
    $
    696,833
    
    
    $
    691,419
  December 31, 2006
    
    
    December 31, 2005Estimated Fair Value
    
    
    Estimated Fair Value(Dollars in thousands)SBA securities
    
    $
    
    
    
    $
    104,722Total
    
    $
    
    
    
    $
    104,722
    F-30




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  December 31, 2006
    
    
    December 31, 2005Less than 12 Months
    
    
    12 Months or More
    
    
    Less than 12 Months
    
    
    12 Months or MoreEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Dollars in thousands)Mortgage-backed
securities agency,
available for sale
    
    $
    1,135
    
    
    $
    (13
    )
    
    $
    2,337
    
    
    $
    (26
    )
    
    $
    6,181
    
    
    $
    (38
    )
    
    $
    328
    
    
    $
    (9
    )Collateralized
mortgage
obligations-private,
available for sale
    
    
    44,766
    
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SBA securities,
available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476
    
    
    
    (1
    )Mortgage-backed
securities-private,
held to maturity
    
    
    77,081
    
    
    
    (436
    )
    
    
    85,266
    
    
    
    (827
    )
    
    
    84,001
    
    
    
    (569
    )
    
    
    10,802
    
    
    
    (260
    )Collateralized
mortgage
obligations-private,
held to maturity
    
    
    107,288
    
    
    
    (400
    )
    
    
    201,777
    
    
    
    (4,212
    )
    
    
    247,169
    
    
    
    (3,445
    )
    
    
    
    
    
    
    SBA securities,
held to maturity
    
    
    68,331
    
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    298,601
    
    
    $
    (983
    )
    
    $
    289,380
    
    
    $
    (5,065
    )
    
    $
    337,351
    
    
    $
    (4,052
    )
    
    $
    11,606
    
    
    $
    (270
    )
       F-31




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 11. Loans Held for Sale and Investment
 Loans Held for Sale
  December 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)Residential loans
    
    $
    381,502
    
    
    $
    631,773Multi-family loans
    
    
    52,478
    
    
    
    67,237SBA guaranteed purchased loans
    
    
    1,365
    
    
    
    177,328SBA guaranteed originated loans
    
    
    7,171
    
    
    
    11,045School financing and other loans
    
    
    869
    
    
    
    25,272Fair value adjustment
    
    
    
    
    
    
    (2,339
    )Purchase premiums and unearned fees, net
    
    
    3,266
    
    
    
    22,315446,651
    
    
    
    932,631Less: Allowance for credit losses
    
    
    2,531
    
    
    
    5,189Loans held for sale, net
    
    $
    444,120
    
    
    $
    927,442
  Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Balance at beginning of year
    
    $
    5,189
    
    
    $
    5,198
    
    
    $
    4,803Provision for credit losses
    
    
    322
    
    
    
    774
    
    
    
    1,180Charge-offs and transfers
    
    
    (1,441
    )
    
    
    (803
    )
    
    
    (785
    )School financing  allowance sold
    
    
    (1,791
    )
    
    
    
    
    
    
    Recoveries
    
    
    252
    
    
    
    20
    
    
    
    Balance at end of year
    
    $
    2,531
    
    
    $
    5,189
    
    
    $
    5,198
  Loans Held for Investment
  December 31, 2006
    
    
    December 31, 2005(Dollars in thousands)Residential loans
    
    $
    223,189
    
    
    $
    250,793Construction loans
    
    
    53,787
    
    
    
    24,049Multi-family loans
    
    
    1,986
    
    
    
    2,161SBA guaranteed purchased loans
    
    
    154,949
    
    
    
    SBA originated loans
    
    
    94,985
    
    
    
    99,519Commercial real estate loans
    
    
    168,823
    
    
    
    50,562Commercial loans and other
    
    
    21,801
    
    
    
    5,539Discounts, net
    
    
    (539
    )
    
    
    (843
    )Unearned fees
    
    
    (1,149
    )
    
    
    (1,029
    )717,832
    
    
    
    430,751Less: Allowance for credit losses
    
    
    6,231
    
    
    
    4,808Loans held for investment, net
    
    $
    711,601
    
    
    $
    425,943
  F-32




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
   Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Balance at beginning of year
    
    $
    4,808
    
    
    $
    5,974
    
    
    $
    4,986Provision for loan and valuation losses
    
    
    2,019
    
    
    
    891
    
    
    
    2,089Charge-offs and transfers
    
    
    (755
    )
    
    
    (2,249
    )
    
    
    (1,264
    )Recoveries
    
    
    159
    
    
    
    192
    
    
    
    163Balance at end of year
    
    $
    6,231
    
    
    $
    4,808
    
    
    $
    5,974
   December 31,2006
    
    
    2005(Dollars in thousands)Loans on nonaccrual status in the held for investment portfolio
    
    $
    3,675
    
    
    $
    9,601Loans on nonaccrual status in the held for sale portfolio
    
    
    4,723
    
    
    
    7,293Total nonperforming loans
    
    $
    8,398
    
    
    $
    16,894Interest income that would have been recognized at original
contract terms
    
    $
    700
    
    
    $
    875
   F-33




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
   12. Premises and Equipment
  December 31,2006
    
    
    2005(Dollars in thousands)Land
    
    $
    1,305
    
    
    $
    3,106Buildings
    
    
    3,269
    
    
    
    10,854Leasehold improvements
    
    
    808
    
    
    
    4,005Office furniture and equipment
    
    
    10,224
    
    
    
    10,66115,606
    
    
    
    28,626Less accumulated depreciation
    
    
    7,015
    
    
    
    11,472Premises and equipment, net
    
    $
    8,591
    
    
    $
    17,154
  13. Mortgage Servicing Rights
  Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Mortgage servicing rights
Balance at beginning of year
    
    $
    22,934
    
    
    $
    29,980
    
    
    $
    47,194Purchases
    
    
    98
    
    
    
    
    
    
    
    871Originations
    
    
    135
    
    
    
    788
    
    
    
    615Amortization
    
    
    (5,810
    )
    
    
    (7,764
    )
    
    
    (16,100
    )Sales
    
    
    (8
    )
    
    
    (70
    )
    
    
    Application of valuation allowance to write down
permanently impaired MSRs
    
    
    
    
    
    
    
    
    
    
    (2,600
    )Balance before valuation allowance at end of year
    
    
    17,349
    
    
    
    22,934
    
    
    
    29,980
  F-34




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Valuation allowance for impairment
of mortgage servicing rights
Balance at beginning of year
    
    
    (2,226
    )
    
    
    (3,406
    )
    
    
    (6,450
    )Additions
    
    
    
    
    
    
    (230
    )
    
    
    (1,656
    )Application of valuation allowance
to write down permanently impaired
MSRs
    
    
    
    
    
    
    
    
    
    
    2,600Recovery
    
    
    276
    
    
    
    1,410
    
    
    
    2,100Balance at end of year
    
    
    (1,950
    )
    
    
    (2,226
    )
    
    
    (3,406
    )Mortgage servicing rights, net
    
    $
    15,399
    
    
    $
    20,708
    
    
    $
    26,574
   December 31, 2006
    
    
    December 31, 2005Principal
    
    
    
    
    
    
    PrincipalNumber
    
    
    Balance
    
    
    Number
    
    
    Balanceof Loans
    
    
    Outstanding
    
    
    of Loans
    
    
    Outstanding(Dollars in thousands)Freddie Mac
    
    
    2,903
    
    
    $
    98,555
    
    
    
    3,673
    
    
    $
    130,386Fannie Mae
    
    
    8,732
    
    
    
    443,719
    
    
    
    10,400
    
    
    
    542,782Ginnie Mae
    
    
    6,716
    
    
    
    367,712
    
    
    
    8,913
    
    
    
    514,900VA, FHA, conventional
and other loans
    
    
    5,115
    
    
    
    403,078
    
    
    
    6,491
    
    
    
    529,930Total servicing portfolio
    
    
    23,466
    
    
    $
    1,313,064
    
    
    
    29,477
    
    
    $
    1,717,998
    F-35




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 14. Deposits
 December 31, 2006
    
    
    December 31, 2005Percent of
    
    
    Weighted
    
    
    
    
    
    
    Percent of
    
    
    WeightedTotal
    
    
    Average
    
    
    
    
    
    
    Total
    
    
    AverageAmount
    
    
    Deposits
    
    
    Rate
    
    
    Amount
    
    
    Deposits
    
    
    Rate(Dollars in thousands)Passbook accounts
    
    $
    115
    
    
    
    0.01
    %
    
    
    1.28
    %
    
    $
    405
    
    
    
    0.04
    %
    
    
    1.26
    %NOW and DDA accounts
    
    
    604,821
    
    
    
    44.95
    
    
    
    0.63
    
    
    
    495,260
    
    
    
    44.06
    
    
    
    0.49Money market accounts
    
    
    705,371
    
    
    
    52.41
    
    
    
    2.78
    
    
    
    581,704
    
    
    
    51.75
    
    
    
    1.69Subtotal
    
    
    1,310,307
    
    
    
    97.37
    
    
    
    1.79
    
    
    
    1,077,369
    
    
    
    95.85
    
    
    
    1.18Certificate accounts
    
    
    35,374
    
    
    
    2.63
    
    
    
    3.87
    
    
    
    46,675
    
    
    
    4.15
    
    
    
    3.66Total Deposits
    
    $
    1,345,681
    
    
    
    100.00
    %
    
    
    1.84
    %
    
    $
    1,124,044
    
    
    
    100.00
    %
    
    
    1.27
    %
   Under 12 months
    
    
    12 to 36 months
    
    
    36 to 60 months
    
    
    Total(Dollars in thousands)2.00-2.99%
    
    $
    88
    
    
    $
    
    
    
    $
    
    
    
    $
    883.00-3.99%
    
    
    13,659
    
    
    
    13,420
    
    
    
    
    
    
    
    27,0794.00-4.99%
    
    
    1,212
    
    
    
    2,178
    
    
    
    196
    
    
    
    3,5865.00-5.99%
    
    
    4,621
    
    
    
    
    
    
    
    
    
    
    
    4,621$
    19,580
    
    
    $
    15,598
    
    
    $
    196
    
    
    $
    35,374
   F-36




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Years Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Passbook accounts
    
    $
    3
    
    
    $
    5
    
    
    $
    38NOW accounts
    
    
    3,238
    
    
    
    1,169
    
    
    
    261Money market accounts
    
    
    17,112
    
    
    
    10,621
    
    
    
    4,504Certificates of deposit accounts
    
    
    2,389
    
    
    
    4,088
    
    
    
    5,862Interest expense on deposits
    
    $
    22,742
    
    
    $
    15,883
    
    
    $
    10,665
  15. Borrowed Money
  December 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)Borrowed Money$5,000,000 one year revolving line
converting to an amortizing term
note payable to a third party
financial institution, with annual
equal principal payments beginning
June 30, 2008 through June 30,
2011, collateralized by the common
stock of United Western Bank;
interest at 30 day LIBOR plus
1.50% (6.83% at December 31,
2006), $5,000,000 available at
December 31, 2006
    
    $
    $12,000,000 revolving line of
credit to a third party financial
institution, through June 30,
2007, renewable annually,
collateralized by the common stock
of United Western Bank; interest
at 30 day LIBOR plus 1.35%; (6.68%
at December 31, 2006), $12,000,000
available at December 31, 2006
    
    
    $8,215,000 note payable to a third
party financial institution
collateralized by the common stock
of United Western Bank; paid in
full on June 30, 2006
    
    
    
    
    
    $
    3,217$10,000,000 subordinated debt
securities, interest payments due
quarterly at three-month LIBOR
plus 2.75% (8.11% at December 31,
2006), maturing February 13, 2014
    
    
    10,000
    
    
    
    10,000School financing agreements,
maturing September 1, 2008,
collateralized by school
obligations; interest rate
variable based on the BMA
mini-swap index
    
    
    
    
    
    
    16,364$50,000,000 structured
repurchase agreements at United
Western Bank with a third party
financial institution
    
    
    50,000
    
    
    
    Total
    
    $
    60,000
    
    
    $
    29,581
  F-37




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  (Dollars in thousands)2011
    
    $
    50,000Thereafter
    
    
    10,000$
    60,000
    16. Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trusts and
Corporation-Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely
Debentures of the Company
   F-38




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  December 31,2006
    
    
    2005(Dollars in thousands)Junior Subordinated Debentures Owed to Unconsolidated Subsidiary TrustsJunior subordinated debentures owed to Matrix Bancorp Capital Trust I,
10% junior subordinated debentures payable quarterly, unsecured and
maturing September 30, 2029
    
    $
    
    
    
    $
    5,156Junior subordinated debentures owed to Matrix Bancorp Capital Trust
II, 10.18% junior subordinated debentures payable semi-annually,
unsecured and maturing June 8, 2031
    
    
    12,400
    
    
    
    12,400Junior subordinated debentures owed to Matrix Bancorp Capital Trust
III, 10.25% junior subordinated debentures payable semi-annually,
unsecured and maturing July 25, 2031
    
    
    15,464
    
    
    
    15,464Junior subordinated debentures owed to Matrix Bancorp Capital Trust
IV, six-month LIBOR plus 3.75% (9.12% at December 31, 2006) junior
subordinated debentures payable semi-annually, unsecured and maturing
December 8, 2031
    
    
    5,155
    
    
    
    5,155Junior subordinated debentures owed to Matrix Bancorp Capital Trust V,
six-month LIBOR plus 3.625% (8.99% at December 31, 2006) junior
subordinated debentures payable semi-annually, unsecured and maturing
January 25, 2032
    
    
    5,155
    
    
    
    5,155Junior subordinated debentures owed to Matrix Bancorp Capital Trust
VI, interest fixed at 6.425% through October 2009, then three-month
LIBOR plus 2.50%, junior subordinated debentures payable
semi-annually, unsecured and maturing October 18, 2034
    
    
    10,310
    
    
    
    10,310Junior subordinated debentures owed to Matrix Bancorp Capital Trust
VIII, interest fixed at 5.86% through July 2010, then three-month
LIBOR plus 1.69%, junior subordinated debentures payable
semi-annually, unsecured and maturing July 7, 2035
    
    
    7,732
    
    
    
    7,732Total
    
    $
    56,216
    
    
    $
    61,372
   F-39




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
      F-40




---



##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
    17. FHLBank Borrowings
   F-41




---



##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  December 31,2006
    
    
    2005(Dollars in thousands)FHLBank of Topeka borrowings
    
    $
    492,500
    
    
    $
    508,000FHLBank of Dallas borrowings
    
    
    26,931
    
    
    
    107,028$
    519,431
    
    
    $
    615,028
   (Dollars in thousands)2007
    
    $
    498,5002008
    
    
    10,0002009
    
    
    2010
    
    
    10,0002011
    
    
    931Thereafter
    
    
    $
    519,431
   F-42




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 18. Income Taxes
  Current:Federal
    
    $
    5,800
    
    
    $
    (1,538
    )
    
    $
    10,819State
    
    
    1,069
    
    
    
    (177
    )
    
    
    1,708Deferred:Federal
    
    
    (1,944
    )
    
    
    (670
    )
    
    
    (1,810
    )State
    
    
    (180
    )
    
    
    (62
    )
    
    
    (269
    )Provision (benefit)
    
    $
    4,745
    
    
    $
    (2,447
    )
    
    $
    10,448
  Years ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Expected income tax provision (benefit)
    
    $
    5,740
    
    
    $
    (302
    )
    
    $
    11,320State income tax provision (benefit), net
of federal benefit
    
    
    578
    
    
    
    (29
    )
    
    
    1,682Tax-exempt interest income
    
    
    (459
    )
    
    
    (1,030
    )
    
    
    (1,345
    )New Market Tax Credits
    
    
    (1,037
    )
    
    
    (729
    )
    
    
    (378
    )Utilization of State net operating loss
carry-forwards
    
    
    
    
    
    
    (140
    )
    
    
    (509
    )Other
    
    
    (77
    )
    
    
    (217
    )
    
    
    (322
    )Provision (benefit) for income taxes
    
    $
    4,745
    
    
    $
    (2,447
    )
    
    $
    10,448
    F-43




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  December 31,2006
    
    
    2005(Dollars in thousands)Deferred tax assets:Allowance for loan and valuation losses
    
    $
    4,833
    
    
    $
    5,210Deferred fees
    
    
    1,307
    
    
    
    2,211State operating loss carry-forwards
    
    
    50
    
    
    
    6532005 operating loss carry-forward
    
    
    
    
    
    
    1,059Gain on sale of building
    
    
    4,508
    
    
    
    Other
    
    
    469
    
    
    
    285Subtotal
    
    
    11,167
    
    
    
    9,418Valuation allowances
    
    
    (50
    )
    
    
    (653
    )Total deferred tax assets
    
    
    11,117
    
    
    
    8,765Deferred tax liabilities:Mortgage servicing rights
    
    $
    (3,291
    )
    
    $
    (3,878
    )New Market Tax Credits
    
    
    (1,335
    )
    
    
    (692
    )Gain on sale of building
    
    
    
    
    
    
    (1,187
    )Installment gain on sale of interest in subsidiary
    
    
    (1,122
    )
    
    
    (952
    )FHLB Dividends
    
    
    (2,606
    )
    
    
    (1,722
    )Other
    
    
    (387
    )
    
    
    (82
    )Total deferred tax liabilities
    
    
    (8,741
    )
    
    
    (8,513
    )Net deferred tax asset
    
    $
    2,376
    
    
    $
    252
    F-44




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 19. Regulatory
 The Company.
 United Western Bank .
   To Be Well CapitalizedUnder PromptFor Capital
    
    
    Corrective ActionActual
    
    
    Adequacy Purposes
    
    
    ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)As of December 31, 2006Total Capital (to Risk Weighted Assets)
    
    $
    153,520
    
    
    
    15.7
    %
    
    $
    78,249
    
    
    
    8.0
    %
    
    $
    97,811
    
    
    
    10.0
    %Core Capital (to Adjusted Tangible Assets)
    
    
    145,805
    
    
    
    6.8
    
    
    
    85,574
    
    
    
    4.0
    
    
    
    106,967
    
    
    
    5.0Tier I Capital (to Risk Weighted Assets)
    
    
    145,805
    
    
    
    14.9
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    58,687
    
    
    
    6.0As of December 31, 2005Total Capital (to Risk Weighted Assets)
    
    $
    131,018
    
    
    
    14.3
    %
    
    $
    73,098
    
    
    
    8.0
    %
    
    $
    91,373
    
    
    
    10.0
    %Core Capital (to Adjusted Tangible Assets)
    
    
    127,053
    
    
    
    6.3
    
    
    
    80,987
    
    
    
    4.0
    
    
    
    101,234
    
    
    
    5.0Tier I Capital (to Risk Weighted Assets)
    
    
    127,053
    
    
    
    13.8
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    54,824
    
    
    
    6.0
   F-45




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Matrix Financial.
 First Matrix .
 Sterling Trust.
 20. Shareholders Equity
 Stock Option Plans
     F-46




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
    Years ended December 31,2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of year
    
    
    2,000
    
    
    $
    26.50
    
    
    
    440,550
    
    
    $
    10.94
    
    
    
    609,750
    
    
    $
    10.10Granted
    
    
    734,924
    
    
    
    20.09
    
    
    
    53,000
    
    
    
    12.87
    
    
    
    65,000
    
    
    
    10.03Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81,950
    )
    
    
    5.25Forfeited or cancelled
    
    
    (6,250
    )
    
    
    23.95
    
    
    
    (491,550
    )
    
    
    11.08
    
    
    
    (152,250
    )
    
    
    10.25Outstanding, end of year
    
    
    730,674
    
    
    $
    20.07
    
    
    
    2,000
    
    
    $
    26.50
    
    
    
    440,550
    
    
    $
    10.94Exercisable end of year
    
    
    8,750
    
    
    $
    22.21
    
    
    
    2,000
    
    
    $
    26.50
    
    
    
    312,050
    
    
    $
    11.42Weighted average fair value
of options granted during the
year
    
    $
    4.39
    
    
    
    
    
    
    $
    4.25
    
    
    
    
    
    
    $
    4.96
  Weighted AverageRemainingContractual Life in
    
    
    Weighted AverageDecember 31, 2006
    
    
    years
    
    
    Exercise PriceExercise Price$19.00
    
    
    484,247
    
    
    
    9.03
    
    
    $
    19.0019.90 - 20.76
    
    
    65,448
    
    
    
    9.81
    
    
    
    20.1822.42 - 22.95
    
    
    139,046
    
    
    
    9.27
    
    
    
    22.8523.05 - 23.40
    
    
    41,933
    
    
    
    9.60
    
    
    
    23.09730,674
   F-47




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Stock-Based Compensation Expense
   Valuation of Stock-Based Compensation
    Quarter ended
    
    Quarter ended
    
    Quarter ended
    
    Quarter ended
    
    Year endedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,
    
    December 31,Expected Volatility
    
    27.70%
    
    26.70% - 27.20%
    
    26.60% - 26.70%
    
    26.30%
    
    26.30% - 27.70%Expected dividend yield
    
    0
    
    0
    
    0
    
    0
    
    0Risk-free interest rate
    
    4.59%
    
    4.99% - 5.11%
    
    4.94% - 5.22%
    
    4.56% - 4.64%
    
    4.56% - 5.22%Expected term (in years)
    
    5.37 - 6.46
    
    5.09 - 7.58
    
    4.39 - 5.37
    
    4.67 - 7.72
    
    4.39 - 7.72WA grant date Fair Value
    
    $3.83 - $4.76
    
    $3.44 - $9.41
    
    $3.92 - $7.35
    
    $3.66 - $6.31
    
    $3.44 - $9.41Options granted
    
    540,047
    
    97,496
    
    41,933
    
    55,448
    
    734,924Options forfeited
    
    (2,000)
    
    
    
    (3,750)
    
    (500)
    
    (6,250)
  F-48




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Employee Stock Purchase Plan
  Proforma Earnings for 2005 and 2004 under FAS 123
  Year ended December 31,2005
    
    
    2004(Dollars in thousands, except share data)Net incomeNet income as reported
    
    $
    1,558
    
    
    $
    21,897Deduct: Total
stock-based employee
compensation expense
determined under fair
value based method for
awards, net of related
tax effects
    
    
    
    
    
    
    (236
    )Pro forma
    
    $
    1,558
    
    
    $
    21,661Income per share:Basic, as reported
    
    $
    0.22
    
    
    $
    3.36Basic, pro forma
    
    $
    0.22
    
    
    $
    3.32Diluted, as reported
    
    $
    0.22
    
    
    $
    3.30Diluted, pro forma
    
    $
    0.22
    
    
    $
    3.27
  F-49




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Stock Repurchase Plan
  21. Commitments, Contingencies and Related Party Transactions
 Sale-leaseback of United Western Financial Center
  Cash
    
    
    Accrual
    
    
    Deferred
    
    
    Deferred
    
    
    Net RentRent (1)
    
    
    Rent (2)
    
    
    Rent (3)
    
    
    Gain (4)
    
    
    Expense (5)(Dollars in thousands)2007
    
    $
    1,186
    
    
    $
    1,367
    
    
    $
    181
    
    
    $
    1,123
    
    
    $
    2442008
    
    
    1,229
    
    
    
    1,367
    
    
    
    138
    
    
    
    1,123
    
    
    
    2442009
    
    
    1,271
    
    
    
    1,367
    
    
    
    96
    
    
    
    1,123
    
    
    
    2442010
    
    
    1,314
    
    
    
    1,367
    
    
    
    53
    
    
    
    1,123
    
    
    
    2442011
    
    
    1,357
    
    
    
    1,367
    
    
    
    10
    
    
    
    1,123
    
    
    
    244Thereafter
    
    
    7,022
    
    
    
    6,496
    
    
    
    (526
    )
    
    
    5,332
    
    
    
    1,164Total
    
    $
    13,379
    
    
    $
    13,331
    
    
    $
    (48
    )
    
    $
    10,947
    
    
    $
    2,384
 (1)
    
    The cash rent reflects the future minimum lease payments required to be paid under the
terms of the lease.(2)
    
    GAAP requires when a lease has an escalation clause the rent must be accrued on a
straight line basis over the lease term or expected life of the lease.(3)
    
    The deferred rent represents the difference between columns (1) and (2). Deferred rent
accumulates in the first half of the lease and then reverses over the later part of the
lease.(4)
    
    The deferred gain represents the recognition of the $11.2 million economic gain over
the life of the lease.(5)
    
    The prospective effect of the reduction in the Companys net rent expense from
realization of the annual deferred gain amortization will be substantially offset by the
rental income that was previously earned by Matrix Tower Holdings, LLC.
  F-50




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Leases
  (Dollars in thousands)2007
    
    $
    5822008
    
    
    5632009
    
    
    5442010
    
    
    5462011
    
    
    424Thereafter
    
    
    973$
    3,632
   Off-Balance Sheet Risk and Concentration of Commitments
  December 31,2006
    
    
    2005(Dollars in thousands)Commitments to extend credit:Loans secured by mortgages
    
    $
    74,450
    
    
    $
    49,732Construction loans
    
    
    122,526
    
    
    
    48,860Commercial lines of credit
    
    
    14,627
    
    
    
    854Commercial loans
    
    
    28,641
    
    
    
    1,569Consumer loans
    
    
    246
    
    
    
    278Standby letters of credit
    
    
    791
    
    
    
    429Commitments to purchase USDA and SBA loans
    
    
    
    
    
    
    39,660
    F-51




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
     Risk Management Activities for MSRs
  Contingencies  Liabilities and Guarantees
   F-52




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Contingencies  Legal
  United Western Bancorp. Roderick Adderley, et al. v. Guy A.
Gibson, et al. Roderick Adderley, et al. v. Advance Financial Services, Inc., et al. (Adderley I)
 Munoz
 United Western Bank In re Apponline.com, Inc. and Island Mortgage Network,
Inc.
  F-53




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Sterling. Roderick Adderley, et
al. v. Advanced Financial Services, Inc., et al.
 Douglas Wheeler,
et al. v. Pacific Air Transport, et al.; Paul C. Jared, et al. v. South Mountain Resort and Spa,
Inc., et al.; Lawrence Rehrig, et al. v. Caffe Diva, et al.; Merrill B. Christman, et al. v.
Millennium 2100, Inc., et al.; David M. Veneziale, et al. v. Sun Broadcasting Systems, Inc., et
al.; and Don Glazer, et al. v. Technical Support Servs., Inc., et al. Munoz
 Heraclio A.
Munoz, et al. v. Sterling Trust Company, et. al.
  F-54




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Related Party Transactions
    22. Defined Contribution Plan
   F-55




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 23. Fair Value of Financial Instruments
  December 31,2006
    
    
    2005Estimated
    
    
    
    
    
    
    EstimatedCarrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    23,754
    
    
    $
    23,754
    
    
    $
    34,232
    
    
    $
    34,232Investment securities  available for sale
    
    
    142,146
    
    
    
    142,146
    
    
    
    14,462
    
    
    
    14,462Investment securities  held to maturity
    
    
    696,833
    
    
    
    691,419
    
    
    
    421,010
    
    
    
    416,919Investment securities   trading
    
    
    
    
    
    
    
    
    
    
    104,722
    
    
    
    104,722Loans held for sale, net
    
    
    444,120
    
    
    
    447,680
    
    
    
    927,442
    
    
    
    928,255Loans held for investment, net
    
    
    711,601
    
    
    
    713,512
    
    
    
    425,943
    
    
    
    425,561FHLBank stock
    
    
    42,764
    
    
    
    42,764
    
    
    
    34,002
    
    
    
    34,002Derivative assets
    
    
    
    
    
    
    
    
    
    
    198
    
    
    
    198Financial liabilities:Deposits
    
    $
    1,345,681
    
    
    $
    1,345,298
    
    
    $
    1,124,044
    
    
    $
    1,123,190Custodial escrow balances
    
    
    40,017
    
    
    
    40,017
    
    
    
    49,385
    
    
    
    49,385FHLBank borrowings
    
    
    519,431
    
    
    
    518,277
    
    
    
    615,028
    
    
    
    603,389Borrowed money and junior subordinated
debentures
    
    
    116,216
    
    
    
    85,701
    
    
    
    90,953
    
    
    
    62,650Derivative liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
        F-56




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  24. Parent Company Condensed Financial Information
  December 31,2006
    
    
    2005(Dollars in thousands)Condensed Balance SheetsAssets:Cash
    
    $
    16,669
    
    
    $
    93,827Other receivables
    
    
    70
    
    
    
    127Premises and equipment, net
    
    
    362
    
    
    
    425Other assets
    
    
    4,009
    
    
    
    4,536Investment in and advances to subsidiaries
    
    
    158,732
    
    
    
    160,450Total assets
    
    $
    179,842
    
    
    $
    259,365Liabilities and shareholders equity:Borrowed money and junior subordinated
debentures owed to unconsolidated
subsidiary trusts
    
    $
    66,216
    
    
    $
    74,589Other liabilities
    
    
    5,873
    
    
    
    4,048Total liabilities
    
    
    72,089
    
    
    
    78,637Shareholders equity:Common stock
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    23,791
    
    
    
    108,395Retained earnings
    
    
    83,795
    
    
    
    72,314Accumulated other comprehensive income
    
    
    166
    
    
    
    18Total shareholders equity
    
    
    107,753
    
    
    
    180,728Total liabilities and shareholders equity
    
    $
    179,842
    
    
    $
    259,365
  F-57




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 (a)
    
    The Parents debt is set forth in a table following the condensed statements of cash
flows. See Note 15 and Note 16 for additional information regarding debt.
 Years ended December 31,2006
    
    
    2005
    
    
    2004Condensed Statements of Income
    
    (Dollars in thousands)Income (loss):Interest income
    
    $
    124
    
    
    $
    232
    
    
    $
    41Other
    
    
    (122
    )
    
    
    (250
    )
    
    
    (515
    )Total income (loss)
    
    
    2
    
    
    
    (18
    )
    
    
    (474
    )Expenses:Compensation and employee benefits
    
    
    4,730
    
    
    
    11,372
    
    
    
    4,255Occupancy and equipment
    
    
    667
    
    
    
    599
    
    
    
    606Interest on borrowed money
    
    
    6,244
    
    
    
    6,151
    
    
    
    7,526Professional fees
    
    
    485
    
    
    
    441
    
    
    
    367Other general and administrative
    
    
    (161
    )
    
    
    (537
    )
    
    
    (314
    )Total expenses
    
    
    11,965
    
    
    
    18,026
    
    
    
    12,440Loss before income taxes and equity
income of subsidiaries
    
    
    (11,963
    )
    
    
    (18,044
    )
    
    
    (12,914
    )Income taxes (b)
    
    
    
    
    
    
    
    
    
    
    Loss before equity income of subsidiaries
    
    
    (11,963
    )
    
    
    (18,044
    )
    
    
    (12,914
    )Equity income of subsidiaries
    
    
    23,619
    
    
    
    19,602
    
    
    
    34,811Net income
    
    $
    11,656
    
    
    $
    1,558
    
    
    $
    21,897
 (b)
    
    The Companys tax sharing agreement with its subsidiaries provides that the
subsidiaries will pay the Parent an amount equal to its individual current income tax
provision calculated on the basis of the subsidiary filing a separate return. In the event
a subsidiary incurs a net operating loss in future periods, the subsidiary will be paid an
amount equal to the current income tax refund the subsidiary would be due as a result of
carry-back of such loss, calculated on the basis of the subsidiary filing a separate
return.
 Years ended December 31,2006
    
    
    2005
    
    
    2004Condensed Statements of Cash Flows
    
    (Dollars in thousands)Operating activities:Net income
    
    $
    11,656
    
    
    $
    1,558
    
    
    $
    21,897Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Equity income of subsidiaries
    
    
    (23,620
    )
    
    
    (19,602
    )
    
    
    (34,811
    )Dividends from subsidiaries
    
    
    21,610
    
    
    
    2,066
    
    
    
    14,249Share based compensation expense
    
    
    575
    
    
    
    
    
    
    
    Loss on disposal of assets
    
    
    30
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    689
    
    
    
    770
    
    
    
    432Unrealized gain (loss) on securities
available for sale
    
    
    148
    
    
    
    (108
    )
    
    
    (83
    )
  F-58




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Years ended December 31,2006
    
    
    2005
    
    
    2004Condensed Statements of Cash Flows
    
    (Dollars in thousands)Changes in assets and liabilities:Increase (decrease) in other liabilities
    
    
    1,825
    
    
    
    (959
    )
    
    
    2,622Decrease (increase) in other receivables
and other assets
    
    
    176
    
    
    
    (885
    )
    
    
    1,426Net cash provided by (used in) by operating
activities
    
    
    13,089
    
    
    
    (17,160
    )
    
    
    5,732Investing activities:Purchases of premises and equipment
    
    
    (248
    )
    
    
    (193
    )
    
    
    (299
    )Return of investment in and advances to
subsidiaries, net
    
    
    3,728
    
    
    
    13,859
    
    
    
    8,802Net cash provided by investing activities
    
    
    3,480
    
    
    
    13,666
    
    
    
    8,503Financing activities:Repayments of notes payable and revolving line
of credit
    
    
    (3,217
    )
    
    
    (13,071
    )
    
    
    (11,330
    )Proceeds from notes payable and revolving line
of credit
    
    
    
    
    
    
    12,000
    
    
    
    9,760Repayments from capital securities of
subsidiary trusts, net
    
    
    (5,156
    )
    
    
    (695
    )
    
    
    (4,550
    )Proceeds from issuance of common stock, net
    
    
    
    
    
    
    86,963
    
    
    
    817Repurchase of common stock
    
    
    (85,354
    )
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (93,727
    )
    
    
    85,197
    
    
    
    (5,303
    )(Decrease) increase in cash
    
    
    (77,158
    )
    
    
    81,703
    
    
    
    8,932Cash at beginning of year
    
    
    93,827
    
    
    
    12,124
    
    
    
    3,192Cash at end of year
    
    $
    16,669
    
    
    $
    93,827
    
    
    $
    12,124
  December 31,2006
    
    
    2005(Dollars in thousands)Subordinated debt
    
    $
    10,000
    
    
    $
    10,000Bank stock loan
    
    
    
    
    
    
    3,217Total term notes
    
    
    10,000
    
    
    
    13,217Junior subordinated debentures owed to
unconsolidated subsidiary trusts
    
    
    56,216
    
    
    
    61,372Total debt
    
    $
    66,216
    
    
    $
    74,589
  (Dollars in thousands)2007
    
    $
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    66,216$
    66,216
  F-59




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 25. Quarterly Financial Data (Unaudited)
 Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Dollars in thousands, except share data)2006Operations:Net interest income before
provision for credit losses
    
    $
    15,096
    
    
    $
    13,504
    
    
    $
    13,449
    
    
    $
    13,469Provision for credit losses
    
    
    82
    
    
    
    232
    
    
    
    1,071
    
    
    
    957Noninterest income
    
    
    7,149
    
    
    
    7,216
    
    
    
    5,373
    
    
    
    9,277Noninterest expense
    
    
    17,346
    
    
    
    17,494
    
    
    
    17,649
    
    
    
    16,195Income from continuing
operations before income taxes
    
    
    4,817
    
    
    
    2,994
    
    
    
    102
    
    
    
    5,594Income tax provision (benefit)
    
    
    1,072
    
    
    
    906
    
    
    
    (102
    )
    
    
    1,715Income from continuing operations
    
    
    3,745
    
    
    
    2,088
    
    
    
    204
    
    
    
    3,879Discontinued operations:Income from discontinued
operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    1,638Net income
    
    $
    3,745
    
    
    $
    2,088
    
    
    $
    307
    
    
    $
    5,517Net income per share data:Basic
    
    $
    0.50
    
    
    $
    0.28
    
    
    $
    0.04
    
    
    $
    0.64Diluted
    
    $
    0.50
    
    
    $
    0.27
    
    
    $
    0.04
    
    
    $
    0.64Balance Sheet:Total assets
    
    $
    2,156,548
    
    
    $
    2,203,665
    
    
    $
    2,156,120
    
    
    $
    2,145,863Total loans, net
    
    
    1,155,721
    
    
    
    1,144,809
    
    
    
    1,169,655
    
    
    
    1,298,790Shareholders equity
    
    
    107,753
    
    
    
    109,654
    
    
    
    107,190
    
    
    
    106,9862005Operations:Net interest income before
provision for credit losses
    
    $
    11,776
    
    
    $
    11,038
    
    
    $
    10,868
    
    
    $
    10,948Provision for credit losses
    
    
    380
    
    
    
    50
    
    
    
    302
    
    
    
    758Noninterest income
    
    
    6,078
    
    
    
    6,540
    
    
    
    6,978
    
    
    
    8,671Noninterest expense
    
    
    28,897
    
    
    
    14,536
    
    
    
    15,247
    
    
    
    15,004(Loss) income from continuing
operations before income taxes
    
    
    (11,423
    )
    
    
    2,992
    
    
    
    2,297
    
    
    
    3,857Income tax (benefit) provision
    
    
    (5,220
    )
    
    
    763
    
    
    
    703
    
    
    
    1,343Income from continuing operations
    
    
    (6,203
    )
    
    
    2,229
    
    
    
    1,594
    
    
    
    2,514Discontinued operations:Income from discontinued
operations, net of income taxes
    
    
    196
    
    
    
    706
    
    
    
    116
    
    
    
    406Net (loss) income
    
    $
    (6,007
    )
    
    $
    2,935
    
    
    $
    1,710
    
    
    $
    2,920Net income per share data:Basic
    
    $
    (0.76
    )
    
    $
    0.44
    
    
    $
    0.26
    
    
    $
    0.44Diluted
    
    $
    (0.76
    )
    
    $
    0.44
    
    
    $
    0.26
    
    
    $
    0.44Balance Sheet:Total assets
    
    $
    2,079,388
    
    
    $
    2,027,955
    
    
    $
    1,974,978
    
    
    $
    1,865,243Total loans, net
    
    
    1,353,385
    
    
    
    1,370,296
    
    
    
    1,422,619
    
    
    
    1,344,963Shareholders equity
    
    
    180,728
    
    
    
    99,760
    
    
    
    97,192
    
    
    
    94,597
  F-60




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 26. Segments of the Company and Related Information
    Custodial andCommunity
    
    
    Mortgage
    
    
    
    
    
    
    AdvisoryBanking
    
    
    Banking
    
    
    Broker Dealer
    
    
    Services
    
    
    All Others
    
    
    Total(Dollars in thousands)2006Revenues from external
customers:Interest income
    
    $
    113,429
    
    
    $
    1,267
    
    
    $
    43
    
    
    $
    
    
    
    $
    561
    
    
    $
    115,300Noninterest income
    
    
    4,224
    
    
    
    8,742
    
    
    
    417
    
    
    
    6,842
    
    
    
    8,790
    
    
    
    29,015Intersegment revenues
    
    
    704
    
    
    
    1,943
    
    
    
    211
    
    
    
    1,587
    
    
    
    387
    
    
    
    4,832Interest expense
    
    
    53,485
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    6,245
    
    
    
    59,783Depreciation/amortization
    
    
    582
    
    
    
    5,701
    
    
    
    8
    
    
    
    257
    
    
    
    1,367
    
    
    
    7,915Segment income (loss)
from continuing
operations before income
taxes
    
    
    20,734
    
    
    
    (718
    )
    
    
    (336
    )
    
    
    373
    
    
    
    (6,547
    )
    
    
    13,506Segment assets (a)
    
    
    2,192,349
    
    
    
    49,813
    
    
    
    865
    
    
    
    4,765
    
    
    
    163,616
    
    
    
    2,411,408
  F-61




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Custodial andCommunity
    
    
    Mortgage
    
    
    
    
    
    
    AdvisoryBanking
    
    
    Banking
    
    
    Broker Dealer
    
    
    Services
    
    
    All Others
    
    
    Total(Dollars in thousands)2005Revenues from external
customers:Interest income
    
    $
    84,084
    
    
    $
    1,238
    
    
    $
    29
    
    
    $
    
    
    
    $
    1,745
    
    
    $
    87,096Noninterest income
    
    
    6,756
    
    
    
    9,841
    
    
    
    1,313
    
    
    
    6,147
    
    
    
    4,210
    
    
    
    28,267Intersegment revenues
    
    
    1,395
    
    
    
    1,773
    
    
    
    510
    
    
    
    1,451
    
    
    
    (208
    )
    
    
    4,921Interest expense
    
    
    36,187
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    6,254
    
    
    
    42,466Depreciation/amortization
    
    
    583
    
    
    
    7,695
    
    
    
    14
    
    
    
    239
    
    
    
    1,679
    
    
    
    10,210Segment income (loss)
from continuing operations
before income taxes
    
    
    20,082
    
    
    
    (5,017
    )
    
    
    62
    
    
    
    (2,690
    )
    
    
    (14,713
    )
    
    
    (2,276
    )Segment assets (a)
    
    
    2,066,720
    
    
    
    50,344
    
    
    
    1,584
    
    
    
    3,994
    
    
    
    298,406
    
    
    
    2,421,0482004Revenues from external
customers:Interest income
    
    $
    66,433
    
    
    $
    3,479
    
    
    $
    127
    
    
    $
    (3
    )
    
    $
    537
    
    
    $
    70,573Noninterest income
    
    
    7,639
    
    
    
    28,915
    
    
    
    3,000
    
    
    
    5,393
    
    
    
    33,605
    
    
    
    78,552Intersegment revenues
    
    
    2,510
    
    
    
    1,038
    
    
    
    952
    
    
    
    1,241
    
    
    
    649
    
    
    
    6,390Interest expense
    
    
    23,105
    
    
    
    2,567
    
    
    
    
    
    
    
    
    
    
    
    5,099
    
    
    
    30,771Depreciation/amortization
    
    
    677
    
    
    
    16,449
    
    
    
    39
    
    
    
    205
    
    
    
    2,150
    
    
    
    19,520Segment income (loss) from
continuing operations before
income taxes
    
    
    33,381
    
    
    
    (15,925
    )
    
    
    83
    
    
    
    (89
    )
    
    
    13,370
    
    
    
    30,820Segment assets (a)
    
    
    1,850,868
    
    
    
    73,610
    
    
    
    1,595
    
    
    
    3,396
    
    
    
    218,639
    
    
    
    2,148,108
  2006
    
    
    2005
    
    
    2004(Dollars in thousands)Revenues for year ended December 31:Interest income for reportable segments
    
    $
    114,739
    
    
    $
    85,351
    
    
    $
    70,036Noninterest income for reportable segments
    
    
    20,225
    
    
    
    24,057
    
    
    
    44,947Intersegment revenues for reportable segments
    
    
    4,445
    
    
    
    5,129
    
    
    
    5,741Other revenues
    
    
    9,738
    
    
    
    5,747
    
    
    
    34,791Elimination of intersegment revenues
    
    
    (4,832
    )
    
    
    (4,921
    )
    
    
    (6,390
    )Total consolidated revenues
    
    $
    144,315
    
    
    $
    115,363
    
    
    $
    149,125
  F-62




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 2006
    
    
    2005
    
    
    2004(Dollars in thousands)Income (loss) for year ended December 31:Total income for reportable segments
    
    $
    20,053
    
    
    $
    12,437
    
    
    $
    17,450Other (loss) income
    
    
    (201
    )
    
    
    (14,395
    )
    
    
    15,380Elimination of intersegment (loss)
    
    
    (6,346
    )
    
    
    (318
    )
    
    
    (2,010
    )Income (loss) before income taxes
    
    
    13,506
    
    
    $
    (2,276
    )
    
    $
    30,820Assets as of December 31:Total assets for reportable segments
    
    $
    2,247,792
    
    
    $
    2,122,642
    
    
    $
    1,929,469Other assets
    
    
    163,616
    
    
    
    298,406
    
    
    
    218,639Elimination of intersegment receivables
    
    
    (22,524
    )
    
    
    (232,535
    )
    
    
    (236,040
    )Other intersegment eliminations
    
    
    (232,336
    )
    
    
    (109,125
    )
    
    
    (23,208
    )Total consolidated assets
    
    $
    2,156,548
    
    
    $
    2,079,388
    
    
    $
    1,888,860Other Significant Items for the year ended
December 31:Depreciation/amortization expense:Segment totals
    
    $
    6,548
    
    
    $
    8,531
    
    
    $
    17,370Other and intersegment adjustments
    
    
    1,367
    
    
    
    1,679
    
    
    
    2,150Consolidated totals
    
    $
    7,915
    
    
    $
    10,210
    
    
    $
    19,520Interest expense:Segment totals
    
    $
    53,538
    
    
    $
    36,212
    
    
    $
    25,672Other and intersegment adjustments
    
    
    6,245
    
    
    
    6,254
    
    
    
    5,099Consolidated totals
    
    $
    59,783
    
    
    $
    42,466
    
    
    $
    30,771
 26. Subsequent Event
  F-63




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##### Table of Contents



EXHIBIT INDEX
 3.2
    
    Articles of Amendment to the Articles of Incorporation.3.3
    
    Bylaws, as amended, of the Registrant.21
    
    Subsidiaries of the Registrant.23.1
    
    Consent of McGladrey & Pullen LLP.23.2
    
    Consent of KPMG LLP.31.1
    
    Certification by Scot T. Wetzel pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification by William D. Snider pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.3
    
    Certification by Benjamin C. Hirsh pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1
    
    Certification by D. Scot T. Wetzel pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.2
    
    Certification by William D. Snider pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.3
    
    Certification by Benjamin C. Hirsh pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.