##### Table of Contents



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, 2009
 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
    
    84-1233716(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)700 17thStreet, Suite 2100, Denver, Colorado
    
    80202(Address of principal executive offices)
    
    (Zip Code)
 (303) 595-9898
  Title of Each Class
    
    Name of each exchange on which RegisteredCommon Stock, par value $.0001 per share
    
    The NASDAQ Global Stock MarketPreferred Share Purchase Rights
 None
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o
 No o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    20Item 1B. Unresolved Staff Comments
    
    
    34Item 2. Properties
    
    
    34Item 3. Legal Proceedings
    
    
    34Item 4. Removed and ReservedPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    37Item 6. Selected Financial Data
    
    
    40Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    43Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    80Item 8. Financial Statements and Supplementary Data
    
    
    81Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    81Item 9A. Controls and Procedures
    
    
    81Item 9B. Other Information
    
    
    82PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    82Item 11. Executive Compensation
    
    
    82Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    82Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    82Item 14. Principal Accountant Fees and Services
    
    
    82PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    82Exhibit 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
 The disclosures set forth in this item are qualified by Item 1A. Risk Factors and Item 7.
Managements Discussion and Analysis  Forward Looking Statements and other cautionary statements
set forth elsewhere in this report.
 United Western Bancorp, Inc.
 General. ® e.g.,
  Community Bank Business Strategy
     - 2 -




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Regulatory Issues
 ®
      - 3 -




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The Subsidiaries
  United Western Bank®
  UW Trust Company and Discontinued Operations.
 Matrix Financial Services Corporation . ,
 UW Investment Services, Inc.
 Other Subsidiaries.
  - 4 -




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Lending Activities
 General.
   Community Bank Lending
 Commercial Real Estate Lending.
  - 5 -




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Residential and Commercial Construction and Development Lending.
 Commercial and Industrial Lending.
  - 6 -




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Small Business Administration Lending.
 New Markets Tax Credits Lending.
  Consumer Lending.
 Other Lending
 Single-family Residence Lending.
  - 7 -




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Purchased SBA Guaranteed Loans.
 Other Activities Related to Lendin g
 Sales of Loans.
 Deposits
 Deposits .
  - 8 -




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Custodial Escrow, Paying Agent and Trust Administration Services
 Self-Directed Trust and Custody Services.
 Brokerage Services
 UW Investment Services, Inc.
 Mortgage Servicing Activities
 Residential Mortgage Loan Servicing.
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Competition
   e.g.
  - 10 -




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Employees
  Regulation and Supervision
  Emergency Economic Stabilization Act of 2008.
 
    
    Capital Purchase Program (CPP). Pursuant to this program, Treasury on behalf of
the US Government, purchased preferred stock along with warrants to purchase common
stock, from certain financial institutions, including bank holding companies, savings
and loan holding companies and banks or savings associations not controlled by a
holding company. The investment has a dividend rate of 5% per year, until the fifth
anniversary of the Treasurys investment and a dividend of 9% thereafter.
 On November 7, 2008, the Company submitted an application to Treasury to participate in
the Treasurys CPP Program. During the fourth quarter of 2009, after reviewing the
terms and conditions of the governing documents pertaining to the CPP and observing the
manner in which the CPP is administered by the Treasury, the Company determined that it
was in its best interests to withdraw its CPP application. On December 10, 2009, the
Company requested to withdraw from consideration for participation in the CPP. This will
provide the Company with the opportunity to participate in the extended tax-loss carry
back provisions made available to corporations in 2009 under recent revisions to the
Internal Revenue Code of 1986, as amended.
 
    
    Temporary Liquidity Guarantee Program (TLGP). This program contained both (i) a
debt guarantee component (Debt Guarantee Program), whereby the FDIC will guarantee
until June 30, 2012, the senior unsecured debt issued by eligible financial
institutions between October 14, 2008 and October 31, 2009; and (ii) a transaction
account guarantee (TAG) component (TAG Program), whereby the FDIC will insure 100%
of noninterest bearing deposit transaction accounts held at eligible financial
institutions, such as payment processing accounts, payroll accounts and working capital
accounts through December 31, 2009.
 United Western Bank elected to participate in both parts of the TLGP. The FDIC will only
guarantee a participants newly issued unsecured debt in a total amount not to exceed
125% of the par or face value of such participants senior unsecured debt outstanding as
of September 30, 2008 and scheduled to mature on June 30, 2009. If there was no
unsecured senior debt outstanding at September 30, 2008, the amount available under the
program is limited to two percent of total liabilities as of September 30, 2008. As the
Company did not have any unsecured senior debt outstanding as of September 30, 2008, the
conclusion of the Debt Guarantee Program on October 31, 2009 had no impact on the Bank
or Company.
 On August 26, 2009, the FDIC approved the final rule extending the TAG Program for six
months until June 30, 2010, and increased the applicable TAG assessment fees during that
six month period. The Company did not opt out of the TAG program extension, which is
expected to increase future FDIC insurance costs.
 
    
    Temporary increase in deposit insurance coverage. Pursuant to the EESA, the FDIC
temporarily increased the amount of deposit coverage for deposits at banks, thrifts and
credit unions for deposits that are subject to deposit insurance provided by the FDIC
from $100,000 to $250,000 per applicable depositor. The EESA provided that the basic
deposit insurance limit will return to $100,000 after December 31, 2009. The temporary
increase in the basic limit on federal deposit insurance coverage from $100,000 to
$250,000 per depositor has been extended through December 31, 2013, but is permanent
for certain retirement accounts (including IRAs).
  - 11 -




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Federal Securities Laws.
 Office of Thrift Supervision. e.g.
    Change in Bank Control Act.
 Gramm-Leach-Bliley.
  - 12 -




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Anti-Money Laundering and USA Patriot Act.
 Office of Foreign Assets Control Regulation. e.g
 Transactions with Affiliates.
  - 13 -




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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 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 Requirements.
 
    
    well capitalized if it has a total risk-based capital ratio of 10% or greater and a
core capital ratio of 5% or greater;
 
    
    adequately capitalized if it has a total risk-based capital ratio of 8% or greater, a
Tier 1 risk-based capital ratio of 4% or greater and generally a core capital ratio of 4%
or greater;
 
    
    undercapitalized if it has a total risk-based capital ratio of less than 8%, a Tier 1
risk-based capital ratio of less than 4%, or generally a core capital ratio of less than
4%;
 
    
    significantly undercapitalized if it has a total risk-based capital ratio of less than
6%, a Tier 1 risk-based capital ratio of less than 3%, or a core capital 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%.
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As of December 31, 2009Core
    
    
    Risk-BasedCapital
    
    
    Capital(Dollars in thousands)Shareholders equity/GAAP capital
    
    $
    188,356
    
    
    $
    188,356Disallowed assets
    
    
    (64
    )
    
    
    (64
    )Unrealized loss on available for sale securities
    
    
    4,547
    
    
    
    4,547Additional capital items:General valuation allowances
    
    
    
    
    
    
    20,236Low-level recourse and residual interests
    
    
    
    
    
    
    (51,406
    )Regulatory capital as reported to the OTS
    
    
    192,839
    
    
    
    161,669Minimum capital requirement as reported to the OTS
    
    
    100,400
    
    
    
    128,382Regulatory capitalexcess
    
    $
    92,439
    
    
    $
    33,287Capital ratios
    
    
    7.68
    %
    
    
    10.07
    %Well capitalized requirement
    
    
    5.00
    %
    
    
    10.00
    %Minimum capital requirements reported to the OTS
    
    
    4.00
    %
    
    
    8.00
    %
 Regulatory Informal Agreement  Memorandum of Understanding.
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Insurance of Accounts and Regulation by the Federal Deposit Insurance Corporation
      - 16 -




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FHLBank System.
 Brokered Deposits.
 Federal Reserve System .
  - 17 -




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Mortgage Banking Operations.
 Regulation of UW 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.
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
    
    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.
   Regulation of UW Investment Services Inc.
 Available Information
 www.sec.gov
 www.uwbancorp.com
  - 19 -




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Item 1A.
    
    Risk Factors
  Risks Related to Our Business
 Our business has been and may continue to be adversely affected by conditions in the financial
markets and economic conditions generally.
     Regulatory Risks
 We are subject to informal agreements and other determinations by the OTS that restricts
certain of our actions.
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We may elect or be compelled to seek additional capital, but that capital may not be available
or it may be dilutive.
  As a regulated entity, the Bank must maintain certain required levels of regulatory capital
that may limit our operations and potential growth.
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e.g.
   Liquidity Risks
 Liquidity risk could impact our operations and our results of operations. If the Bank or
Company were unable to borrow funds through access to the marketplace, we may not be able to meet
the cash flow requirements of our depositors, creditors, and borrowers, or the operating cash
needed to fund corporate expansion and other corporate activities.
   - 22 -




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United Western Bank relies on wholesale funding sources for secondary and contingent liquidity
sources.
  - 23 -




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We are significantly dependent upon brokered deposits as a source of liquidity, and are
currently under significant restrictions in our ability to use them in the future.
 Our ability to service our debt and pay dividends is subject to our ability to receive
dividends from our subsidiaries.
  Risks Associated with Non-Agency Mortgage Backed Securities
 Continued deterioration in the underlying performance of our investment securities backed by
mortgage loans could create losses in our investment portfolio.
    - 24 -




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Declines in the credit and residential housing markets could result in further losses on our
mortgage-backed securities.
 If any additional of the Banks subordinate-tranche, non-agency, mortgage-backed securities
were to be downgraded below investment grade by one or more of the nationally recognized securities
rating organizations, or NRSROs, which rate the securities, we could be required to maintain
additional capital.
   - 25 -




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Risks Related to Lending
 Our allowance for credit losses may be insufficient.
 A significant portion of our loan portfolio is secured by real estate, and a continued
downturn in the economy within the markets we serve could significantly hurt our business and
prospects for growth.
   - 26 -




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We are subject to risk related to our concentration of construction and land development and
commercial real estate loans.
 
    
    the viability of the contractor;
 
    
    the value of the project being subject to successful completion;
 
    
    the contractors ability to complete the project, to meet deadlines and time
schedules and to stay within cost estimates; and
 
    
    concentrations of such loans with a single contractor and its affiliates.
   The mortgage loans that the Bank holds 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.
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The Bank has invested in loan portfolios, pooled securities and mortgage-backed obligations,
which may lead to volatility in cash flow and market risk.
 We must effectively manage our credit risk.
 Other Risks Related to our Business
 Our FDIC deposit insurance premiums have increased and could increase further, which could
have a material adverse impact on earnings in the future.
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Our business is subject to interest rate risk.
 
    
    our Companys ability to originate loans and obtain deposits;
 
    
    the fair value of our Companys financial assets and liabilities;
 
    
    the average duration of our Companys mortgage-backed securities portfolio; and
 
    
    other mortgage and servicing assets
  Continued declines in interest rates would likely hurt our earnings.
 As a savings bank, pursuant to the Home Owners Loan Act, or HOLA, the Bank is required to
maintain a certain percentage of its total assets in HOLA-qualifying loans and investments, which
limits our asset mix and could significantly restrict our ability to sell certain assets to obtain
liquidity.
  Our quarterly results may fluctuate.
  - 29 -




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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.
 Curtailment of government guaranteed loan programs could affect our SBA business.
 We are exposed to risk of environmental liabilities.
 Failure in our automated systems and controls could subject us to increased operating or other
liabilities.
  Breaches of our computer and network security systems may result in customer information being
compromised and/or identity theft.
   - 30 -




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We may be adversely affected by changes in laws and regulations and the regulatory
environment.
      - 31 -




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We are subject to examinations and challenges by tax authorities.
 Restriction on use of tax attributes from tax law ownership change.
  UW Trust Company is subject to regulation as a trust company and could be the subject of third
party actions.
  Significant legal actions could subject our Company to substantial liabilities.
 Risks Related to our Business Strategy
 We may be unable to fully implement our community banking business strategy.
 
    
    attract sufficient commercial business and community bank deposits;
 
    
    attract and maintain business banking relationships with businesses in the markets
in which we serve;
 
    
    attract and retain experienced and successful commercial and community bankers;
 
    
    identify and pursue suitable opportunities for opening new branches in the Colorado
Front Range and selected mountain community markets;
 
    
    maintain adequate regulatory capital and comply with applicable federal and state
regulations; and
 
    
    originate community bank loans and maintain adequate asset quality.
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We may not be able to effectively manage our proposed growth.
 We may not be able to attract and retain key personnel.
 Adverse economic conditions in the Colorado Front Range and our mountain community markets
could impair the execution of our business strategy.
 Risks Relating to Ownership of Our Common Stock
 The trading volume of our stock is low.
 We may issue additional shares of common or preferred stock, which may cause dilution and
other risks.
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The market price of our common stock may fluctuate significantly.
 
    
    changes in earnings estimates or recommendations by analysts who cover our common
stock;
 
    
    variations in our quarterly operating results or the quarterly financial results of
companies perceived to be competitors or similar to us;
 
    
    changes in our capital structure, such as future issuances of securities, sales of
large blocks of common stock by our shareholders or the incurrence of additional
debt; and
 
    
    changes in general economic and market conditions.
 
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
  Monthly Rent orMortgageLocation
    
    Owned/Leased
    
    Occupant
    
    PaymentDenver, CO
    
    Leased through October 31, 2016 (1)
    
    United Western Bancorp and various of its subsidiaries
    
    $
    142,646Highlands Ranch, CO
    
    Leased month to month
    
    United Western Bancorp
    
    $
    2,400Dallas, TX
    
    Leased month to month
    
    United Western Bancorp
    
    $
    875Aspen, CO
    
    Leased
    
    United Western Bank  Aspen office
    
    $
    8,112Boulder, CO
    
    Leased (land lease)
    
    United Western Bank  Boulder Branch
    
    $
    1,356Denver, CO
    
    Leased (land lease)
    
    United Western Bank  Cherry Creek Branch
    
    $
    8,974Fort Collins, CO
    
    Owned
    
    United Western Bank  Fort Collins Branch
    
    
    N/ALoveland, CO
    
    Owned
    
    United Western Bank  Loveland Branch
    
    
    N/ALongmont, CO
    
    Owned
    
    United Western Bank  Longmont Branch
    
    
    N/ADenver, CO
    
    Leased (land lease)
    
    United Western Bank  Hampden Branch
    
    $
    13,240Centennial CO
    
    Owned
    
    United Western Bank  DTC Branch
    
    
    N/AThornton, CO
    
    Leased through April 2010
    
    United Western Bancorp
    
    $
    3,000Waco, TX
    
    Leased month to month
    
    UW Trust Company
    
    $
    3,754Phoenix, AZ
    
    Leased through September 30, 2015
    
    Matrix Financial Services
    
    $
    8,885St. Louis, MO
    
    Leased through June 30, 2012
    
    Equi-Mor Holdings, Inc.
    
    $
    14,125Ft. Lupton, CO
    
    Owned
    
    Matrix Funding Corp.
    
    
    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 17 to the consolidated
financial statements in this report. 
 Item 3.
    
    Legal Proceedings
 General.
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United Western Bancorp, Inc . United Heritage Financial Group, Inc. and United Heritage Life
Insurance Company v. First Matrix Investment Services Corporation
 United Western Bancorp, Inc. and UW Trust Company. William R. and Carolyn Richoz, et al. v.
United Western Trust Company f/k/a Sterling Trust and United Western Bancorp, Inc.
 United Western Bank . Ward Enterprises, LLC v. Daniel E. McCabe et al. including United
Western Bank.
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United Western Bank . Anita Hunter et. al. v. Citibank, N.A. et al. including United Western
Bank
 United Western Bank . Highpoint Vista, LLC et al. v. United Western Bank et al
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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Common Stock Market Prices and Dividends
  Market PriceHigh
    
    
    Low
    
    
    Dividends PaidQuarter Ended:December 31, 2009
    
    $
    4.29
    
    
    $
    2.17
    
    
    $
    September 30, 2009
    
    
    10.17
    
    
    
    3.71
    
    
    
    0.01June 30, 2009
    
    
    10.85
    
    
    
    4.44
    
    
    
    0.06March 31, 2009
    
    
    9.98
    
    
    
    4.40
    
    
    
    0.06December 31, 2008
    
    $
    12.15
    
    
    $
    6.98
    
    
    $
    0.06September 30, 2008
    
    
    13.68
    
    
    
    9.92
    
    
    
    0.06June 30, 2008
    
    
    18.08
    
    
    
    12.42
    
    
    
    0.06March 31, 2008
    
    
    20.09
    
    
    
    15.60
    
    
    
    0.06
  Dividends
   - 37 -




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Issuer Purchases of Equity Securities
  Total Number of
    
    
    Maximum NumberShares Purchased
    
    
    of Shares that mayTotal Number of
    
    
    Average Price
    
    
    as part of Publicly
    
    
    yet be purchasedShares Purchased
    
    
    Paid per Share
    
    
    Announced Plan
    
    
    under the PlanJanuary 1 through February 28, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    March 1 through March 31, 2008
    
    
    13,900
    
    
    
    16.25
    
    
    
    13,900
    
    
    
    365,018April 1 through May 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1 through June 30, 2008
    
    
    100,000
    
    
    
    13.79
    
    
    
    100,000
    
    
    
    265,018July 1 through December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    113,900
    
    
    $
    14.09
    
    
    
    113,900
    
    
    
    265,018
 Total Number of
    
    
    Maximum NumberShares Purchased
    
    
    of Shares that mayTotal Number of
    
    
    Average Price
    
    
    as part of Publicly
    
    
    yet be purchasedShares Purchased
    
    
    Paid per Share
    
    
    Announced Plan
    
    
    under the PlanJanuary 1 through July 31, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    August 1 through August 31, 2007
    
    
    25,000
    
    
    
    21.54
    
    
    
    25,000
    
    
    
    414,118September 1 through November 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 1 through December 31, 2007
    
    
    35,200
    
    
    
    20.23
    
    
    
    35,200
    
    
    
    378,918Total
    
    
    60,200
    
    
    $
    20.78
    
    
    
    60,200
    
    
    
    378,918
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Performance Graph
  
 Index
    
    12/31/2004
    
    
    12/31/2005
    
    

12/31/2006
    
    
    12/31/2007
    
    

12/31/2008
    
    

12/31/2009United Western Bancorp,
Inc.
    
    $
    100.00
    
    
    $
    150.36
    
    
    $
    159.79
    
    
    $
    161.57
    
    
    $
    76.99
    
    
    $
    23.18SNL $1B-$5B Thrift index
    
    
    100.00
    
    
    
    99.12
    
    
    
    114.01
    
    
    
    88.94
    
    
    
    75.87
    
    
    
    63.69Russell 2000
    
    
    100.00
    
    
    
    104.55
    
    
    
    123.76
    
    
    
    121.82
    
    
    
    80.66
    
    
    
    102.58
  - 39 -




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Item 6.
    
    Selected Financial Data
 SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
   As of and for the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands, except per share data)Statement of Operations DataInterest and dividend income
    
    $
    101,507
    
    
    $
    115,017
    
    
    $
    121,559
    
    
    $
    115,300
    
    
    $
    87,096Interest expense
    
    
    31,193
    
    
    
    33,032
    
    
    
    52,717
    
    
    
    59,783
    
    
    
    42,466Net interest income before provision
for credit losses
    
    
    70,314
    
    
    
    81,985
    
    
    
    68,842
    
    
    
    55,517
    
    
    
    44,630Provision for credit losses
    
    
    35,032
    
    
    
    8,599
    
    
    
    2,312
    
    
    
    2,019
    
    
    
    891Net interest income after provision for
credit losses
    
    
    35,282
    
    
    
    73,386
    
    
    
    66,530
    
    
    
    53,498
    
    
    
    43,739Noninterest income:Custodial, administrative and escrow
services
    
    
    491
    
    
    
    864
    
    
    
    606
    
    
    
    302
    
    
    
    1,319Loan administration
    
    
    4,290
    
    
    
    4,914
    
    
    
    6,311
    
    
    
    7,749
    
    
    
    10,103Gain on sale of loans held for sale
    
    
    2,248
    
    
    
    764
    
    
    
    2,124
    
    
    
    640
    
    
    
    1,511(Loss) gain on trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    613(Loss) gain on sale of available for
sale investment securities
    
    
    (46,980
    )
    
    
    
    
    
    
    98
    
    
    
    274
    
    
    
    (122
    )Total other-than-temporary impairment
losses
    
    
    (42,790
    )
    
    
    (4,110
    )
    
    
    
    
    
    
    
    
    
    
    Portion of loss recognized in other
comprehensive income (before taxes)
    
    
    6,197
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net impairment losses recognized in
earnings
    
    
    (36,593
    )
    
    
    (4,110
    )
    
    
    
    
    
    
    
    
    
    
    Gain on sale of investment in Matrix
Financial Solutions, Inc.
    
    
    3,567
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,100
    
    
    
    300Litigation settlements
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    2,550
    
    
    
    764Other
    
    
    2,450
    
    
    
    3,072
    
    
    
    3,729
    
    
    
    8,265
    
    
    
    8,203Total noninterest (loss) income
    
    
    (70,527
    )
    
    
    5,504
    
    
    
    13,023
    
    
    
    22,651
    
    
    
    22,691Noninterest expense
    
    
    76,892
    
    
    
    66,130
    
    
    
    66,085
    
    
    
    61,885
    
    
    
    65,136(Loss) income from continuing
operations before income taxes
    
    
    (112,137
    )
    
    
    12,760
    
    
    
    13,468
    
    
    
    14,264
    
    
    
    1,294Income tax (benefit) expense
    
    
    (32,567
    )
    
    
    2,635
    
    
    
    3,315
    
    
    
    3,885
    
    
    
    (318
    )(Loss) income from continuing operations
    
    $
    (79,570
    )
    
    $
    10,125
    
    
    $
    10,153
    
    
    $
    10,379
    
    
    $
    1,612(Loss) income from continuing
operations per share basic
    
    $
    (6.06
    )
    
    $
    1.39
    
    
    $
    1.39
    
    
    $
    1.33
    
    
    $
    0.23(Loss) income from continuing
operations per share  assuming
dilution (1)
    
    $
    (6.06
    )
    
    $
    1.39
    
    
    $
    1.39
    
    
    $
    1.33
    
    
    $
    0.23Weighted average common shares  basic
    
    
    13,139,070
    
    
    
    7,164,250
    
    
    
    7,247,636
    
    
    
    7,791,516
    
    
    
    6,943,480Weighted average common shares 
assuming dilution
    
    
    13,139,070
    
    
    
    7,164,598
    
    
    
    7,256,484
    
    
    
    7,791,516
    
    
    
    7,035,948
  - 40 -




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##### Table of Contents



As of and for the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Balance Sheet DataTotal assets
    
    $
    2,526,172
    
    
    $
    2,259,429
    
    
    $
    2,096,559
    
    
    $
    2,156,548
    
    
    $
    2,079,388Cash and due from banks
    
    
    586,380
    
    
    
    22,880
    
    
    
    40,806
    
    
    
    23,754
    
    
    
    34,232Investment securities
    
    
    390,199
    
    
    
    558,037
    
    
    
    661,781
    
    
    
    838,979
    
    
    
    540,194Loans held for investment, net
    
    
    1,150,105
    
    
    
    1,233,301
    
    
    
    885,710
    
    
    
    711,601
    
    
    
    425,943Loans held for sale  at lower of cost or fair value
    
    
    260,757
    
    
    
    291,620
    
    
    
    369,071
    
    
    
    444,120
    
    
    
    927,442Mortgage servicing rights, net
    
    
    7,344
    
    
    
    9,496
    
    
    
    11,971
    
    
    
    15,399
    
    
    
    20,708Deposits(2)
    
    
    1,993,513
    
    
    
    1,724,672
    
    
    
    1,385,481
    
    
    
    1,345,681
    
    
    
    1,124,044Custodial escrow balances
    
    
    31,905
    
    
    
    29,697
    
    
    
    34,172
    
    
    
    40,017
    
    
    
    49,385FHLBank borrowings
    
    
    180,607
    
    
    
    226,721
    
    
    
    406,129
    
    
    
    519,431
    
    
    
    615,028Junior subordinated debentures owed to unconsolidated
subsidiary trusts
    
    
    30,442
    
    
    
    30,442
    
    
    
    30,442
    
    
    
    56,216
    
    
    
    61,372United Western Bank repurchase agreements
    
    
    78,635
    
    
    
    81,265
    
    
    
    76,428
    
    
    
    50,000
    
    
    
    Other borrowings
    
    
    30,000
    
    
    
    38,000
    
    
    
    21,000
    
    
    
    10,000
    
    
    
    29,581Total shareholders equity(3)
    
    
    159,651
    
    
    
    101,949
    
    
    
    113,421
    
    
    
    107,753
    
    
    
    180,728Operating Ratios and Other Selected DataAverage equity to average total assets(4)
    
    
    5.62
    %
    
    
    5.01
    %
    
    
    5.42
    %
    
    
    5.12
    %
    
    
    5.00
    %Yield on assets
    
    
    4.31
    
    
    
    5.54
    
    
    
    6.09
    
    
    
    5.63
    
    
    
    4.75Cost of liabilities
    
    
    1.45
    
    
    
    1.80
    
    
    
    3.06
    
    
    
    3.26
    
    
    
    2.56Net interest margin(4)(5)
    
    
    3.00
    
    
    
    3.96
    
    
    
    3.46
    
    
    
    2.74
    
    
    
    2.44Return from continuing operations on average total assets(4)
    
    NMF
    
    
    
    0.46
    
    
    
    0.48
    
    
    
    0.48
    
    
    
    0.08Return from continuing operations on average equity(4)
    
    NMF
    
    
    
    9.21
    
    
    
    8.92
    
    
    
    9.34
    
    
    
    1.61Operating efficiency ratio(4) and (6)
    
    NMF
    
    
    
    72.57
    
    
    
    76.46
    
    
    
    72.09
    
    
    
    86.97Ratios of Earnings to Fixed Charges(7)Including interest on deposits
    
    NMF
    
    
    
    1.38
    X
    
    
    1.25
    X
    
    
    1.24
    X
    
    
    1.03
    XExcluding interest on deposits
    
    NMF
    
    
    
    1.60
    
    
    
    1.51
    
    
    
    1.38
    
    
    
    1.05Total Loan Performance Ratios and DataNonperforming loans(8)
    
    $
    54,290
    
    
    $
    21,899
    
    
    $
    10,475
    
    
    $
    8,398
    
    
    $
    16,894Nonperforming loans/total loans(8)
    
    
    3.76
    %
    
    
    1.42
    %
    
    
    0.83
    %
    
    
    0.72
    %
    
    
    1.24
    %Nonperforming assets/total assets(8)
    
    
    2.80
    
    
    
    1.17
    
    
    
    0.65
    
    
    
    0.64
    
    
    
    1.03Net loan charge-offs/average loans(4)
    
    
    1.33
    
    
    
    0.04
    
    
    
    0.07
    
    
    
    0.11
    
    
    
    0.46Loans held for Investment Performance Ratios and DataAllowance for credit losses
    
    $
    34,669
    
    
    $
    16,183
    
    
    $
    8,000
    
    
    $
    6,231
    
    
    $
    4,808Nonperforming loans held for investment(8)
    
    
    60,833
    
    
    
    13,064
    
    
    
    4,251
    
    
    
    3,675
    
    
    
    9,601Nonperforming loans held for investment /total loans held
for investment(8)
    
    
    5.13
    %
    
    
    1.05
    %
    
    
    0.48
    %
    
    
    0.51
    %
    
    
    2.23
    %Allowance for credit losses/total loans held for investment
    
    
    2.93
    
    
    
    1.30
    
    
    
    0.90
    
    
    
    0.87
    
    
    
    1.12Allowance for credit losses/nonperforming loans held for
investment
    
    
    56.99
    
    
    
    123.87
    
    
    
    188.19
    
    
    
    169.55
    
    
    
    50.08
 
 (1)
    
    Net (loss) income 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 restricted stock outstanding. There are no other dilutive securities.(2)
    
    At December 31, 2009, 2008, 2007, 2006 and 2005, the total balance of brokered deposits
was $575.7 million, $229.4 million, $13.0 million, $25.7 million, and $42.5 million, respectively.  - 41 -




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##### Table of Contents



(3)
    
    Total Shareholders Equity at December 31, 2009 included approximately $81.7 million in
net proceeds from the September 2009 public offering. See Note 23 to the financial statements.
Total Shareholders Equity at December 31, 2005 included approximately $87.0 million in proceeds
from the private offering completed in December 2005. 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.(4)
    
    Calculations are based on average daily balances where available and monthly averages
otherwise. In some instances, the results are reported as NMF meaning not a meaningful figure
since the reported results would otherwise have reflected a negative number due to the operating
loss realized in the period.(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
      - 42 -




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   - 43 -




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##### Table of Contents



Overview
       - 44 -




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##### Table of Contents



- 45 -




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##### Table of Contents



- 46 -




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##### Table of Contents



Results of Operations
  Net Interest Income
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsInterest-earning assets:Community bank loans:Commercial real estate
    
    $
    401,454
    
    
    
    23,445
    
    
    
    5.84
    %
    
    $
    312,299
    
    
    
    20,082
    
    
    
    6.43
    %
    
    $
    172,716
    
    
    
    12,750
    
    
    
    7.38
    %Construction and development
    
    
    363,943
    
    
    
    17,376
    
    
    
    4.77
    
    
    
    321,410
    
    
    
    19,080
    
    
    
    5.94
    
    
    
    157,796
    
    
    
    14,394
    
    
    
    9.12Originated SBA loans
    
    
    151,543
    
    
    
    8,482
    
    
    
    5.60
    
    
    
    113,430
    
    
    
    8,340
    
    
    
    7.35
    
    
    
    96,848
    
    
    
    9,136
    
    
    
    9.43Multifamily
    
    
    44,931
    
    
    
    2,288
    
    
    
    5.09
    
    
    
    48,906
    
    
    
    2,927
    
    
    
    5.98
    
    
    
    55,464
    
    
    
    3,615
    
    
    
    6.52Commercial
    
    
    124,207
    
    
    
    6,931
    
    
    
    5.58
    
    
    
    112,239
    
    
    
    7,122
    
    
    
    6.35
    
    
    
    54,765
    
    
    
    4,707
    
    
    
    8.59Consumer and other loans
    
    
    52,028
    
    
    
    2,594
    
    
    
    4.99
    
    
    
    13,154
    
    
    
    482
    
    
    
    3.66
    
    
    
    4,419
    
    
    
    287
    
    
    
    6.49Total community bank loans
    
    
    1,138,106
    
    
    
    61,116
    
    
    
    5.37
    
    
    
    921,438
    
    
    
    58,033
    
    
    
    6.30
    
    
    
    542,008
    
    
    
    44,889
    
    
    
    8.28Other loans and securities:Residential mortgage loans
    
    
    305,507
    
    
    
    14,036
    
    
    
    4.59
    
    
    
    385,908
    
    
    
    20,503
    
    
    
    5.31
    
    
    
    517,720
    
    
    
    27,882
    
    
    
    5.39Purchased SBA loans and securities
    
    
    127,079
    
    
    
    2,056
    
    
    
    1.62
    
    
    
    157,928
    
    
    
    5,109
    
    
    
    3.24
    
    
    
    213,311
    
    
    
    10,393
    
    
    
    4.87Mortgage-backed securities
    
    
    445,439
    
    
    
    23,281
    
    
    
    5.23
    
    
    
    560,039
    
    
    
    29,894
    
    
    
    5.34
    
    
    
    663,379
    
    
    
    35,233
    
    
    
    5.31Total other loans and securities
    
    
    878,025
    
    
    
    39,373
    
    
    
    4.48
    
    
    
    1,103,875
    
    
    
    55,506
    
    
    
    5.03
    
    
    
    1,394,410
    
    
    
    73,508
    
    
    
    5.27Interest-earning deposits
    
    
    319,592
    
    
    
    678
    
    
    
    0.21
    
    
    
    18,454
    
    
    
    345
    
    
    
    1.84
    
    
    
    20,382
    
    
    
    1,012
    
    
    
    4.90FHLBank Stock
    
    
    20,224
    
    
    
    340
    
    
    
    1.68
    
    
    
    34,298
    
    
    
    1,133
    
    
    
    3.30
    
    
    
    39,297
    
    
    
    2,150
    
    
    
    5.47Total interest-earning assets
    
    
    2,355,947
    
    
    
    101,507
    
    
    
    4.31
    %
    
    
    2,078,065
    
    
    
    115,017
    
    
    
    5.54
    %
    
    
    1,996,097
    
    
    
    121,559
    
    
    
    6.09
    %Noninterest-earning assets:Cash
    
    $
    62,601
    
    
    
    
    
    
    
    
    
    
    $
    19,239
    
    
    
    
    
    
    
    
    
    
    $
    18,720Allowance for credit losses
    
    
    (26,234
    )
    
    
    
    
    
    
    
    
    
    
    (13,500
    )
    
    
    
    
    
    
    
    
    
    
    (9,238
    )Premises and equipment
    
    
    25,646
    
    
    
    
    
    
    
    
    
    
    
    21,662
    
    
    
    
    
    
    
    
    
    
    
    11,321Other assets
    
    
    90,455
    
    
    
    
    
    
    
    
    
    
    
    87,333
    
    
    
    
    
    
    
    
    
    
    
    82,585Total non-interest bearing assets
    
    
    152,468
    
    
    
    
    
    
    
    
    
    
    
    114,734
    
    
    
    
    
    
    
    
    
    
    
    103,388Total assets
    
    $
    2,508,415
    
    
    
    
    
    
    
    
    
    
    $
    2,192,799
    
    
    
    
    
    
    
    
    
    
    $
    2,099,485Liabilities and Shareholders EquityInterest-bearing liabilities:Savings accounts
    
    $
    344
    
    
    
    1
    
    
    
    0.29
    %
    
    $
    256
    
    
    
    2
    
    
    
    0.76
    %
    
    $
    165
    
    
    
    2
    
    
    
    1.26
    %Money market and NOW accounts
    
    
    1,484,182
    
    
    
    7,525
    
    
    
    0.51
    
    
    
    1,238,869
    
    
    
    10,376
    
    
    
    0.84
    
    
    
    1,198,094
    
    
    
    25,759
    
    
    
    2.15Certificates of deposit
    
    
    285,863
    
    
    
    7,040
    
    
    
    2.46
    
    
    
    59,718
    
    
    
    2,284
    
    
    
    3.82
    
    
    
    32,369
    
    
    
    1,381
    
    
    
    4.27FHLBank borrowings
    
    
    214,881
    
    
    
    9,339
    
    
    
    4.29
    
    
    
    383,543
    
    
    
    13,769
    
    
    
    3.53
    
    
    
    351,231
    
    
    
    17,086
    
    
    
    4.80Repurchase agreements
    
    
    79,195
    
    
    
    3,666
    
    
    
    4.57
    
    
    
    78,934
    
    
    
    2,975
    
    
    
    3.71
    
    
    
    72,354
    
    
    
    3,494
    
    
    
    4.83Borrowed money and junior subordinated debentures
    
    
    68,149
    
    
    
    3,622
    
    
    
    5.24
    
    
    
    53,702
    
    
    
    3,626
    
    
    
    6.64
    
    
    
    59,742
    
    
    
    4,995
    
    
    
    8.25Total interest-bearing liabilities
    
    
    2,132,614
    
    
    
    31,193
    
    
    
    1.45
    %
    
    
    1,815,022
    
    
    
    33,032
    
    
    
    1.80
    %
    
    
    1,713,955
    
    
    
    52,717
    
    
    
    3.06
    %Noninterest-bearing liabilities:Demand deposits (including custodial escrow balances)
    
    
    215,824
    
    
    
    
    
    
    
    
    
    
    
    246,064
    
    
    
    
    
    
    
    
    
    
    
    249,356Other liabilities
    
    
    19,096
    
    
    
    
    
    
    
    
    
    
    
    21,831
    
    
    
    
    
    
    
    
    
    
    
    22,327Total non-interest bearing liabilities
    
    
    234,920
    
    
    
    
    
    
    
    
    
    
    
    267,895
    
    
    
    
    
    
    
    
    
    
    
    271,683Shareholders equity
    
    
    140,881
    
    
    
    
    
    
    
    
    
    
    
    109,882
    
    
    
    
    
    
    
    
    
    
    
    113,847Total liabilities and shareholders equity
    
    $
    2,508,415
    
    
    
    
    
    
    
    
    
    
    $
    2,192,799
    
    
    
    
    
    
    
    
    
    
    $
    2,099,485Net interest income before provision for credit losses
    
    
    
    
    
    $
    70,314
    
    
    
    
    
    
    
    
    
    
    $
    81,985
    
    
    
    
    
    
    
    
    
    
    $
    68,842Interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.86
    %
    
    
    
    
    
    
    
    
    
    
    3.74
    %
    
    
    
    
    
    
    
    
    
    
    3.03
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.00
    %
    
    
    
    
    
    
    
    
    
    
    3.96
    %
    
    
    
    
    
    
    
    
    
    
    3.46
    %Ratio of average interest-earning assets to average
interest bearing liabilities
    
    
    
    
    
    
    
    
    
    
    110.47
    %
    
    
    
    
    
    
    
    
    
    
    114.49
    %
    
    
    
    
    
    
    
    
    
    
    116.46
    %
  - 47 -




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##### Table of Contents



Volume and Rate Analysis of Net Interest Income
  Year ended 2009 versus 2008
    
    
    Year ended 2008 versus 2007Increase (Decrease) Due to Change in
    
    
    Increase (Decrease) Due to Change inVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(Dollars in thousands)Interest-earning assets:Community bank loans:Commercial real estate loans
    
    $
    5,334
    
    
    $
    (1,971
    )
    
    $
    3,363
    
    
    $
    9,155
    
    
    $
    (1,823
    )
    
    $
    7,332Construction and development
loans
    
    
    2,337
    
    
    
    (4,041
    )
    
    
    (1,704
    )
    
    
    11,017
    
    
    
    (6,331
    )
    
    
    4,686Originated SBA loans
    
    
    2,407
    
    
    
    (2,265
    )
    
    
    142
    
    
    
    1,413
    
    
    
    (2,209
    )
    
    
    (796
    )Multifamily loans
    
    
    (225
    )
    
    
    (414
    )
    
    
    (639
    )
    
    
    (405
    )
    
    
    (283
    )
    
    
    (688
    )Commercial Loans
    
    
    719
    
    
    
    (910
    )
    
    
    (191
    )
    
    
    3,900
    
    
    
    (1,485
    )
    
    
    2,415Consumer and other loans
    
    
    1,881
    
    
    
    231
    
    
    
    2,112
    
    
    
    365
    
    
    
    (170
    )
    
    
    195Other loans and securities:Residential loans
    
    
    (3,917
    )
    
    
    (2,550
    )
    
    
    (6,467
    )
    
    
    (6,973
    )
    
    
    (406
    )
    
    
    (7,379
    )Purchased SBA loans and
securities
    
    
    (858
    )
    
    
    (2,195
    )
    
    
    (3,053
    )
    
    
    (2,308
    )
    
    
    (2,976
    )
    
    
    (5,284
    )Mortgage-backed securities
    
    
    (6,008
    )
    
    
    (605
    )
    
    
    (6,613
    )
    
    
    (5,536
    )
    
    
    197
    
    
    
    (5,339
    )Interest-earning deposits
    
    
    887
    
    
    
    (554
    )
    
    
    333
    
    
    
    (87
    )
    
    
    (580
    )
    
    
    (667
    )FHLBank stock
    
    
    (361
    )
    
    
    (432
    )
    
    
    (793
    )
    
    
    (247
    )
    
    
    (770
    )
    
    
    (1,017
    )Total interest-earning assets
    
    
    2,196
    
    
    
    (15,706
    )
    
    
    (13,510
    )
    
    
    10,294
    
    
    
    (16,836
    )
    
    
    (6,542
    )Interest-bearing liabilities:Savings accounts
    
    
    1
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    1
    
    
    
    (1
    )
    
    
    Money market and NOW accounts
    
    
    1,785
    
    
    
    (4,636
    )
    
    
    (2,851
    )
    
    
    847
    
    
    
    (16,230
    )
    
    
    (15,383
    )Certificates of deposit
    
    
    5,832
    
    
    
    (1,076
    )
    
    
    4,756
    
    
    
    1,062
    
    
    
    (159
    )
    
    
    903FHLBank borrowings
    
    
    (6,888
    )
    
    
    2,458
    
    
    
    (4,430
    )
    
    
    1,446
    
    
    
    (4,763
    )
    
    
    (3,317
    )Repurchase agreements
    
    
    10
    
    
    
    681
    
    
    
    691
    
    
    
    310
    
    
    
    (829
    )
    
    
    (519
    )Borrowed money
    
    
    841
    
    
    
    (845
    )
    
    
    (4
    )
    
    
    (467
    )
    
    
    (902
    )
    
    
    (1,369
    )Total interest-bearing liabilities
    
    
    1,581
    
    
    
    (3,420
    )
    
    
    (1,839
    )
    
    
    3,199
    
    
    
    (22,884
    )
    
    
    (19,685
    )Change in net interest income
    
    $
    615
    
    
    $
    (12,286
    )
    
    $
    (11,671
    )
    
    $
    7,095
    
    
    $
    6,048
    
    
    $
    13,143
 Net Interest Income .
   - 48 -




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##### Table of Contents



Provision for Credit Losses.
  - 49 -




---



##### Table of Contents



Noninterest Income.
 Years Ended December 31,
    
    
    $ Change
    
    
    % Change2009
    
    
    2008
    
    
    2007
    
    
    2009-2008
    
    
    2008-2007
    
    
    2009-2008
    
    
    2008-2007(Dollars in thousands)Noninterest income:Custodial, administrative and escrow services
    
    $
    491
    
    
    $
    864
    
    
    $
    606
    
    
    $
    (373
    )
    
    $
    258
    
    
    
    (43
    )%
    
    
    43
    %Loan administration
    
    
    4,290
    
    
    
    4,914
    
    
    
    6,311
    
    
    
    (624
    )
    
    
    (1,397
    )
    
    
    (13
    )
    
    
    (22
    )Gain on sale of loans held for sale
    
    
    2,248
    
    
    
    764
    
    
    
    2,124
    
    
    
    1,484
    
    
    
    (1,360
    )
    
    
    194
    
    
    
    (64
    )(Loss) gain on sale of available for sale
investment securities
    
    
    (46,980
    )
    
    
    
    
    
    
    98
    
    
    
    (46,980
    )
    
    
    (98
    )
    
    
    100
    
    
    
    (100
    )Total other-than-temporary impairment losses
    
    
    (42,790
    )
    
    
    (4,110
    )
    
    
    
    
    
    
    (38,680
    )
    
    
    (4,110
    )
    
    
    941
    
    
    
    100Portion of loss recognized in other
comprehensive income (before taxes)
    
    
    6,197
    
    
    
    
    
    
    
    
    
    
    
    6,197
    
    
    
    
    
    
    
    100
    
    
    
    Net impairment losses recognized in earnings
    
    
    (36,593
    )
    
    
    (4,110
    )
    
    
    
    
    
    
    (32,483
    )
    
    
    (4,110
    )
    
    
    790
    
    
    
    Gain on sale of investment in Matrix
Financial Solutions, Inc.
    
    
    3,567
    
    
    
    
    
    
    
    
    
    
    
    3,567
    
    
    
    
    
    
    
    100
    
    
    
    Litigation settlements
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    
    
    
    
    (155
    )
    
    
    
    
    
    
    (100
    )Other income
    
    
    2,450
    
    
    
    3,072
    
    
    
    3,729
    
    
    
    (622
    )
    
    
    (657
    )
    
    
    (20
    )
    
    
    (18
    )Total noninterest (loss) income
    
    $
    (70,527
    )
    
    $
    5,504
    
    
    $
    13,023
    
    
    $
    (76,031
    )
    
    $
    (7,519
    )
    
    
    (1,381
    )%
    
    
    (58
    )%
 Custodial and Administration Services.
    - 50 -




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##### Table of Contents



Loan Administration.
  Gain on Sale of Loans Held for Sale.
  (Loss) Gain on Sale of Available for Sale Investment Securities.
 Other-than-temporary Impairment (OTTI).
   - 51 -




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##### Table of Contents



Gain on Sale of Investment.
 Other Income.
   Noninterest Expense.
 Years Ended December 31,
    
    
    $ Change
    
    
    % Change2009
    
    
    2008
    
    
    2007
    
    
    2009-2008
    
    
    2008-2007
    
    
    2009-2008
    
    
    2008-2007(Dollars in thousands)Noninterest expense:Compensation and employee benefits
    
    $
    25,417
    
    
    $
    24,868
    
    
    $
    21,892
    
    
    $
    549
    
    
    $
    2,976
    
    
    
    2
    %
    
    
    14
    %Subaccounting fees
    
    
    20,442
    
    
    
    17,914
    
    
    
    22,851
    
    
    
    2,528
    
    
    
    (4,937
    )
    
    
    14
    
    
    
    (22
    )Amortization of mortgage servicing rights
    
    
    2,507
    
    
    
    2,635
    
    
    
    3,489
    
    
    
    (128
    )
    
    
    (854
    )
    
    
    (5
    )
    
    
    (24
    )Lower of cost or fair value adjustment on loans held for sale
    
    
    586
    
    
    
    2,793
    
    
    
    722
    
    
    
    (2,207
    )
    
    
    2,071
    
    
    
    (79
    )
    
    
    287Occupancy and equipment
    
    
    3,368
    
    
    
    2,708
    
    
    
    2,346
    
    
    
    660
    
    
    
    362
    
    
    
    24
    
    
    
    15Deposit insurance
    
    
    4,920
    
    
    
    1,027
    
    
    
    818
    
    
    
    3,893
    
    
    
    209
    
    
    
    379
    
    
    
    26Postage and communication
    
    
    937
    
    
    
    910
    
    
    
    770
    
    
    
    27
    
    
    
    140
    
    
    
    3
    
    
    
    18Professional fees
    
    
    4,043
    
    
    
    3,333
    
    
    
    2,082
    
    
    
    710
    
    
    
    1,251
    
    
    
    21
    
    
    
    60Mortgage servicing rights subservicing fees
    
    
    1,369
    
    
    
    1,690
    
    
    
    1,931
    
    
    
    (321
    )
    
    
    (241
    )
    
    
    (19
    )
    
    
    (12
    )Redemption of junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    1,487
    
    
    
    
    
    
    
    (1,487
    )
    
    
    
    
    
    
    (100
    )Other general and administrative
    
    
    13,303
    
    
    
    8,252
    
    
    
    7,697
    
    
    
    5,051
    
    
    
    555
    
    
    
    61
    
    
    
    7Total noninterest expense
    
    $
    76,892
    
    
    $
    66,130
    
    
    $
    66,085
    
    
    $
    10,762
    
    
    $
    45
    
    
    
    16
    %
    
    
    0
    %
  - 52 -




---



##### Table of Contents



- 53 -




---



##### Table of Contents



- 54 -




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##### Table of Contents



Income Taxes.
 Years ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Current:Federal
    
    $
    (17,014
    )
    
    $
    6,696
    
    
    $
    3,947State
    
    
    
    
    
    
    1,249
    
    
    
    828Deferred:Federal
    
    
    (23,793
    )
    
    
    (4,900
    )
    
    
    (1,336
    )State
    
    
    (1,989
    )
    
    
    (410
    )
    
    
    (124
    )Deferred Tax Valuation Allowance
    
    
    10,229
    
    
    
    
    
    
    
    Income tax (benefit) provision from continuing operations
    
    $
    (32,567
    )
    
    $
    2,635
    
    
    $
    3,315Income tax provision (benefit) related to discontinued operations
    
    $
    20,620
    
    
    $
    (99
    )
    
    $
    (7
    )
  Balance Sheet
    - 55 -




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##### Table of Contents



Investment Securities.
 December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Due After Five
    
    
    
    
    
    
    
    
    
    
    Due After Five
    
    
    
    
    
    
    
    
    
    
    Due After FiveYears through Ten Years
    
    
    Due after Ten Years
    
    
    Years through Ten Years
    
    
    Due after Ten Years
    
    
    Years through Ten Years
    
    
    Due after Ten YearsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    Yield
    
    
    Balance
    
    
    YieldAvailable for SaleMortgage-backed securities  agency
    
    $
    740
    
    
    
    3.46
    %
    
    $
    11,474
    
    
    
    3.11
    %
    
    $
    971
    
    
    
    4.86
    %
    
    $
    14,657
    
    
    
    4.39
    %
    
    
    
    
    
    
    
    %
    
    $
    3,250
    
    
    
    6.39
    %Mortgage-backed securities  private
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,934
    
    
    
    1.40
    
    
    
    
    
    
    
    
    
    
    
    43,253
    
    
    
    5.27Collateralized Mortgage Obligations
 private
    
    
    
    
    
    
    
    
    
    
    20,797
    
    
    
    5.75
    
    
    
    
    
    
    
    
    
    
    
    27,788
    
    
    
    5.79
    
    
    
    
    
    
    
    
    
    
    
    40,732
    
    
    
    5.81SBA securities
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    0.79
    
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    2.11
    
    
    
    
    
    
    
    
    
    
    
    441
    
    
    
    5.13Total  available for sale
    
    
    740
    
    
    
    3.46
    
    
    
    32,391
    
    
    
    4.86
    
    
    
    971
    
    
    
    4.86
    
    
    
    58,602
    
    
    
    3.36
    
    
    
    
    
    
    
    
    
    
    
    87,676
    
    
    
    5.56Held to MaturityMortgage-backed securities  private
    
    
    
    
    
    
    
    
    
    
    150,073
    
    
    
    6.14
    
    
    
    
    
    
    
    
    
    
    
    166,733
    
    
    
    5.70
    
    
    
    
    
    
    
    
    
    
    
    187,922
    
    
    
    5.46Collateralized Mortgage Obligations
 private
    
    
    
    
    
    
    
    
    
    
    207,675
    
    
    
    5.58
    
    
    
    
    
    
    
    
    
    
    
    278,633
    
    
    
    5.26
    
    
    
    
    
    
    
    
    
    
    
    323,316
    
    
    
    5.25SBA securities
    
    
    24,581
    
    
    
    3.68
    
    
    
    18,315
    
    
    
    3.05
    
    
    
    30,869
    
    
    
    5.42
    
    
    
    21,749
    
    
    
    4.76
    
    
    
    6,387
    
    
    
    8.35
    
    
    
    56,480
    
    
    
    7.74Total  held to maturity
    
    
    24,581
    
    
    
    3.68
    
    
    
    376,063
    
    
    
    5.65
    
    
    
    30,869
    
    
    
    5.42
    
    
    
    467,115
    
    
    
    5.39
    
    
    
    6,387
    
    
    
    8.35
    
    
    
    567,718
    
    
    
    5.57Total AFS and HTM Securities
    
    $
    25,321
    
    
    
    3.67
    %
    
    $
    408,454
    
    
    
    5.58
    %
    
    $
    31,840
    
    
    
    5.40
    %
    
    $
    525,717
    
    
    
    5.26
    %
    
    $
    6,387
    
    
    
    8.35
    %
    
    $
    655,394
    
    
    
    5.57
    %
   Based on lowest rating assigned by credit rating agency at December 31, 2009Available for sale
    
    Total
    
    
    Agency/AAA
    
    
    AA
    
    
    A
    
    
    BBB
    
    
    <BBB(Dollars in thousands)Agency mortgage-pass through
    
    $
    12,212
    
    
    $
    12,212
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    CMO  Prime
    
    
    18,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,875CMO  Alt  A
    
    
    1,923
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,923$
    33,010
    
    
    $
    12,212
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,798
 Based on lowest rating assigned by credit rating agency at December 31, 2009Held to maturity
    
    Total
    
    
    Agency/AAA
    
    
    AA
    
    
    A
    
    
    BBB
    
    
    <BBB(Dollars in thousands)Agency mortgage-pass through
    
    $
    19,455
    
    
    $
    19,455
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage pass through
    
    
    3,290
    
    
    
    
    
    
    
    
    
    
    
    3,290
    
    
    
    
    
    
    
    CMO  Prime
    
    
    250,398
    
    
    
    38,906
    
    
    
    
    
    
    
    33,046
    
    
    
    24,798
    
    
    
    153,648CMO  Alt  A
    
    
    38,750
    
    
    
    1,352
    
    
    
    
    
    
    
    
    
    
    
    3,129
    
    
    
    34,269$
    311,893
    
    
    $
    59,898
    
    
    $
    
    
    
    $
    36,336
    
    
    $
    27,927
    
    
    $
    187,917
  - 56 -




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##### Table of Contents



- 57 -




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##### Table of Contents



Loan Portfolio.
  - 58 -




---



##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Community Bank LoansLoans held for investment:Commercial real estate
    
    $
    466,784
    
    
    $
    434,399
    
    
    $
    243,111
    
    
    $
    219,392
    
    
    $
    123,430Construction
    
    
    250,975
    
    
    
    277,614
    
    
    
    162,711
    
    
    
    59,878
    
    
    
    32,285Land
    
    
    92,248
    
    
    
    123,395
    
    
    
    110,846
    
    
    
    33,521
    
    
    
    11,405Commercial and industrial
    
    
    151,928
    
    
    
    134,435
    
    
    
    87,199
    
    
    
    24,028
    
    
    
    12,305Multifamily
    
    
    19,283
    
    
    
    20,381
    
    
    
    8,822
    
    
    
    1,986
    
    
    
    2,161Consumer
    
    
    46,568
    
    
    
    49,440
    
    
    
    3,822
    
    
    
    2,845
    
    
    
    244Premium
    
    
    180
    
    
    
    216
    
    
    
    225
    
    
    
    
    
    
    
    Unearned fees
    
    
    (4,580
    )
    
    
    (3,565
    )
    
    
    (2,527
    )
    
    
    (1,149
    )
    
    
    (1,029
    )Loans held for sale:Commercial real estate
    
    
    55,299
    
    
    
    49,031
    
    
    
    45,465
    
    
    
    
    
    
    
    Multifamily
    
    
    17,382
    
    
    
    29,074
    
    
    
    39,559
    
    
    
    52,478
    
    
    
    67,237SBA originated, guaranteed portions
    
    
    4,379
    
    
    
    5,370
    
    
    
    5,602
    
    
    
    7,171
    
    
    
    11,045LOCOFV valuation
    
    
    (881
    )
    
    
    (1,848
    )
    
    
    (1,282
    )
    
    
    (1,084
    )
    
    
    (712
    )Premiums
    
    
    87
    
    
    
    177
    
    
    
    285
    
    
    
    391
    
    
    
    634Total Community Bank Loans
    
    $
    1,099,652
    
    
    $
    1,118,119
    
    
    $
    703,838
    
    
    $
    399,457
    
    
    $
    259,005Other LoansLoans held for investment:Residential
    
    $
    90,405
    
    
    $
    125,630
    
    
    $
    163,419
    
    
    $
    223,189
    
    
    $
    250,793SBA purchased
    
    
    64,820
    
    
    
    80,110
    
    
    
    106,721
    
    
    
    142,252
    
    
    
    SBA purchased, premium
    
    
    5,864
    
    
    
    7,084
    
    
    
    9,364
    
    
    
    12,697
    
    
    
    Premium
    
    
    299
    
    
    
    345
    
    
    
    (3
    )
    
    
    (807
    )
    
    
    (843
    )Loans held for sale:Residential
    
    
    186,591
    
    
    
    212,083
    
    
    
    278,534
    
    
    
    381,503
    
    
    
    631,773SBA purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,365
    
    
    
    177,328School financing and other loans
    
    
    
    
    
    
    
    
    
    
    927
    
    
    
    869
    
    
    
    25,272LOCOFV valuation
    
    
    (3,404
    )
    
    
    (3,619
    )
    
    
    (1,739
    )
    
    
    (1,447
    )
    
    
    (4,478
    )Unearned fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,233
    )Premiums
    
    
    1,304
    
    
    
    1,352
    
    
    
    1,720
    
    
    
    2,874
    
    
    
    20,576Total Other Loans
    
    $
    345,879
    
    
    $
    422,985
    
    
    $
    558,943
    
    
    $
    762,495
    
    
    $
    1,099,188
  - 59 -




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##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Community bank loans:Commercial real estate
    
    $
    519,562
    
    
    
    47.2
    %
    
    $
    481,053
    
    
    
    43.0
    %
    
    $
    286,728
    
    
    
    40.8
    %
    
    $
    218,569
    
    
    
    54.7
    %
    
    $
    122,745
    
    
    
    47.3
    %Construction
    
    
    250,727
    
    
    
    22.8
    
    
    
    276,718
    
    
    
    24.7
    
    
    
    161,890
    
    
    
    23.0
    
    
    
    59,638
    
    
    
    14.9
    
    
    
    32,037
    
    
    
    12.4Land
    
    
    92,226
    
    
    
    8.4
    
    
    
    123,395
    
    
    
    11.0
    
    
    
    110,846
    
    
    
    15.7
    
    
    
    33,521
    
    
    
    8.4
    
    
    
    11,405
    
    
    
    4.4Commercial and industrial
    
    
    149,739
    
    
    
    13.6
    
    
    
    133,930
    
    
    
    12.0
    
    
    
    87,061
    
    
    
    12.4
    
    
    
    23,984
    
    
    
    6.0
    
    
    
    12,231
    
    
    
    4.7Multifamily
    
    
    36,434
    
    
    
    3.3
    
    
    
    48,253
    
    
    
    4.3
    
    
    
    47,888
    
    
    
    6.8
    
    
    
    53,729
    
    
    
    13.5
    
    
    
    69,299
    
    
    
    26.8SBA originated guaranteed portions
    
    
    4,379
    
    
    
    0.4
    
    
    
    5,370
    
    
    
    0.5
    
    
    
    5,602
    
    
    
    0.8
    
    
    
    7,171
    
    
    
    1.8
    
    
    
    11,045
    
    
    
    4.3Consumer
    
    
    46,585
    
    
    
    4.2
    
    
    
    49,400
    
    
    
    4.4
    
    
    
    3,823
    
    
    
    0.5
    
    
    
    2,845
    
    
    
    0.7
    
    
    
    243
    
    
    
    0.1Total community bank loans
    
    
    1,099,652
    
    
    
    100
    %
    
    
    1,118,119
    
    
    
    100
    %
    
    
    703,838
    
    
    
    100
    %
    
    
    399,457
    
    
    
    100
    %
    
    
    259,005
    
    
    
    100
    %Less allowance for credit losses
    
    
    (33,642
    )
    
    
    
    
    
    
    (15,232
    )
    
    
    
    
    
    
    (7,231
    )
    
    
    
    
    
    
    (5,372
    )
    
    
    
    
    
    
    (4,018
    )Total community bank loans, net
    
    
    1,066,010
    
    
    
    
    
    
    
    1,102,887
    
    
    
    
    
    
    
    696,607
    
    
    
    
    
    
    
    394,085
    
    
    
    
    
    
    
    254,987Other loans:Residential
    
    
    275,195
    
    
    
    79.6
    %
    
    
    335,791
    
    
    
    79.4
    %
    
    
    441,932
    
    
    
    79.0
    %
    
    
    605,201
    
    
    
    79.4
    %
    
    
    883,153
    
    
    
    80.4
    %SBA purchased guaranteed portions
    
    
    70,684
    
    
    
    20.4
    
    
    
    87,194
    
    
    
    20.6
    
    
    
    116,084
    
    
    
    20.8
    
    
    
    156,425
    
    
    
    20.5
    
    
    
    193,788
    
    
    
    17.6School financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    927
    
    
    
    0.2
    
    
    
    869
    
    
    
    0.1
    
    
    
    22,247
    
    
    
    2.0Total other loans
    
    
    345,879
    
    
    
    100
    %
    
    
    422,985
    
    
    
    100
    %
    
    
    558,943
    
    
    
    100
    %
    
    
    762,495
    
    
    
    100
    %
    
    
    1,099,188
    
    
    
    100
    %Less allowance for credit losses
    
    
    (1,027
    )
    
    
    
    
    
    
    (951
    )
    
    
    
    
    
    
    (769
    )
    
    
    
    
    
    
    (859
    )
    
    
    
    
    
    
    (790
    )Total other loans, net
    
    
    344,852
    
    
    
    
    
    
    
    422,034
    
    
    
    
    
    
    
    558,174
    
    
    
    
    
    
    
    761,636
    
    
    
    
    
    
    
    1,098,398Total loans, net
    
    $
    1,410,862
    
    
    
    
    
    
    $
    1,524,921
    
    
    
    
    
    
    $
    1,254,781
    
    
    
    
    
    
    $
    1,155,721
    
    
    
    
    
    
    $
    1,353,385
   December 31,2009
    
    
    2008(Dollars in thousands)Construction type breakdownConstruction  1-4 family
    
    $
    87,595
    
    
    $
    89,434Construction  commercial
    
    
    109,572
    
    
    
    100,402Construction  multifamily
    
    
    44,541
    
    
    
    63,693Construction  1-4 family (consumer)
    
    
    9,267
    
    
    
    24,085Total construction
    
    
    250,975
    
    
    
    277,614Land type breakdown:Land development
    
    
    79,185
    
    
    
    100,823Undeveloped land
    
    
    12,239
    
    
    
    21,480Undeveloped land (consumer)
    
    
    824
    
    
    
    1,092Total development
    
    
    92,248
    
    
    
    123,395Total construction and development
    
    $
    343,223
    
    
    $
    401,009
  - 60 -




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008Outstanding
    
    
    Percent
    
    
    Outstanding
    
    
    Percent(Dollars in thousands)AreaDenver Metro
    
    $
    108,706
    
    
    
    31.8
    %
    
    $
    181,505
    
    
    
    45.2
    %Northeastern Colorado  Fort Collins
    
    
    40,092
    
    
    
    11.7
    %
    
    
    52,062
    
    
    
    13.0
    %Mountain Communities  Aspen, Roaring
Fork Valley
    
    
    72,149
    
    
    
    21.0
    %
    
    
    62,726
    
    
    
    15.6
    %North Central Colorado  Steamboat Springs
    
    
    18,018
    
    
    
    5.2
    %
    
    
    25,159
    
    
    
    6.3
    %Other Colorado Areas
    
    
    56,038
    
    
    
    16.3
    %
    
    
    44,043
    
    
    
    11.0
    %Outside Colorado
    
    
    48,220
    
    
    
    14.0
    %
    
    
    35,514
    
    
    
    8.9
    %Total
    
    $
    343,223
    
    
    
    100.0
    %
    
    $
    401,009
    
    
    
    100.0
    %
    - 61 -




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##### Table of Contents



As of December 31, 2009Less than
    
    
    One to Five
    
    
    Over FiveOne Year
    
    
    Years
    
    
    Years
    
    
    Total(Dollars in thousands)Held for InvestmentCommunity bank loans:Commercial real estate
    
    $
    141,457
    
    
    $
    199,324
    
    
    $
    124,035
    
    
    $
    464,816Construction and development
    
    
    304,523
    
    
    
    35,663
    
    
    
    2,767
    
    
    
    342,953Commercial
    
    
    69,321
    
    
    
    35,441
    
    
    
    44,977
    
    
    
    149,739Multifamily
    
    
    7,514
    
    
    
    5,202
    
    
    
    6,577
    
    
    
    19,293Consumer
    
    
    19,174
    
    
    
    4,281
    
    
    
    23,130
    
    
    
    46,585Held for SaleCommunity bank loans:Commercial real estate
    
    
    10,101
    
    
    
    
    
    
    
    44,645
    
    
    
    54,746Multifamily
    
    
    
    
    
    
    5,858
    
    
    
    11,283
    
    
    
    17,141Originated SBA, guaranteed portions
    
    
    
    
    
    
    
    
    
    
    4,379
    
    
    
    4,379Held for InvestmentOther loans:Residential
    
    
    147
    
    
    
    3,844
    
    
    
    86,713
    
    
    
    90,704Purchased SBA
    
    
    
    
    
    
    1,508
    
    
    
    69,176
    
    
    
    70,684Held for SaleOther loans:Residential
    
    
    129
    
    
    
    2,680
    
    
    
    181,682
    
    
    
    184,491Total loans
    
    $
    552,366
    
    
    $
    293,801
    
    
    $
    599,364
    
    
    $
    1,445,531
  As of December 31, 2009Less than
    
    
    One to Five
    
    
    Over FiveOne Year
    
    
    Years
    
    
    Years
    
    
    Total(Dollars in thousands)Fixed
    
    $
    80,562
    
    
    $
    140,692
    
    
    $
    91,011
    
    
    $
    312,265Adjustable
    
    
    471,804
    
    
    
    153,109
    
    
    
    508,353
    
    
    
    1,133,266Total loans
    
    $
    552,366
    
    
    $
    293,801
    
    
    $
    599,364
    
    
    $
    1,445,531
  - 62 -




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##### Table of Contents



Asset Quality.
     As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Commercial real estate
    
    $
    15,411
    
    
    $
    1,311
    
    
    $
    1,152
    
    
    $
    140
    
    
    $
    3,045Construction and development
    
    
    21,778
    
    
    
    2,900
    
    
    
    
    
    
    
    645
    
    
    
    120Commercial and industrial
    
    
    3,329
    
    
    
    283
    
    
    
    
    
    
    
    159
    
    
    
    373SBA originated, guaranteed portions
    
    
    49
    
    
    
    124
    
    
    
    557
    
    
    
    1,017
    
    
    
    4,206Total community bank
    
    
    40,567
    
    
    
    4,618
    
    
    
    1,709
    
    
    
    1,961
    
    
    
    7,744Residential
    
    
    3,916
    
    
    
    3,238
    
    
    
    1,649
    
    
    
    1,136
    
    
    
    1,857SBA purchased, guaranteed portions
    
    
    
    
    
    
    791
    
    
    
    893
    
    
    
    578
    
    
    
    Total other
    
    
    3,916
    
    
    
    4,029
    
    
    
    2,542
    
    
    
    1,714
    
    
    
    1,857REO
    
    
    16,350
    
    
    
    4,417
    
    
    
    3,109
    
    
    
    5,403
    
    
    
    4,526Total nonperforming assets held for investment
    
    $
    60,833
    
    
    $
    13,064
    
    
    $
    7,360
    
    
    $
    9,078
    
    
    $
    14,127Total nonperforming loans held for investment to loans held for investment
    
    
    3.75
    %
    
    
    0.69
    %
    
    
    0.48
    %
    
    
    0.51
    %
    
    
    2.23
    %
   - 63 -




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##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Residential
    
    $
    9,807
    
    
    $
    6,493
    
    
    $
    6,224
    
    
    $
    4,723
    
    
    $
    7,046School financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    247Total other
    
    
    9,807
    
    
    
    6,493
    
    
    
    6,224
    
    
    
    4,723
    
    
    
    7,293Multifamily
    
    
    
    
    
    
    6,759
    
    
    
    
    
    
    
    
    
    
    
    Total community bank
    
    
    
    
    
    
    6,759
    
    
    
    
    
    
    
    
    
    
    
    Total nonperforming loans held for sale
    
    $
    9,807
    
    
    $
    13,252
    
    
    $
    6,224
    
    
    $
    4,723
    
    
    $
    7,293
  Allowance for Credit Losses.
  - 64 -




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##### Table of Contents



As of and for the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Allowance for credit losses, beginning of year
    
    $
    16,183
    
    
    $
    8,000
    
    
    $
    6,231
    
    
    $
    4,808
    
    
    $
    5,974Charge-offs:Residential
    
    
    (200
    )
    
    
    (194
    )
    
    
    (435
    )
    
    
    (9
    )
    
    
    (1,225
    )Commercial real estate
    
    
    (3,178
    )
    
    
    (79
    )
    
    
    (25
    )
    
    
    (128
    )
    
    
    (292
    )Construction and development
    
    
    (12,142
    )
    
    
    
    
    
    
    (222
    )
    
    
    (500
    )
    
    
    (244
    )Commercial
    
    
    (1,063
    )
    
    
    (143
    )
    
    
    (67
    )
    
    
    (115
    )
    
    
    (223
    )Multifamily
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (200
    )Consumer
    
    
    (10
    )
    
    
    (2
    )
    
    
    (34
    )
    
    
    (3
    )
    
    
    (65
    )Total charge-offs
    
    
    (16,593
    )
    
    
    (418
    )
    
    
    (783
    )
    
    
    (755
    )
    
    
    (2,249
    )Recoveries:Residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    90Commercial real estate
    
    
    41
    
    
    
    
    
    
    
    20
    
    
    
    79
    
    
    
    35Construction and development
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    50
    
    
    
    Commercial
    
    
    6
    
    
    
    2
    
    
    
    43
    
    
    
    14
    
    
    
    58Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    9Total recoveries
    
    
    47
    
    
    
    2
    
    
    
    240
    
    
    
    159
    
    
    
    192Net charge-offs
    
    
    (16,546
    )
    
    
    (416
    )
    
    
    (543
    )
    
    
    (596
    )
    
    
    (2,057
    )Provision for credit losses charged to operations
    
    
    35,032
    
    
    
    8,599
    
    
    
    2,312
    
    
    
    2,019
    
    
    
    891Balance at end of year
    
    $
    34,669
    
    
    $
    16,183
    
    
    $
    8,000
    
    
    $
    6,231
    
    
    $
    4,808Ratio of net charge-offs to average loans
    
    
    1.33
    %
    
    
    0.04
    %
    
    
    0.07
    %
    
    
    0.11
    %
    
    
    0.46
    %Average loans outstanding during the year
    
    $
    1,240,299
    
    
    $
    1,099,044
    
    
    $
    820,755
    
    
    $
    545,343
    
    
    $
    446,362Net charge offs to average residential loans HFI
    
    
    0.19
    %
    
    
    0.30
    %
    
    
    0.30
    %
    
    
    0.40
    %
    
    
    0.90
    %Net charge offs to average community bank loans HFI
    
    
    1.44
    
    
    
    0.04
    
    
    
    0.09
    
    
    
    0.30
    
    
    
    1.20Allowance as a percentage of loans HFI
    
    
    2.93
    
    
    
    1.30
    
    
    
    0.90
    
    
    
    0.87
    
    
    
    1.12Allowance as a percentage of nonperforming loans HFI
    
    
    77.94
    
    
    
    187.15
    
    
    
    188.19
    
    
    
    169.55
    
    
    
    50.08
   - 65 -




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##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Percentage of
    
    
    
    
    
    
    Percentage of
    
    
    
    
    
    
    Percentage of
    
    
    
    
    
    
    Percentage of
    
    
    
    
    
    
    Percentage ofLoans in each
    
    
    
    
    
    
    Loans in each
    
    
    
    
    
    
    Loans in each
    
    
    
    
    
    
    Loans in each
    
    
    
    
    
    
    Loans in eachCategory to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category toAmount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans(Dollars in thousands)Residential
    
    $
    992
    
    
    
    19.03
    %
    
    $
    909
    
    
    
    21.79
    %
    
    $
    713
    
    
    
    34.98
    %
    
    $
    783
    
    
    
    52.09
    %
    
    $
    790
    
    
    
    65.02
    %SBA guaranteed purchased premium
    
    
    35
    
    
    
    4.89
    
    
    
    42
    
    
    
    5.66
    
    
    
    56
    
    
    
    9.19
    
    
    
    76
    
    
    
    13.45
    
    
    
    
    
    
    
    14.27Subtotal other allowance
    
    
    1,027
    
    
    
    
    
    
    
    951
    
    
    
    
    
    
    
    769
    
    
    
    
    
    
    
    859
    
    
    
    
    
    
    
    790Commercial real estate
    
    
    9,401
    
    
    
    36.25
    
    
    
    4,821
    
    
    
    31.56
    
    
    
    2,387
    
    
    
    23.16
    
    
    
    3,210
    
    
    
    19.43
    
    
    
    2,898
    
    
    
    11.49Construction and development
    
    
    19,398
    
    
    
    23.73
    
    
    
    7,820
    
    
    
    25.96
    
    
    
    2,978
    
    
    
    21.6
    
    
    
    1,110
    
    
    
    8.02
    
    
    
    398
    
    
    
    3.20Commercial
    
    
    2,973
    
    
    
    10.36
    
    
    
    1,394
    
    
    
    8.69
    
    
    
    1,030
    
    
    
    6.98
    
    
    
    429
    
    
    
    2.14
    
    
    
    245
    
    
    
    0.90Multifamily
    
    
    633
    
    
    
    2.52
    
    
    
    195
    
    
    
    3.13
    
    
    
    97
    
    
    
    3.79
    
    
    
    20
    
    
    
    4.63
    
    
    
    16
    
    
    
    5.10Consumer
    
    
    437
    
    
    
    3.22
    
    
    
    202
    
    
    
    3.21
    
    
    
    39
    
    
    
    0.30
    
    
    
    53
    
    
    
    0.24
    
    
    
    11
    
    
    
    0.02Unallocated
    
    
    800
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    450
    
    
    
    Subtotal community bank allowance
    
    
    33,642
    
    
    
    
    
    
    
    15,232
    
    
    
    
    
    
    
    7,231
    
    
    
    
    
    
    
    5,372
    
    
    
    
    
    
    
    4,018Total
    
    $
    34,669
    
    
    
    100
    %
    
    $
    16,183
    
    
    
    100
    %
    
    $
    8,000
    
    
    
    100
    %
    
    $
    6,231
    
    
    
    100
    %
    
    $
    4,808
    
    
    
    100
    %
     - 66 -




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##### Table of Contents



Mortgage Servicing Rights.
 As of December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)FHA insured/VA guaranteed residential
    
    $
    296,448
    
    
    $
    349,723
    
    
    $
    408,191Conventional loans
    
    
    451,486
    
    
    
    530,210
    
    
    
    628,139Other loans
    
    
    18,221
    
    
    
    21,817
    
    
    
    24,788Total mortgage servicing portfolio
    
    $
    766,155
    
    
    $
    901,750
    
    
    $
    1,061,118Fixed rate loans
    
    $
    580,567
    
    
    $
    692,665
    
    
    $
    815,122Adjustable rate loans
    
    
    185,588
    
    
    
    209,085
    
    
    
    245,996Total mortgage servicing portfolio
    
    $
    766,155
    
    
    $
    901,750
    
    
    $
    1,061,118
   - 67 -




---



##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    PercentageNumber of
    
    
    of Servicing
    
    
    Number of
    
    
    of Servicing
    
    
    Number of
    
    
    of ServicingLoans
    
    
    Portfolio
    
    
    Loans
    
    
    Portfolio
    
    
    Loans
    
    
    PortfolioLoans delinquent for:30-59 days
    
    
    791
    
    
    
    6.08
    %
    
    
    869
    
    
    
    5.58
    %
    
    
    970
    
    
    
    5.14
    %60-89 days
    
    
    259
    
    
    
    1.99
    
    
    
    250
    
    
    
    1.60
    
    
    
    276
    
    
    
    1.4690 days and over
    
    
    830
    
    
    
    6.38
    
    
    
    795
    
    
    
    5.10
    
    
    
    741
    
    
    
    3.93Total delinquencies
    
    
    1,880
    
    
    
    14.45
    %
    
    
    1,914
    
    
    
    12.28
    %
    
    
    1,987
    
    
    
    10.53
    %Foreclosures
    
    
    313
    
    
    
    2.41
    %
    
    
    289
    
    
    
    1.85
    %
    
    
    279
    
    
    
    1.48
    %
  As of December 31,2009
    
    
    2008
    
    
    2007Percentage of
    
    
    
    
    
    
    
    
    
    
    Percentage of
    
    
    
    
    
    
    
    
    
    
    Percentage ofAggregate
    
    
    Aggregate
    
    
    
    
    
    
    Aggregate
    
    
    Aggregate
    
    
    
    
    
    
    Aggregate
    
    
    AggregateNumber of
    
    
    Principal
    
    
    Principal
    
    
    Number of
    
    
    Principal
    
    
    Principal
    
    
    Number of
    
    
    Principal
    
    
    PrincipalRate
    
    Loans
    
    
    Balance
    
    
    Balance
    
    
    Loans
    
    
    Balance
    
    
    Balance
    
    
    Loans
    
    
    Balance
    
    
    Balance(Dollars in thousands)Less than 7.00%
    
    
    6,229
    
    
    $
    457,010
    
    
    
    59.65
    %
    
    
    6,949
    
    
    $
    528,344
    
    
    
    58.59
    %
    
    
    6,024
    
    
    $
    514,393
    
    
    
    48.48
    %7.00%  7.99%
    
    
    2,555
    
    
    
    162,821
    
    
    
    21.25
    
    
    
    3,079
    
    
    
    197,382
    
    
    
    21.89
    
    
    
    5,255
    
    
    
    316,658
    
    
    
    29.848.00%  8.99%
    
    
    1,375
    
    
    
    65,271
    
    
    
    8.52
    
    
    
    1,739
    
    
    
    77,826
    
    
    
    8.63
    
    
    
    2,541
    
    
    
    107,873
    
    
    
    10.179.00%  9.99%
    
    
    864
    
    
    
    31,593
    
    
    
    4.12
    
    
    
    1,212
    
    
    
    36,563
    
    
    
    4.05
    
    
    
    1,873
    
    
    
    44,915
    
    
    
    4.2310.00% and over
    
    
    1,982
    
    
    
    49,460
    
    
    
    6.46
    
    
    
    2,602
    
    
    
    61,635
    
    
    
    6.84
    
    
    
    3,183
    
    
    
    77,279
    
    
    
    7.28Total
    
    
    13,005
    
    
    $
    766,155
    
    
    
    100.00
    %
    
    
    15,581
    
    
    $
    901,750
    
    
    
    100.00
    %
    
    
    18,876
    
    
    $
    1,061,118
    
    
    
    100.00
    %
  As of December 31,2009
    
    
    2008
    
    
    2007Percentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PercentagePercentage
    
    
    Unpaid
    
    
    Unpaid
    
    
    
    
    
    
    Percentage
    
    
    Unpaid
    
    
    Unpaid
    
    
    
    
    
    
    Percentage
    
    
    Unpaid
    
    
    UnpaidNumber of
    
    
    of Number
    
    
    Principal
    
    
    Principal
    
    
    Number of
    
    
    of Number
    
    
    Principal
    
    
    Principal
    
    
    Number 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
    
    
    1,713
    
    
    
    13.17
    %
    
    $
    22,400
    
    
    
    2.92
    %
    
    
    2,250
    
    
    
    14.44
    %
    
    $
    18,744
    
    
    
    2.08
    %
    
    
    3,666
    
    
    
    19.41
    %
    
    $
    28,943
    
    
    
    2.73
    %6   10 years
    
    
    2,818
    
    
    
    21.67
    
    
    
    99,749
    
    
    
    13.02
    
    
    
    3,356
    
    
    
    21.54
    
    
    
    116,543
    
    
    
    12.92
    
    
    
    3,342
    
    
    
    17.71
    
    
    
    120,663
    
    
    
    11.3711   15 years
    
    
    1,853
    
    
    
    14.25
    
    
    
    93,372
    
    
    
    12.19
    
    
    
    1,848
    
    
    
    11.86
    
    
    
    94,605
    
    
    
    10.49
    
    
    
    2,321
    
    
    
    12.30
    
    
    
    114,538
    
    
    
    10.7916   20 years
    
    
    1,842
    
    
    
    14.16
    
    
    
    112,332
    
    
    
    14.66
    
    
    
    1,969
    
    
    
    12.64
    
    
    
    121,697
    
    
    
    13.50
    
    
    
    2,127
    
    
    
    11.27
    
    
    
    135,904
    
    
    
    12.8121   25 years
    
    
    4,500
    
    
    
    34.60
    
    
    
    379,047
    
    
    
    49.48
    
    
    
    5,876
    
    
    
    37.71
    
    
    
    489,868
    
    
    
    54.32
    
    
    
    6,252
    
    
    
    33.12
    
    
    
    504,702
    
    
    
    47.56More than 25 years
    
    
    279
    
    
    
    2.15
    
    
    
    59,255
    
    
    
    7.73
    
    
    
    282
    
    
    
    1.81
    
    
    
    60,293
    
    
    
    6.69
    
    
    
    1,168
    
    
    
    6.19
    
    
    
    156,368
    
    
    
    14.74Total
    
    
    13,005
    
    
    
    100.00
    %
    
    $
    766,155
    
    
    
    100.00
    %
    
    
    15,581
    
    
    
    100.00
    %
    
    $
    901,750
    
    
    
    100.00
    %
    
    
    18,876
    
    
    
    100.00
    %
    
    $
    1,061,118
    
    
    
    100.00
    %
   - 68 -




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##### Table of Contents



For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Quarter ended:December 31
    
    
    15.9
    %
    
    
    13.1
    %
    
    
    16.5
    %September 30
    
    
    14.8
    
    
    
    21.4
    
    
    
    19.3June 30
    
    
    17.9
    
    
    
    16.2
    
    
    
    20.8March 31
    
    
    16.4
    
    
    
    16.4
    
    
    
    20.7Annual average
    
    
    16.3
    %
    
    
    16.8
    %
    
    
    19.3
    %
 Valuation of Servicing Rights.
  Risk Management Activities for MSRs .
  - 69 -




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##### Table of Contents



Sources of Funds.
 Deposits.
   December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAmount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate(Dollars in thousands)Savings accounts
    
    $
    360
    
    
    
    0.25
    %
    
    $
    299
    
    
    
    0.25
    %
    
    $
    148
    
    
    
    1.04
    %NOW and DDA accounts
    
    
    583,976
    
    
    
    0.10
    
    
    
    624,064
    
    
    
    0.17
    
    
    
    686,867
    
    
    
    0.47Money market accounts
    
    
    937,082
    
    
    
    0.39
    
    
    
    958,837
    
    
    
    0.79
    
    
    
    668,483
    
    
    
    2.19Subtotal
    
    
    1,521,418
    
    
    
    0.28
    
    
    
    1,583,200
    
    
    
    0.55
    
    
    
    1,355,498
    
    
    
    1.32Certificate accounts
    
    
    472,095
    
    
    
    1.58
    
    
    
    141,472
    
    
    
    3.53
    
    
    
    29,983
    
    
    
    4.21Total Deposits
    
    $
    1,993,513
    
    
    
    0.59
    %
    
    $
    1,724,672
    
    
    
    0.79
    %
    
    $
    1,385,481
    
    
    
    1.05
    %
 ®
  - 70 -




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007(Dollars in thousands)Community bank deposits
    
    $
    218,405
    
    
    $
    160,444
    
    
    $
    89,338CDARS deposits
    
    
    246,463
    
    
    
    31,522
    
    
    
    Brokered deposits
    
    
    329,184
    
    
    
    197,867
    
    
    
    13,025UW Trust Company
    
    
    4,425
    
    
    
    31,915
    
    
    
    110,978Matrix Financial Services Corp.
    
    
    11,755
    
    
    
    14,083
    
    
    
    18,256Matrix Financial Solutions, Inc.
    
    
    155,156
    
    
    
    203,329
    
    
    
    236,436Legent Clearing, LLC
    
    
    
    
    
    
    120,178
    
    
    
    163,527Deposit concentrations
    
    
    1,044,706
    
    
    
    967,993
    
    
    
    772,212Other deposits
    
    
    15,324
    
    
    
    27,038
    
    
    
    15,881Deposits and custodial escrow
balances
    
    $
    2,025,418
    
    
    $
    1,754,369
    
    
    $
    1,419,653
        - 71 -




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##### Table of Contents



Weighted AverageAmount
    
    
    Rate Paid(Dollars in thousands)Three months or less
    
    $
    3,323
    
    
    
    1.35
    %Over three months through six months
    
    
    4,230
    
    
    
    1.94Over six months through twelve months
    
    
    58,108
    
    
    
    2.13Over twelve months
    
    
    13,007
    
    
    
    3.61Total
    
    $
    78,668
    
    
    
    2.33
    %
 Borrowings.
  Average
    
    
    
    
    
    
    WeightedAmount
    
    
    Maximum
    
    
    Average
    
    
    WeightedAmount
    
    
    Outstanding
    
    
    Outstanding
    
    
    Interest Rate
    
    
    AverageOutstanding
    
    
    During the
    
    
    at any
    
    
    During the
    
    
    Interest Rateat Year-End
    
    
    Year (1)
    
    
    Month-End
    
    
    Year
    
    
    at Year-End(Dollars in thousands)At or for the year ended December 31, 2009:FHLBank borrowings(2)
    
    $
    180,607
    
    
    
    214,881
    
    
    
    226,712
    
    
    
    4.29
    %
    
    
    4.16
    %Repurchase Agreements
    
    
    78,635
    
    
    
    79,195
    
    
    
    80,384
    
    
    
    4.57
    
    
    
    4.79Revolving lines of credit
    
    
    20,000
    
    
    
    27,417
    
    
    
    30,000
    
    
    
    3.19
    
    
    
    5.23Subordinated debt
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000
    
    
    
    3.44
    
    
    
    3.00Total at December 31, 2009
    
    $
    289,242At or for the year ended December 31, 2008:FHLBank borrowings(3)
    
    $
    226,721
    
    
    
    383,543
    
    
    
    458,794
    
    
    
    3.53
    %
    
    
    4.25
    %Repurchase Agreements
    
    
    81,265
    
    
    
    78,934
    
    
    
    81,442
    
    
    
    3.71
    
    
    
    4.46Revolving lines of credit
    
    
    28,000
    
    
    
    10,292
    
    
    
    28,000
    
    
    
    4.22
    
    
    
    2.58Advancing line
    
    
    
    
    
    
    2,967
    
    
    
    6,000
    
    
    
    4.22
    
    
    
    2.58Subordinated debt
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000
    
    
    
    5.94
    
    
    
    4.58Total at December 31, 2008
    
    $
    345,986At or for the year ended December 31, 2007:FHLBank borrowings(4)
    
    $
    406,129
    
    
    
    351,231
    
    
    
    454,423
    
    
    
    4.80
    %
    
    
    4.46
    %Repurchase Agreements
    
    
    76,428
    
    
    
    72,354
    
    
    
    77,460
    
    
    
    4.83
    
    
    
    4.63Revolving lines of credit
    
    
    5,000
    
    
    
    2,205
    
    
    
    5,000
    
    
    
    6.38
    
    
    
    6.27Advancing line
    
    
    6,000
    
    
    
    2,647
    
    
    
    6,000
    
    
    
    6.38
    
    
    
    6.27Subordinated debt
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000
    
    
    
    8.05
    
    
    
    7.73Total at December 31, 2007
    
    $
    503,557
 (1)
    
    Calculations are based on daily averages where available and monthly averages otherwise.(2)
    
    A total of $180 million of the FHLBank borrowings outstanding at December 31, 2009 were
borrowed under short option advance agreements with the FHLBank. The interest rates on the
short option advance borrowings ranged from 2.77% to 4.80% at December 31, 2009 and their
possible call dates varied from January 2010 to April 2010. Additionally, $607,000 of the
FHLBank borrowings outstanding at December 31, 2009 are fixed-term/rate advances, which were
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.  - 72 -




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##### Table of Contents



(3)
    
    A total of $206.0 million of the FHLBank borrowings outstanding at December 31, 2008 were
borrowed under short option advance agreements with the FHLBank. The interest rates on the
short option advance borrowings ranged from 2.77% to 5.63% at December 31, 2008 and their
possible call dates varied from January 2009 to September 2009. Of these advances, $26 million
will reach final maturity, $19 million in November and $7 million December 2009, with a rate
of 5.40% and 5.63%, respectively. A total of $20.0 million of the FHLBank borrowings
outstanding at December 31, 2008 were borrowed under fixed rate advance agreements. The
interest rates on these advances ranged are 2.71% and 4.30% at December 31, 2008 and their
maturity dates were February 2009 and November 2009, respectively. Additionally, $721,000 of
the FHLBank borrowings outstanding at December 31, 2008 are fixed-term/rate advances, which
were 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 $206.0 million of the FHLBank borrowings outstanding at December 31, 2007 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, 2008 and their
possible call dates varied from January 2008 to September 2009. A total of $20.0 million of
the FHLBank borrowings outstanding at December 31, 2007 were borrowed under fixed rate advance
agreements. The interest rates on the advances ranged from 3.92% to 4.30% at December 31, 2007
and their maturity dates were May 2008 and November 2009. Additionally, $829,000 of the
FHLBank borrowings outstanding at December 31, 2007 are fixed-term/rate advances, which were
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.  Junior Subordinated Debentures.
 Capital
 Capital.
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Liquidity
  Bank Liquidity.
    Company Liquidity.
   - 74 -




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Statement of Cash Flows
 Operating Activities .
 Investing Activities .
 Financing Activities
  - 75 -




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Off-Balance Sheet Arrangements, Contractual Obligations, Commitments, and Contingent Liabilities.
  As of December 31, 2009Note
    
    
    1 Year or
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Reference
    
    
    Less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(Dollars in thousands)Contractual ObligationsDeposits (savings, NOW and money market)
    
    
    8
    
    
    $
    1,521,418
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,521,418Certificate accounts
    
    
    8
    
    
    
    443,227
    
    
    
    23,671
    
    
    
    5,197
    
    
    
    
    
    
    
    472,095FHLBank borrowings
    
    
    10
    
    
    
    
    
    
    
    150,000
    
    
    
    30,607
    
    
    
    
    
    
    
    180,607Borrowed money
    
    
    9
    
    
    
    23,635
    
    
    
    75,000
    
    
    
    
    
    
    
    10,000
    
    
    
    108,635Junior subordinated debentures owed to
unconsolidated subsidiary trusts
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,442
    
    
    
    30,442Sale leaseback commitment
    
    
    17
    
    
    
    1,314
    
    
    
    2,756
    
    
    
    2,926
    
    
    
    2,697
    
    
    
    9,693Other operating leases
    
    
    17
    
    
    
    631
    
    
    
    1,064
    
    
    
    851
    
    
    
    1,273
    
    
    
    3,819
  December 31,2009
    
    
    2008(Dollars in thousands)CommitmentsCommitments to extend credit:Loans secured by mortgages
    
    $
    31,516
    
    
    $
    110,249Construction and development loans
    
    
    23,605
    
    
    
    151,195Commercial loans and lines of credit
    
    
    47,154
    
    
    
    65,362Consumer loans
    
    
    705
    
    
    
    340Total commitments to extend credit
    
    $
    102,980
    
    
    $
    327,146Standby letters of credit
    
    
    8,471
    
    
    
    12,077Total
    
    $
    111,451
    
    
    $
    339,223
 Financial Instruments with Off-Balance-Sheet Risk.
 Commitments to Extend Credit.
 Standby Letters of Credit.
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Commitments and Contingent Liabilities.
   Impact of Inflation and Changing Prices
  Critical Accounting Policies
  Allowance for Credit Losses.
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i.e.
  i.e
    Valuation Loans Held for Sale.
  - 78 -




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##### Table of Contents



Temporary vs. Other-Than-Temporary Impairment. e.g.
  Income Taxes.
 Real Estate Owned .
 Recent Accounting Pronouncements
   - 79 -




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Forward-Looking Statements
   
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Market Risk.
 Interest Rate Risk .
 Asset Liability Management.
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##### Table of Contents



Immediate ShiftsChanges in Levels of
    
    
    Change in Net Interest IncomeInterest Rates
    
    
    Dollar Change
    
    
    Percentage Change(in basis points)
    
    
    (dollars in thousands)200
    
    
    $
    14,336
    
    
    
    21.67
    %100
    
    
    
    4,668
    
    
    
    7.060
    
    
    
    
    
    
    
    (100
    )
    
    
    (1,939
    )
    
    
    (2.93
    )
  Immediate ShiftsChanges in Levels of
    
    
    Change in Net Interest IncomeInterest Rates
    
    
    Dollar Change
    
    
    Percentage Change(in basis points)
    
    
    (dollars in thousands)200
    
    
    $
    4,307
    
    
    
    5.69
    %100
    
    
    
    1,607
    
    
    
    2.120
    
    
    
    
    
    
    
    (100
    )
    
    
    (1,483
    )
    
    
    (1.96
    )
    
 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
 (a)
    
    Evaluation of Disclosure Controls and Procedures
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(b)
    
    Managements Annual Report on Internal Control over Financial Reporting
    (c)
    
    Changes in Internal Control over Financial Reporting
  
 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
 (a)
    
    (1) and (a) (2) Financial statements and financial statement schedules
  (b)
    
    Exhibits
  (c)
    
    Financial Statement Schedules
   - 82 -




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SIGNATURES
 th
 UNITED WESTERN BANCORP, INC.Dated: March 15, 2010

/s/ Scot T. WetzelScot T. WetzelPresident and Chief Executive Officer
(Principal Executive Officer)Dated: March 15, 2010

/s/ William D. SniderWilliam D. SniderChief Financial Officer

(Principal Financial Officer)Dated: March 15, 2010

/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 15, 2010/s/ Guy A. Gibson
Guy A. Gibson
    
    Chairman of the Board
    
    March 15, 2010/s/ William D. Snider
William D. Snider
    
    Vice Chairman, Chief Financial
Officer and
a Director
(Principal Financial Officer)
    
    March 15, 2010/s/ Michael J. McCloskey
Michael J. McCloskey
    
    Executive Vice President,
Chief Operating
Officer
and a Director
    
    March 15, 2010/s/ Robert T. Slezak
Robert T. Slezak
    
    Director
    
    March 15, 2010/s/ Lester Ravitz
Lester Ravitz
    
    Director
    
    March 15, 2010/s/ Dr. James Bullock
Dr. James Bullock
    
    Director
    
    March 15, 2010/s/ Jeffrey R. Leeds
Jeffrey R. Leeds
    
    Director
    
    March 15, 2010/s/ Bernard C. Darré
Bernard C. Darré
    
    Director
    
    March 15, 2010
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INDEX TO EXHIBITS
 3.1
    
    
    Amended and Restated Articles of Incorporation, incorporated by
reference to 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 on March 14, 2003.3.1
    (a)
    
    Articles of Amendment to the Articles of Incorporation,
incorporated by reference to Exhibit 3.2 to Registrants annual
report on Form 10-K for the fiscal year ended December 31, 2006
filed by the Registrant with the Commission on March 16, 2007.3.2
    
    
    Bylaws, as amended, of the Registrant, incorporated by
reference to Exhibit 3.2 to the Registrants report on Form 8-K
filed by the Registrant with the Commission on December 27,
2007.4.1
    
    
    Specimen Certificate for Common Stock of the Registrant,
incorporated by reference to 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, as
amended by Form S-1/A, filed by the Registrant with the
Commission on September 27, 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 with the Commission on April
28, 2006, for the annual meeting of shareholders held on June
15, 2006 and Exhibit 4.1 to Registrants Form S-8 registration
statement filed with the Commission on June 30, 2006. 4.3
    
    
    Form of Non-Qualified Stock Option Agreement, incorporated by
reference to 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,
incorporated by reference to 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 with
the Commission on April 28, 2006, for the annual meeting of
shareholders held on June 15, 2006 and Exhibit 4.2 to
Registrants Form S-8 registration statement on June 30, 2006. 4.6
    
    
    2006 Employee Stock Option Plan, incorporated by reference to
Appendix IV of the Proxy Statement filed by the Registrant with
the Commission on April 28, 2006, for the annual meeting of
shareholders held on June 15, 2006 and Exhibit 4.1 to
Registrants Form S-8 registration statement filed with the
Commission on June 30, 2006. 4.7
    
    
    2007 Equity Incentive Plan, incorporated by reference to
Exhibit 1 of the Proxy Statement filed by the Registrant with
the Commission on March 27, 2007, for the annual meeting of
shareholders held on May 17, 2007 and Exhibit 4.1 to
Registrants Form S-8 registration statement filed with the
Commission on May 18, 2007. 4.8
    
    
    Amended 2007 Equity Incentive Plan, incorporated by reference
to Exhibit 10.20 of the Form 10-K filed by the Registrant with
the Commission on March 3, 2009. 4.9
    
    
    Form of Restricted Stock Agreement, incorporated by reference
to Exhibit 99.3 to Registrants report on Form 8-K filed by the
Registrant with the Commission on May 21, 2007. 4.10
    
    
    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, incorporated by reference to 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 on May 15, 2001.4.11
    
    
    Amended and Restated Declaration of Trust of Matrix Bancorp
Capital Trust II, dated as of March 28, 2001, incorporated by
reference to 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 on May 15, 2001.4.12
    
    
    Common Securities Guarantee Agreement of the Registrant, dated
as of March 28, 2001, incorporated by reference to 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 on May 15, 2001.4.13
    
    
    Capital Securities Guarantee Agreement of the Registrant, dated
as of March 28, 2001, incorporated by reference to 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 on May 15, 2001.
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4.14
    
    
    Amended and Restated Trust Agreement of Matrix Bancorp Capital
Trust VI, dated as of August 30, 2004, incorporated by
reference to 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 on November 4, 2004.4.15
    
    
    Guarantee Agreement of Matrix Bancorp Capital Trust VI, dated
as of August 30, 2004, incorporated by reference to 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 on November 4, 2004.4.16
    
    
    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,
incorporated by reference to 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 on
November 4, 2004.4.17
    
    
    Indenture between the Registrant and Wells Fargo Bank, National
Association, as debenture trustee, dated as of June 30, 2005,
incorporated by reference to 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 on August 3,
2005.4.18
    
    
    Amended and Restated Declaration of Trust Agreement of Matrix
Bancorp Capital Trust VIII, dated as of June 30, 2005,
incorporated by reference to 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 on August 3,
2005.4.19
    
    
    Guarantee Agreement of Matrix Bancorp Capital Trust VIII, dated
as of June 30, 2005, incorporated by reference to 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 on August 3, 2005.4.20
    
    
    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, incorporated by
reference to Exhibit 4.1 to Registrants report on Form 8-K
filed by the Registrant with the Commission on November 6,
2002.4.21
    
    
    Indenture, dated February 13, 2004, between Registrant and
Wells Fargo Bank, as Trustee, relating to Floating Rate
Subordinated Debt Security due 2014, incorporated by reference
to 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 on March 12, 2004.10.1
    
    
    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., incorporated by reference
to 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, 199610.2
    
    
    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.
incorporated by reference to Exhibit 10.2 to Registrants
annual report on Form 10-K for the fiscal year ended December
31, 2002, filed by the Registrant with the Commission on March
14, 2003.10.3
    
    
    Development Management Agreement, dated as of June 28, 1996, by
and among Matrix Funding Corp. and Nicholson Enterprises, Inc.,
incorporated by reference to 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., incorporated by reference to 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 on March 26, 1999.10.5
    
    
    Fort Lupton Golf Course Residential and Planned Unit
Development Agreement, dated as of November 28, 1995,
incorporated by reference to 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
    
    
    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.,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on December 6, 2004.
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10.7
    
    
    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., incorporated by reference to Exhibit
10.1 to Registrants report on Form 8-K filed by the Registrant
with the Commission on March 28, 2005.10.8
    
    
    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, incorporated
by reference to Exhibit 4.1 to Registrants report on Form 8-K
filed by the Registrant with the Commission on December 13,
2005.10.9
    
    
    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, incorporated by reference to Exhibit 2.1
to Registrants report on Form 8-K filed by the Registrant with
the Commission on April 6, 2006.10.10
    
    
    Purchase Agreement, dated as of May 5, 2006, between SKS
Ventures, LLC and Equi-Mor Holdings, Inc., incorporated by
reference to Exhibit 10.1 to Registrants report on Form 8-K
filed by the Registrant with the Commission on May 10, 2006.10.11
    
    
    Agreement for Purchase and Sale, dated as of August 11, 2006
between Matrix Tower Holdings, LLC and Grant Management, A.S.,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on August 25, 2006.10.12
    
    
    License Agreement, dated as of September 29, 2006, between
Legent Clearing, LLC and United Western Bancorp, Inc.,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on October 5, 2006.10.13
    
    
    First Amendment to License Agreement, dated as of June 6, 2007,
between Legent Clearing, LLC and United Western Bancorp, Inc.,
incorporated by reference to Exhibit 10.14 to Registrants
report on Form 10-K filed by the Registrant with the Commission
on March 3, 2009.10.14
    
    
    Revolving Loan Agreement, dated as of September 29, 2006,
between Legent Group, LLC and United Western Bank, in the
amount of $5,000,000, incorporated by reference to Exhibit 10.2
to Registrants report on Form 8-K filed by the Registrant with
the Commission on October 5, 2006.10.15
    
    
    Second Modification of Loan Agreement, effective as of October
1, 2008, by and between Legent Group, LLC and United Western
Bank, in the amount of $5,000,000, incorporated by reference to
Exhibit 10.16 to Registrants report on Form 10-K filed by the
Registrant with the Commission on March 3, 2009.10.16
    
    
    Form of Office Lease, dated as of October 1, 2006, between 700
17th Street Operating, LLC and United Western Bank,
incorporated by reference to Exhibit 10.3 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on October 5, 2006.10.17
    
    
    Credit Agreement, dated as of June 29, 2007 between United
Western Bancorp, Inc. and JPMorgan Chase Bank, N.A.,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on July 2, 2007.10.18
    
    
    Employment Agreement, dated December 31, 2008, and effective as
of October 15, 2008, by and between United Western Bancorp,
Inc. and Scot T. Wetzel, incorporated by reference to Exhibit
10.1 to Registrants report on Form 8-K filed by the Registrant
with the Commission on January 7, 2009. 10.19
    
    
    Stock Purchase Agreement, dated March 23, 2009, between
MSCS Ventures, Inc. and Bluff Point Associates, Corp.,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on March 27, 2009.10.20
    
    
    Asset Purchase Agreement, dated April 7, 2009, by and
among the Registrant, Sterling Trust Company, Equity Trust
Company, and Sterling Administrative Services, LLC incorporated
by reference to Exhibit 10.1 to Registrants report on Form 8-K
filed by the Registrant with the Commission on April 8, 2009.10.21
    
    
    Line of Credit Note, dated June 29, 2009, in the amount
of $30,000,000 by and between United Western Bancorp, Inc. and
JPMorgan Chase Bank, NA incorporated by reference to Exhibit
10.1 to Registrants report on Form 8-K filed by the Registrant
with the Commission on June 26, 2009.10.22
    
    
    Amendment to Credit Agreement, dated June 29, 2009, by
and between United Western Bancorp, Inc. and JPMorgan Chase
Bank, NA incorporated by reference to Exhibit 10.2 to
Registrants report on Form 8-K filed by the Registrant with
the Commission on June 26, 2009.10.23
    
    
    Loan and Security Agreement, dated June 27, 2009, by and
among Sterling Trust Company, Equity Trust Company, Equity
Administrative Services, Inc., and Sterling Administrative
Services, LLC, incorporated by reference to Exhibit 10.1 to
Registrants report on Form 8-K filed by the Registrant with
the Commission on June 29, 2009.
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10.24
    
    
    Amended and Restated Subaccounting Agreement, dated June
27, 2009, by and among United Western Bank, Equity Trust
Company, Equity Administrative Services, Inc., and Sterling
Administrative Services, LLC, incorporated by reference to
Exhibit 10.2 to Registrants report on Form 8-K filed by the
Registrant with the Commission on June 29, 2009.10.25
    
    
    Line of Credit Note, dated September 30, 2009, in the
amount of $25,000,000 by and between United Western Bancorp,
Inc. and JPMorgan Chase Bank, NA incorporated by reference to
Exhibit 10.1 to Registrants report on Form 8-K filed by the
Registrant with the Commission on October 6, 2009.10.26
    
    
    Amendment to Credit Agreement, dated September 30, 2009,
by and between United Western Bancorp, Inc. and JPMorgan Chase
Bank, NA incorporated by reference to Exhibit 10.2 to
Registrants report on Form 8-K filed by the Registrant with
the Commission on October 6, 2009.10.27
    
    
    Amendment and Forbearance Agreement, dated December 14,
2009, by and between United Western Bancorp, Inc. and JPMorgan
Chase Bank, NA incorporated by reference to Exhibit 10.1 to
Registrants report on Form 8-K filed by the Registrant with
the Commission on December 16, 2009.10.28
    
    
    Amendment to Credit Agreement, Note Modification and
Forbearance Agreement, dated January 15, 2010, by and between
United Western Bancorp, Inc. and JPMorgan Chase Bank, NA
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on January 22, 2010.10.29
    
    
    First Amendment to Amended and Restated Subaccounting
Agreement entered into as of February 24, 2010 between United
Western Bank®, Equity Trust Company, Equity Administrative
Services, Inc., and Sterling Administrative Services, LLC,
incorporated by reference to Exhibit 10.1 to Registrants
report on Form 8-K filed by the Registrant with the Commission
on March 4, 2010.21
    *
    
    Subsidiaries of the Registrant.23.1
    *
    
    Consent of McGladrey & Pullen, LLP.23.2
    *
    
    Consent of Crowe Horwath 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.
 
 
    
    Compensation Agreement*
    
    Filed herewith  - 87 -




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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, 2009
    
    
    F-2Report of Independent Registered Public Accounting Firm
on the Consolidated Financial Statements, December 31, 2009 and 2008
    
    
    F-3Report of Independent Registered Public Accounting Firm
on the Consolidated Financial Statements, December 31, 2007
    
    
    F-5Consolidated Balance SheetsDecember 31, 2009 and 2008
    
    
    F-6Consolidated Statements of Operationsfor the years ended
December 31, 2009, 2008 and 2007
    
    
    F-7Consolidated Statements of Shareholders Equity and Comprehensive Income/(Loss)
for the years ended December 31, 2009, 2008 and 2007
    
    
    F-9Consolidated Statements of Cash Flowsfor the years ended
December 31, 2009, 2008 and 2007
    
    
    F-10Notes to Consolidated Financial Statements
    
    
    F-12
  F-1




---



##### Table of Contents



Report on Managements Assessment of Internal Control over Financial Reporting
       F-2




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      F-3




---



##### Table of Contents



/s/ Crowe Horwath LLP 
  F-4




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
  F-5




---



##### Table of Contents



(Dollars in thousands, except share information)
 December 31,
    
    
    December 31,2009
    
    
    2008AssetsCash and due from banks
    
    $
    61,424
    
    
    $
    22,332Interest-earning deposits
    
    
    524,956
    
    
    
    548Total cash and cash equivalents
    
    
    586,380
    
    
    
    22,880Investment securities  available for sale, at fair value
    
    
    33,131
    
    
    
    59,573Investment securities  held to maturity (fair value December 31, 2009
 $292,474, December 31, 2008  $429,526)
    
    
    357,068
    
    
    
    498,464Loans held for sale  at lower of cost or fair value
    
    
    260,757
    
    
    
    291,620Loans held for investment
    
    
    1,184,774
    
    
    
    1,249,484Allowance for credit losses
    
    
    (34,669
    )
    
    
    (16,183
    )Loans held for investment, net
    
    
    1,150,105
    
    
    
    1,233,301FHLBank stock, at cost
    
    
    9,388
    
    
    
    29,046Mortgage servicing rights, net
    
    
    7,344
    
    
    
    9,496Accrued interest receivable
    
    
    7,023
    
    
    
    8,973Other receivables
    
    
    14,940
    
    
    
    15,123Premises and equipment, net
    
    
    24,061
    
    
    
    23,364Bank owned life insurance
    
    
    26,182
    
    
    
    25,233Other assets, net
    
    
    7,291
    
    
    
    13,839Income tax receivable
    
    
    11,965
    
    
    
    Deferred income taxes
    
    
    14,187
    
    
    
    24,100Foreclosed real estate, net
    
    
    16,350
    
    
    
    4,417Total assets
    
    $
    2,526,172
    
    
    $
    2,259,429Liabilities and shareholders equityLiabilities:Deposits
    
    $
    1,993,513
    
    
    $
    1,724,672Custodial escrow balances
    
    
    31,905
    
    
    
    29,697FHLBank borrowings
    
    
    180,607
    
    
    
    226,721Borrowed money
    
    
    108,635
    
    
    
    119,265Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    30,442
    
    
    
    30,442Income tax payable
    
    
    
    
    
    
    1,140Other liabilities
    
    
    21,419
    
    
    
    25,543Total liabilities
    
    
    2,366,521
    
    
    
    2,157,480Commitments and contingencies (Note 16)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;
29,345,522 shares at December 31, 2009 and
7,253,391 shares at December 31, 2008 outstanding, respectively
    
    
    3
    
    
    
    1Additional paid-in capital
    
    
    107,161
    
    
    
    23,856Retained earnings
    
    
    57,747
    
    
    
    100,348Accumulated other comprehensive loss
    
    
    (5,260
    )
    
    
    (22,256
    )Total shareholders equity
    
    
    159,651
    
    
    
    101,949Total liabilities and shareholders equity
    
    $
    2,526,172
    
    
    $
    2,259,429
 See accompanying notes to consolidated financial statements.
  F-6




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##### Table of Contents



(Dollars in thousands, except share information)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Interest and dividend income:Community bank loans
    
    $
    61,116
    
    
    $
    58,033
    
    
    $
    44,889Residential loans
    
    
    14,036
    
    
    
    20,503
    
    
    
    27,882Other loans
    
    
    1,044
    
    
    
    2,834
    
    
    
    6,779Investment securities
    
    
    24,293
    
    
    
    32,169
    
    
    
    38,847Deposits and dividends
    
    
    1,018
    
    
    
    1,478
    
    
    
    3,162Total interest and dividend income
    
    
    101,507
    
    
    
    115,017
    
    
    
    121,559Interest expense:Deposits
    
    
    14,566
    
    
    
    12,662
    
    
    
    27,142FHLBank borrowings
    
    
    9,339
    
    
    
    13,769
    
    
    
    17,086Other borrowed money
    
    
    7,288
    
    
    
    6,601
    
    
    
    8,489Total interest expense
    
    
    31,193
    
    
    
    33,032
    
    
    
    52,717Net interest income before provision for credit losses
    
    
    70,314
    
    
    
    81,985
    
    
    
    68,842Provision for credit losses
    
    
    35,032
    
    
    
    8,599
    
    
    
    2,312Net interest income after provision for credit losses
    
    
    35,282
    
    
    
    73,386
    
    
    
    66,530Noninterest income:Custodial, administrative and escrow services
    
    
    491
    
    
    
    864
    
    
    
    606Loan administration
    
    
    4,290
    
    
    
    4,914
    
    
    
    6,311Gain on sale of loans held for sale
    
    
    2,248
    
    
    
    764
    
    
    
    2,124(Loss) gain on sale of available for sale investment securities
    
    
    (46,980
    )
    
    
    
    
    
    
    98Other-than-temporary impairmentTotal other-than-temporary impairment losses
    
    
    (42,790
    )
    
    
    (4,110
    )
    
    
    Portion of loss recognized in other comprehensive income (before taxes)
    
    
    6,197
    
    
    
    
    
    
    
    Net impairment losses recognized in earnings
    
    
    (36,593
    )
    
    
    (4,110
    )
    
    
    Gain on sale of investment in Matrix Financial Solutions, Inc.
    
    
    3,567
    
    
    
    
    
    
    
    Litigation settlements
    
    
    
    
    
    
    
    
    
    
    155Other
    
    
    2,450
    
    
    
    3,072
    
    
    
    3,729Total noninterest (loss) income
    
    
    (70,527
    )
    
    
    5,504
    
    
    
    13,023Noninterest expense:Compensation and employee benefits
    
    
    25,417
    
    
    
    24,868
    
    
    
    21,892Subaccounting fees
    
    
    20,442
    
    
    
    17,914
    
    
    
    22,851Amortization of mortgage servicing rights
    
    
    2,507
    
    
    
    2,635
    
    
    
    3,489Lower of cost or fair value adjustment on loans held for sale
    
    
    586
    
    
    
    2,793
    
    
    
    722Occupancy and equipment
    
    
    3,368
    
    
    
    2,708
    
    
    
    2,346Postage and communication
    
    
    937
    
    
    
    910
    
    
    
    770Professional fees
    
    
    4,043
    
    
    
    3,333
    
    
    
    2,082Mortgage servicing rights subservicing fees
    
    
    1,369
    
    
    
    1,690
    
    
    
    1,931Redemption of junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    1,487Other general and administrative
    
    
    18,223
    
    
    
    9,279
    
    
    
    8,515Total noninterest expense
    
    
    76,892
    
    
    
    66,130
    
    
    
    66,085(Loss) income from continuing operations before income taxes
    
    
    (112,137
    )
    
    
    12,760
    
    
    
    13,468Income tax (benefit) provision
    
    
    (32,567
    )
    
    
    2,635
    
    
    
    3,315(Loss) income from continuing operations
    
    
    (79,570
    )
    
    
    10,125
    
    
    
    10,153Discontinued operations:Discontinued operations, net of tax
    
    
    37,525
    
    
    
    (173
    )
    
    
    (12
    )Net (Loss) Income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141
 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 31,2009
    
    
    2008
    
    
    2007(Loss) income from continuing operations per share  basic
    
    $
    (6.06
    )
    
    $
    1.39
    
    
    $
    1.39(Loss) income from continuing operations per share  assuming dilution
    
    $
    (6.06
    )
    
    $
    1.39
    
    
    $
    1.39Income from discontinued operations per share  basic
    
    $
    2.86
    
    
    $
    (0.02
    )
    
    $
    Income from discontinued operations per share  assuming dilution
    
    $
    2.86
    
    
    $
    (0.02
    )
    
    $
    Net (loss) income per share  basic
    
    $
    (3.20
    )
    
    $
    1.37
    
    
    $
    1.39Net (loss) income  assuming dilution
    
    $
    (3.20
    )
    
    $
    1.37
    
    
    $
    1.39Weighted average shares  basic
    
    
    13,139,070
    
    
    
    7,164,250
    
    
    
    7,247,636Weighted average shares  assuming dilution
    
    
    13,139,070
    
    
    
    7,164,598
    
    
    
    7,256,484Dividends declared per share
    
    $
    0.13
    
    
    $
    0.24
    
    
    $
    0.24
 See accompanying notes to consolidated financial statements.
  F-8




---



##### Table of Contents



(Dollars in thousands, except share information)
 Additional
    
    
    
    
    
    
    Accumulated OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (loss)
    
    
    Total
    
    
    Income/(loss)Balance at January 1, 2007
    
    
    7,256,573
    
    
    $
    1
    
    
    $
    23,616
    
    
    $
    83,970
    
    
    $
    166
    
    
    $
    107,753Dividends paid ($0.24 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,747
    )
    
    
    
    
    
    
    (1,747
    )Stock option exercise
    
    
    500
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Stock repurchase
    
    
    (60,200
    )
    
    
    
    
    
    
    (1,251
    )
    
    
    
    
    
    
    
    
    
    
    (1,251
    )Issuance of stock to directors
    
    
    2,711
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    62Issuance of stock to employee stock
purchase plan
    
    
    18,308
    
    
    
    
    
    
    
    399
    
    
    
    
    
    
    
    
    
    
    
    399Restricted stock grants
    
    
    46,332
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    886
    
    
    
    
    
    
    
    
    
    
    
    886Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,141
    
    
    
    
    
    
    
    10,141
    
    
    $
    10,141Net unrealized holding losses, net
of income tax (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,834
    )
    
    
    (2,834
    )
    
    
    (2,834
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,307Balance at December 31, 2007
    
    
    7,264,224
    
    
    $
    1
    
    
    $
    23,724
    
    
    $
    92,364
    
    
    $
    (2,668
    )
    
    $
    113,421Cumulative adjustment to apply ASC 715-60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    
    
    
    
    (226
    )Dividends paid ($0.24 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,742
    )
    
    
    
    
    
    
    (1,742
    )Stock repurchase
    
    
    (113,900
    )
    
    
    
    
    
    
    (1,605
    )
    
    
    
    
    
    
    
    
    
    
    (1,605
    )Issuance of stock to directors
    
    
    9,428
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    
    
    
    
    139Issuance of stock to employee stock
purchase plan
    
    
    26,634
    
    
    
    
    
    
    
    337
    
    
    
    
    
    
    
    
    
    
    
    337Restricted stock grants
    
    
    67,005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    1,261
    
    
    
    
    
    
    
    
    
    
    
    1,261Comprehensive income/(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,952
    
    
    
    
    
    
    
    9,952
    
    
    $
    9,952Net unrealized holding losses, net
of income tax (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,588
    )
    
    
    (19,588
    )
    
    
    (19,588
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,636
    )Balance at December 31, 2008
    
    
    7,253,391
    
    
    $
    1
    
    
    $
    23,856
    
    
    $
    100,348
    
    
    $
    (22,256
    )
    
    $
    101,949Cumulative effect of change in
accounting principle, adoption of ASC
320-10 (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    387
    
    
    
    (387
    )
    
    
    Dividends paid ($0.13 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (943
    )
    
    
    
    
    
    
    (943
    )Issuance of stock to directors
    
    
    25,606
    
    
    
    
    
    
    
    179
    
    
    
    
    
    
    
    
    
    
    
    179Issuance of stock to employee stock
purchase plan
    
    
    29,157
    
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    92Issuance of stock related to public
offering (net of offering costs of
$6,099)
    
    
    21,961,325
    
    
    
    2
    
    
    
    81,744
    
    
    
    
    
    
    
    
    
    
    
    81,746Restricted stock grants
    
    
    76,043
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    1,290
    
    
    
    
    
    
    
    
    
    
    
    1,290Comprehensive income/(loss):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,045
    )
    
    
    
    
    
    
    (42,045
    )
    
    $
    (42,045
    )Net unrealized gains on
available-for-sale securities and
other-than temporary impairment on
held-to-maturity securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,383
    
    
    
    17,383
    
    
    
    17,383Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (24,662
    )Balance at December 31, 2009
    
    
    29,345,522
    
    
    $
    3
    
    
    $
    107,161
    
    
    $
    57,747
    
    
    $
    (5,260
    )
    
    $
    159,651
 (1)
    
    Net of income tax (benefit) provision of ($1,460), ($12,228) and $11,702 for 2007,
2008, and 2009 respectively. See accompanying notes to consolidated financial statements.
  F-9




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##### Table of Contents



(Dollars in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from continuing operating activitiesNet (Loss) income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141(Income) loss from discontinued operations, net of income tax
(benefit)/provision
    
    
    (37,525
    )
    
    
    173
    
    
    
    12Adjustments to reconcile income to net cash from continuing operating
activities:Share-based compensation expense
    
    
    1,475
    
    
    
    1,487
    
    
    
    1,012Depreciation and amortization
    
    
    1,911
    
    
    
    1,508
    
    
    
    1,202Provision for credit losses
    
    
    35,032
    
    
    
    8,599
    
    
    
    2,312Write-down on other-than-temporary impairment of securities
    
    
    36,593
    
    
    
    4,110
    
    
    
    Amortization of mortgage servicing rights
    
    
    2,507
    
    
    
    2,635
    
    
    
    3,489Lower of cost or fair value adjustment on loans held for sale
    
    
    586
    
    
    
    2,793
    
    
    
    722Gain on sale of loans held for sale
    
    
    (2,248
    )
    
    
    (764
    )
    
    
    (2,124
    )Loss (gain) on sale of securities available for sale
    
    
    46,980
    
    
    
    
    
    
    
    (98
    )Gain on sale of investment in Matrix Financial Solutions, Inc.
    
    
    (3,567
    )
    
    
    
    
    
    
    Net loss on sale of assets, equipment and foreclosed real estate
    
    
    1,205
    
    
    
    1,316
    
    
    
    1Changes in assets and liabilities:Loans originated and purchased for sale
    
    
    (35,668
    )
    
    
    (34,161
    )
    
    
    (34,635
    )Principal payments on, and proceeds from sale of, loans held for sale
    
    
    64,193
    
    
    
    89,315
    
    
    
    109,754(Increase) decrease in other receivables, other assets, and deferred
income taxes
    
    
    (4,077
    )
    
    
    (5,471
    )
    
    
    419(Decrease) increase in other liabilities and income tax payable
    
    
    (4,834
    )
    
    
    (4,039
    )
    
    
    595Net cash from continuing operating activities
    
    
    60,518
    
    
    
    77,453
    
    
    
    92,802Cash flows from continuing investing activitiesLoans originated and purchased for investment
    
    
    (422,226
    )
    
    
    (867,438
    )
    
    
    (705,303
    )Principal repayments on loans held for investment
    
    
    498,723
    
    
    
    506,606
    
    
    
    505,323Proceeds from sale of available for sale securities
    
    
    373
    
    
    
    
    
    
    
    25,600Proceeds from sale of cost method investment
    
    
    4,317
    
    
    
    
    
    
    
    Proceeds from maturity and prepayment of available for sale securities
    
    
    13,055
    
    
    
    14,343
    
    
    
    24,822Purchase of held to maturity securities
    
    
    (5,451
    )
    
    
    (5,018
    )
    
    
    (4,940
    )Proceeds from the maturity and prepayment of held to maturity securities
    
    
    104,184
    
    
    
    75,925
    
    
    
    125,707Proceeds from sales of loans transferred to loans held for sale
    
    
    
    
    
    
    
    
    
    
    21,430Proceeds from redemption of FHLBank stock
    
    
    19,998
    
    
    
    12,000
    
    
    
    5,000Purchases of premises and equipment
    
    
    (2,570
    )
    
    
    (9,554
    )
    
    
    (8,624
    )Proceeds from sale of foreclosed real estate
    
    
    4,984
    
    
    
    4,283
    
    
    
    5,784Proceeds from sale of building, equipment and other assets
    
    
    
    
    
    
    
    
    
    
    5Net cash from continuing investing activities
    
    
    215,387
    
    
    
    (268,853
    )
    
    
    (5,196
    )
 Continued
  F-10




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##### Table of Contents



(Dollars in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from continuing financing activitiesNet increase in deposits
    
    $
    268,841
    
    
    $
    339,191
    
    
    $
    39,800Net increase (decrease) in custodial escrow balances
    
    
    2,208
    
    
    
    (4,475
    )
    
    
    (5,845
    )Net decrease in FHLBank borrowings
    
    
    (46,114
    )
    
    
    (179,408
    )
    
    
    (113,302
    )Borrowed money  (repayments of ) proceeds from repurchase agreements
    
    
    (2,630
    )
    
    
    4,837
    
    
    
    26,428Borrowed money  (repayements of) advances on revolving line, net
    
    
    (8,000
    )
    
    
    17,000
    
    
    
    5,000Borrowed money  advances on term line
    
    
    
    
    
    
    
    
    
    
    6,000Redemption of capital securities of subsidiary trust
    
    
    
    
    
    
    
    
    
    
    (25,774
    )Repurchase of common stock
    
    
    
    
    
    
    (1,605
    )
    
    
    (1,251
    )Dividends paid
    
    
    (943
    )
    
    
    (1,742
    )
    
    
    (1,747
    )Stock option exercise
    
    
    
    
    
    
    
    
    
    
    12Proceeds from issuance of common stock, net
    
    
    81,814
    
    
    
    212
    
    
    
    311Net cash from continuing financing activities
    
    
    295,176
    
    
    
    174,010
    
    
    
    (70,368
    )Cash flows from discontinued operations:Operating cash flows
    
    
    (7,934
    )
    
    
    704
    
    
    
    918Investing cash flows
    
    
    353
    
    
    
    (1,240
    )
    
    
    (1,104
    )Financing cash flows
    
    
    
    
    
    
    
    
    
    
    Net cash from discontinued operations
    
    
    (7,581
    )
    
    
    (536
    )
    
    
    (186
    )Increase (decrease) in cash and cash equivalents
    
    
    563,500
    
    
    
    (17,926
    )
    
    
    17,052Cash and cash equivalents at beginning of the period
    
    
    22,880
    
    
    
    40,806
    
    
    
    23,754Cash and cash equivalents at end of the period
    
    $
    586,380
    
    
    $
    22,880
    
    
    $
    40,806Supplemental disclosure of non-cash activityLoans transferred to foreclosed real estate and other assets
    
    $
    21,717
    
    
    $
    6,907
    
    
    $
    4,651Loans securitized and transferred to securities available for sale
    
    $
    
    
    
    $
    18,003
    
    
    $
    Loans held for investment transferred to loans held for sale
    
    $
    
    
    
    $
    
    
    
    $
    21,430Note receivable received in sale of assets of discontinued operations
    
    $
    46,050
    
    
    $
    
    
    
    $
    Issuance of common stock to directors
    
    $
    179
    
    
    $
    139
    
    
    $
    62Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    30,853
    
    
    $
    33,148
    
    
    $
    53,376Cash paid for income taxes
    
    $
    1,256
    
    
    $
    7,529
    
    
    $
    4,589
 See accompanying notes to consolidated financial statements.
  F-11




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 1. Organization
  Subsidiaries
    2. Significant Accounting Policies
 Accounting Standards Codification.
 Basis of Presentation
  F-12




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Consolidation
 Use of Estimates.
 Reclassifications.
  Cash Flow Reporting.
 Concentrations and Restrictions on Cash and Cash Equivalents. .
   F-13




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Dividend Restriction.
 Investment Securities.
   Temporary vs. Other-Than-Temporary Impairment
 e.g.
  F-14




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Loans Held for Investment.
   Loans Held for Sale.
   F-15




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Community Bank Loans.
 Other Loans.
 Allowance for Credit Losses. Loss Contingencies, Loan Impairment.
 e.g.
   F-16




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##### Table of Contents



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




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
      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.
 Repurchase Agreements.
 Custodial and Administration Services Income.
 Loan Administration Income.
 New Markets Tax Credits.
  F-19




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Consolidation.
  Stock-Based Compensation
 Subaccounting Fees.
 Income from Discontinued Operations, net of Income Taxes.
 Income Taxes
  F-20




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Income Taxes,
   Segments of an Enterprise and Related Information.
 Income Per Common Share Earnings Per Share,
  F-21




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 Comprehensive Income/(Loss).
 Derivative Financial Instruments.
 Fair Value Measurements
 3. Net (Loss) Income Per Share
   F-22




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)(Loss) income from continuing operations
    
    $
    (79,570
    )
    
    $
    10,125
    
    
    $
    10,153Income (loss) from discontinued operations
    
    
    37,525
    
    
    
    (173
    )
    
    
    (12
    )Net (Loss) income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141Earnings allocable to participating securities
    
    
    
    
    
    
    (147
    )
    
    
    (60
    )Net (loss) income for earnings per share
    
    $
    (42,045
    )
    
    $
    9,805
    
    
    $
    10,081Weighted average shares  basic
    
    
    13,139,070
    
    
    
    7,164,250
    
    
    
    7,247,636Effect of dilutive securities:Common stock options
    
    
    
    
    
    
    348
    
    
    
    8,848Weighted average shares  assuming dilution
    
    
    13,139,070
    
    
    
    7,164,598
    
    
    
    7,256,484
  4. Investment Securities
  December 31, 2009
    
    
    December 31, 2008Gross
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Amortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)Mortgage-backed securities 
agency/residential
    
    $
    11,984
    
    
    $
    233
    
    
    $
    (4
    )
    
    $
    12,213
    
    
    $
    15,804
    
    
    $
    47
    
    
    $
    (223
    )
    
    $
    15,628Mortgage-backed securities 
private/residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,386
    
    
    
    
    
    
    
    (31,452
    )
    
    
    15,934Collateralized mortgage
obligations-private/residential
    
    
    22,853
    
    
    
    
    
    
    
    (2,056
    )
    
    
    20,797
    
    
    
    32,017
    
    
    
    
    
    
    
    (4,229
    )
    
    
    27,788SBA securities
    
    
    122
    
    
    
    
    
    
    
    (1
    )
    
    
    121
    
    
    
    226
    
    
    
    
    
    
    
    (3
    )
    
    
    223Total
    
    $
    34,959
    
    
    $
    233
    
    
    $
    (2,061
    )
    
    $
    33,131
    
    
    $
    95,433
    
    
    $
    47
    
    
    $
    (35,907
    )
    
    $
    59,573
   F-23




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  December 31, 2009
    
    
    December 31, 2008Gross
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Amortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)Mortgage-backed securities 
agency/residential
    
    $
    22,745
    
    
    $
    798
    
    
    $
    (130
    )
    
    $
    23,413
    
    
    $
    21,218
    
    
    $
    872
    
    
    $
    
    
    
    $
    22,090Mortgage-backed securities 
private/residential
    
    
    101,634
    
    
    
    
    
    
    
    (31,782
    )
    
    
    69,852
    
    
    
    145,515
    
    
    
    1,663
    
    
    
    (30,664
    )
    
    
    116,514Collateralized mortgage
obligations-private/residential
    
    
    187,514
    
    
    
    
    
    
    
    (31,601
    )
    
    
    155,913
    
    
    
    278,633
    
    
    
    
    
    
    
    (38,252
    )
    
    
    240,381SBA securities
    
    
    45,175
    
    
    
    
    
    
    
    (1,879
    )
    
    
    43,296
    
    
    
    53,098
    
    
    
    
    
    
    
    (2,557
    )
    
    
    50,541Total
    
    $
    357,068
    
    
    $
    798
    
    
    $
    (65,392
    )
    
    $
    292,474
    
    
    $
    498,464
    
    
    $
    2,535
    
    
    $
    (71,473
    )
    
    $
    429,526
  Available for Sale
    
    
    Held to MaturityEstimated Fair
    
    
    
    
    
    
    Estimated FairAmortized Cost
    
    
    Value
    
    
    Amortized Cost
    
    
    Value(Dollars in thousands)SBA securitiesWithin 1 year
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Over 1 year through 5 years
    
    
    
    
    
    
    
    
    
    
    2,280
    
    
    
    2,168After 5 years through 10
years
    
    
    
    
    
    
    
    
    
    
    24,581
    
    
    
    23,571Over 10 years
    
    
    122
    
    
    
    121
    
    
    
    18,314
    
    
    
    17,557Subtotal
    
    
    122
    
    
    
    121
    
    
    
    45,175
    
    
    
    43,296Mortgage-backed securitiesAfter 5 years through 10
years
    
    
    723
    
    
    
    739
    
    
    
    
    
    
    
    Over 10 years
    
    
    34,114
    
    
    
    32,271
    
    
    
    311,893
    
    
    
    249,178Subtotal
    
    
    34,837
    
    
    
    33,010
    
    
    
    311,893
    
    
    
    249,178Total
    
    $
    34,959
    
    
    $
    33,131
    
    
    $
    357,068
    
    
    $
    292,474
     F-24




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  December 31, 2009
    
    
    December 31, 2008Less 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)Available for SaleMortgage-backed
securities 
agency
    
    $
    
    
    
    $
    
    
    
    $
    1,565
    
    
    $
    (4
    )
    
    $
    9,826
    
    
    $
    (146
    )
    
    $
    2,543
    
    
    $
    (77
    )Mortgage-backed
securities 
private
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,934
    
    
    
    (31,452
    )Collateralized
mortgage
obligations-private
    
    
    
    
    
    
    
    
    
    
    20,797
    
    
    
    (2,056
    )
    
    
    23,018
    
    
    
    (3,497
    )
    
    
    4,769
    
    
    
    (732
    )SBA securities
    
    
    91
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    (3
    )
    
    
    
    
    
    
    Held to MaturityMortgage-backed
securities 
agency
    
    
    5,450
    
    
    
    (130
    )
    
    
    
    
    
    
    Mortgage-backed
securities 
private
    
    
    
    
    
    
    
    
    
    
    54,586
    
    
    
    (31,782
    )
    
    
    54,236
    
    
    
    (11,104
    )
    
    
    55,793
    
    
    
    (19,560
    )Collateralized
mortgage
obligations-private
    
    
    
    
    
    
    
    
    
    
    132,397
    
    
    
    (31,601
    )
    
    
    71,450
    
    
    
    (21,519
    )
    
    
    169,069
    
    
    
    (16,733
    )SBA securities
    
    
    
    
    
    
    
    
    
    
    43,296
    
    
    
    (1,879
    )
    
    
    
    
    
    
    
    
    
    
    50,541
    
    
    
    (2,557
    )Total
    
    $
    5,541
    
    
    $
    (131
    )
    
    $
    252,641
    
    
    $
    (67,322
    )
    
    $
    158,677
    
    
    $
    (36,269
    )
    
    $
    298,649
    
    
    $
    (71,111
    )
   Mortgage-backed Securities  Non-agency
   F-25




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
     F-26




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
   Other Securities
   F-27




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Other-than-temporaryLoss Recognized asCredit Loss inEarnings(Dollars in thousands)Beginning balance of credit losses at April 1, 2009
    
    $
    3,300Credit losses on newly identified impairment
    
    
    33,979Additional credit losses on securities previously identified for impairment
    
    
    2,614Adjustment for change in cash flows
    
    
    (1,141
    )Ending balance of credit losses at December 31, 2009
    
    $
    38,752
  5. Loans
 Loans Held for Sale
  December 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Community bank loans:Commercial real estate
    
    $
    55,299
    
    
    $
    49,031Multifamily
    
    
    17,382
    
    
    
    29,074SBA originated, guaranteed portions
    
    
    4,379
    
    
    
    5,370Purchase premiums, net
    
    
    87
    
    
    
    177Other loans:Residential
    
    
    186,591
    
    
    
    212,083Purchase premiums, net
    
    
    1,304
    
    
    
    1,352265,042
    
    
    
    297,087Less valuation allowance to reduce loans
held for sale to the lower of cost or fair
value
    
    
    4,285
    
    
    
    5,467Loans held for sale, net
    
    $
    260,757
    
    
    $
    291,620
  F-28




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at beginning of year
    
    $
    5,467
    
    
    $
    3,021
    
    
    $
    2,531Provision to reduce the carrying
value of loans held for sale to the
lower of cost or fair value
    
    
    586
    
    
    
    2,793
    
    
    
    722Charge-offs
    
    
    (1,836
    )
    
    
    (512
    )
    
    
    (238
    )Recoveries
    
    
    68
    
    
    
    165
    
    
    
    6Balance at end of year
    
    $
    4,285
    
    
    $
    5,467
    
    
    $
    3,021
 Loans Held for Investment
  December 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Community bank loans:Commercial real estate
    
    $
    466,784
    
    
    $
    434,399Construction
    
    
    250,975
    
    
    
    277,614Land
    
    
    92,248
    
    
    
    123,395Commercial
    
    
    151,928
    
    
    
    134,435Multifamily
    
    
    19,283
    
    
    
    20,381Consumer and mortgage loans
    
    
    46,568
    
    
    
    49,440Premium, net
    
    
    180
    
    
    
    216Unearned fees, net
    
    
    (4,580
    )
    
    
    (3,565
    )Other loans:Residential
    
    
    90,405
    
    
    
    125,630SBA purchased, guaranteed portions
    
    
    64,820
    
    
    
    80,110Premium on SBA purchased, guaranteed portions
    
    
    5,864
    
    
    
    7,084Premium, net
    
    
    299
    
    
    
    3451,184,774
    
    
    
    1,249,484Less allowance for credit losses
    
    
    34,669
    
    
    
    16,183Loans held for investment, net
    
    $
    1,150,105
    
    
    $
    1,233,301
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at beginning of period
    
    $
    16,183
    
    
    $
    8,000
    
    
    $
    6,231Provision for credit losses
    
    
    35,032
    
    
    
    8,599
    
    
    
    2,312Charge-offs
    
    
    (16,593
    )
    
    
    (418
    )
    
    
    (783
    )Recoveries
    
    
    47
    
    
    
    2
    
    
    
    240Balance at end of period
    
    $
    34,669
    
    
    $
    16,183
    
    
    $
    8,000
  F-29




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  December 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Loans on nonaccrual status held for investment
    
    $
    44,483
    
    
    $
    8,647Loans on nonaccrual status held for sale
    
    
    9,807
    
    
    
    13,252Total nonperforming loans
    
    $
    54,290
    
    
    $
    21,899
   Concentrations of Credit .
  F-30




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 6. Mortgage Servicing Rights
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Mortgage servicing rightsBalance at beginning of year
    
    $
    10,356
    
    
    $
    12,831
    
    
    $
    17,349Originations
    
    
    355
    
    
    
    160
    
    
    
    61Amortization
    
    
    (2,507
    )
    
    
    (2,635
    )
    
    
    (3,489
    )Application of valuation allowance to write
down permanently impaired MSRs
    
    
    
    
    
    
    
    
    
    
    (1,090
    )Balance before valuation allowance at end of year
    
    
    8,204
    
    
    
    10,356
    
    
    
    12,831Valuation allowance for impairment of mortgage
servicing rightsBalance at beginning of year
    
    
    (860
    )
    
    
    (860
    )
    
    
    (1,950
    )Application of valuation allowance to write
down permanently impaired MSRs
    
    
    
    
    
    
    
    
    
    
    1,090Balance at end of year
    
    
    (860
    )
    
    
    (860
    )
    
    
    (860
    )Mortgage servicing rights, net
    
    $
    7,344
    
    
    $
    9,496
    
    
    $
    11,971
   December 31, 2009
    
    
    December 31, 2008Principal
    
    
    
    
    
    
    PrincipalNumber
    
    
    Balance
    
    
    Number
    
    
    Balanceof Loans
    
    
    Outstanding
    
    
    of Loans
    
    
    Outstanding(Dollars in thousands)Freddie Mac
    
    
    1,339
    
    
    $
    52,036
    
    
    
    1,666
    
    
    $
    63,205Fannie Mae
    
    
    4,839
    
    
    
    255,964
    
    
    
    5,842
    
    
    
    308,019Ginnie Mae
    
    
    3,719
    
    
    
    205,384
    
    
    
    4,747
    
    
    
    251,435VA, FHA, conventional
and other loans
    
    
    3,108
    
    
    
    252,771
    
    
    
    3,550
    
    
    
    279,091Total servicing portfolio
    
    
    13,005
    
    
    $
    766,155
    
    
    
    15,805
    
    
    $
    901,750
    F-31




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
 7. Premises and Equipment
  December 31,2009
    
    
    2008(Dollars in thousands)Land
    
    $
    4,909
    
    
    $
    4,909Buildings
    
    
    16,371
    
    
    
    14,081Leasehold improvements
    
    
    1,082
    
    
    
    1,063Office furniture and equipment
    
    
    10,389
    
    
    
    10,39532,751
    
    
    
    30,448Less accumulated depreciation
    
    
    8,690
    
    
    
    7,084Premises and equipment, net
    
    $
    24,061
    
    
    $
    23,364
  8. Deposits
  December 31, 2009
    
    
    December 31, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageAmount
    
    
    Percent
    
    
    Rate
    
    
    Amount
    
    
    Percent
    
    
    Rate(Dollars in thousands)Savings accounts
    
    $
    360
    
    
    
    0.02
    %
    
    
    0.25
    %
    
    $
    299
    
    
    
    0.02
    %
    
    
    0.25
    %NOW and DDA accounts
    
    
    583,976
    
    
    
    29.29
    
    
    
    0.10
    
    
    
    624,064
    
    
    
    36.18
    
    
    
    0.17Money market accounts
    
    
    937,082
    
    
    
    47.01
    
    
    
    0.39
    
    
    
    958,837
    
    
    
    55.60
    
    
    
    0.79Subtotals
    
    
    1,521,418
    
    
    
    76.32
    
    
    
    0.28
    
    
    
    1,583,200
    
    
    
    91.80
    
    
    
    0.55Certificate accounts
    
    
    472,095
    
    
    
    23.68
    
    
    
    1.58
    
    
    
    141,472
    
    
    
    8.20
    
    
    
    3.53Total deposits
    
    $
    1,993,513
    
    
    
    100.00
    %
    
    
    0.59
    %
    
    $
    1,724,672
    
    
    
    100.00
    %
    
    
    0.79
    %
    F-32




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Under 12 months
    
    
    12 to 36 months
    
    
    36 to 60 months
    
    
    Total(Dollars in thousands)0.00-0.99%
    
    $
    91,812
    
    
    $
    
    
    
    $
    
    
    
    $
    91,8121.00-1.99%
    
    
    216,715
    
    
    
    1,520
    
    
    
    
    
    
    
    218,2352.00-2.99%
    
    
    130,637
    
    
    
    11,033
    
    
    
    1,739
    
    
    
    143,4093.00-3.99%
    
    
    3,051
    
    
    
    3,965
    
    
    
    3,458
    
    
    
    10,4744.00-4.99%
    
    
    303
    
    
    
    7,153
    
    
    
    
    
    
    
    7,4565.00-5.99%
    
    
    709
    
    
    
    
    
    
    
    
    
    
    
    709$
    443,227
    
    
    $
    23,671
    
    
    $
    5,197
    
    
    $
    472,095
  December 31, 2009
    
    
    December 31, 2008(Dollars in thousands)UW Trust Company
    
    $
    4,425
    
    
    $
    31,915Matrix Financial Solutions, Inc.
    
    
    155,156
    
    
    
    203,329Legent Clearing, LLC
    
    
    
    
    
    
    120,178Other Deposit Concentrations
    
    
    1,044,706
    
    
    
    967,993
      F-33




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Savings accounts
    
    $
    1
    
    
    $
    2
    
    
    $
    2NOW accounts
    
    
    946
    
    
    
    1,869
    
    
    
    4,621Money market accounts
    
    
    6,579
    
    
    
    8,507
    
    
    
    21,138Certificate accounts
    
    
    7,040
    
    
    
    2,284
    
    
    
    1,381Interest expense on deposits
    
    $
    14,566
    
    
    $
    12,662
    
    
    $
    27,142
  9. Borrowed Money
  December 31,2009
    
    
    2008(Dollars in thousands)Borrowed MoneyRevolving line of credit to a third-party
financial institution, through June 30,
2010, collateralized by the common stock
of the Bank and certain nonagency
mortgage-backed securities of a non-bank
subsidiary; interest at 30-day LIBOR plus
5%; (5.23% at December 31, 2009), $0
available at December 31, 2009
    
    $
    20,000
    
    
    $
    28,000Subordinated debt securities, interest
payments due quarterly at three-month
LIBOR plus 2.75% (3.00% at December 31,
2009), maturing February 13, 2014
    
    
    10,000
    
    
    
    10,000Assets sold under agreements to repurchase:Company structured repurchase agreements
    
    
    75,000
    
    
    
    75,000Customer repurchase agreements
    
    
    3,635
    
    
    
    6,265Total
    
    $
    108,635
    
    
    $
    119,265
   F-34




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
   JP Morgan
    
    
    JP Morgan
    
    
    CitigroupCounterpartyPrincipal balance
    
    $
    25,000,000
    
    
    $
    25,000,000
    
    
    $
    25,000,000Base interest rate
    
    
    4.97
    %
    
    
    4.91
    %
    
    
    4.49
    %Stated maturity date
    
    
    9/28/2011
    
    
    
    11/21/2011
    
    
    
    2/21/2012Call date
    
    
    3/28/2010
    
    
    
    2/21/2010
    
    
    
    2/21/2010
   (Dollars in thousands)2010
    
    $
    23,6352011
    
    
    50,0002012
    
    
    25,0002014
    
    
    10,000$
    108,635
 10. FHLBank Borrowings
   F-35




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries   Notes to Consolidated Financial Statements (continued)
  December 31,2009
    
    
    2008(Dollars in thousands)FHLBank of Topeka borrowings
    
    $
    180,000
    
    
    $
    200,000FHLBank of Dallas borrowings
    
    
    607
    
    
    
    26,721$
    180,607
    
    
    $
    226,721
   (Dollars in thousands)2010
    
    $
    2011
    
    
    50,0002012
    
    
    100,0002013
    
    
    20,0002014
    
    
    10,607Thereafter
    
    
    $
    180,607
   F-36




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  11. Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trusts and
Corporation-Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely
Debentures of the Company
  December 31,2009
    
    
    2008(Dollars in thousands)Junior Subordinated Debentures
Owed to Unconsolidated Subsidiary
TrustsJunior 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 VI,
interest at three-month LIBOR plus
2.50% (2.75% at December 2009), junior
subordinated debentures payable
quarterly, 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 quarterly, unsecured and
maturing July 7, 2035
    
    
    7,732
    
    
    
    7,732Total
    
    $
    30,442
    
    
    $
    30,442
  F-37




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
      F-38




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 12. Income Taxes
  Years ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Current:Federal
    
    $
    (17,014
    )
    
    $
    6,696
    
    
    $
    3,947State
    
    
    
    
    
    
    1,249
    
    
    
    828Deferred:Federal
    
    
    (23,793
    )
    
    
    (4,900
    )
    
    
    (1,336
    )State
    
    
    (1,989
    )
    
    
    (410
    )
    
    
    (124
    )Deferred Tax Valuation Allowance
    
    
    10,229
    
    
    
    
    
    
    
    (Benefit) provision from continuing operations
    
    $
    (32,567
    )
    
    $
    2,635
    
    
    $
    3,315Provision (benefit) related to discontinued operations
    
    $
    20,620
    
    
    $
    (99
    )
    
    $
    (7
    )
  Years ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Expected income tax (benefit) provision
    
    $
    (39,248
    )
    
    $
    4,466
    
    
    $
    4,714State income tax (benefit) provision, net of federal benefit
    
    
    (1,822
    )
    
    
    356
    
    
    
    458Tax-exempt interest income
    
    
    (341
    )
    
    
    (328
    )
    
    
    (339
    )New Markets Tax Credits
    
    
    (1,960
    )
    
    
    (1,186
    )
    
    
    (1,117
    )Change in valuation allowance
    
    
    10,229
    
    
    
    
    
    
    
    Addition / (Resolution) of uncertain tax position
    
    
    454
    
    
    
    (454
    )
    
    
    (474
    )Other
    
    
    121
    
    
    
    (219
    )
    
    
    73(Benefit) provision for income taxes
    
    $
    (32,567
    )
    
    $
    2,635
    
    
    $
    3,315
    F-39




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  December 31,2009
    
    
    2008(Dollars in thousands)Deferred tax assets:Allowance for loan and valuation losses
    
    $
    16,086
    
    
    $
    9,119Other-than-temporary impairment losses
    
    
    14,768
    
    
    
    1,526Deferred fees
    
    
    1,989
    
    
    
    2,457State operating loss carryforward
    
    
    1,060
    
    
    
    Tax credit carryforwards
    
    
    4,238
    
    
    
    Gain on sale of building
    
    
    3,063
    
    
    
    3,503Stock based compensation
    
    
    1,438
    
    
    
    873Unrealized loss on available for sale securities
    
    
    3,215
    
    
    
    13,601Other
    
    
    45
    
    
    
    252Subtotal
    
    
    45,902
    
    
    
    31,331Valuation allowance
    
    
    (10,229
    )
    
    
    Total deferred tax assets
    
    
    35,673
    
    
    
    31,331Deferred tax liabilities:Mortgage servicing rights
    
    
    (1,993
    )
    
    
    (2,125
    )New Markets Tax Credits
    
    
    (3,411
    )
    
    
    (2,537
    )Installment gain on sale of interest in
subsidiary
    
    
    (15,080
    )
    
    
    (82
    )FHLB dividends
    
    
    (861
    )
    
    
    (2,416
    )Other
    
    
    (141
    )
    
    
    (71
    )Total deferred tax liabilities
    
    
    (21,486
    )
    
    
    (7,231
    )Net deferred tax asset
    
    $
    14,187
    
    
    $
    24,100
    F-40




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Income Taxes,
  2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at January 1,
    
    $
    348
    
    
    $
    726
    
    
    $
    1,200Additions based on tax positions related to the current year
    
    
    
    
    
    
    
    
    
    
    Additions for tax positions of prior years
    
    
    454
    
    
    
    76
    
    
    
    Reductions due to the statute of limitations
    
    
    
    
    
    
    (454
    )
    
    
    (474
    )Balance at December 31,
    
    $
    802
    
    
    $
    348
    
    
    $
    726
    13. Regulatory
 The Company.
 United Western Bank.
  F-41




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
   To Be Well CapitalizedFor Capital Adequacy
    
    
    Under Prompt CorrectiveActual
    
    
    Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)As of December 31, 2009Total Capital (to Risk Weighted Assets)
    
    $
    161,669
    
    
    
    10.1
    %
    
    $
    128,382
    
    
    
    8.0
    %
    
    $
    160,476
    
    
    
    10.0
    %Core Capital (to Adjusted Tangible Assets)
    
    
    192,839
    
    
    
    7.7
    
    
    
    100,400
    
    
    
    4.0
    
    
    
    125,499
    
    
    
    5.0Tier 1 Capital (to Risk Weighted Assets)
    
    
    192,839
    
    
    
    8.8
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    96,285
    
    
    
    6.0As of December 31, 2008Total Capital (to Risk Weighted Assets)
    
    $
    189,536
    
    
    
    10.6
    %
    
    $
    143,719
    
    
    
    8.0
    %
    
    $
    179,648
    
    
    
    10.0
    %Core Capital (to Adjusted Tangible Assets)
    
    
    174,034
    
    
    
    7.7
    
    
    
    91,049
    
    
    
    4.0
    
    
    
    113,812
    
    
    
    5.0Tier 1 Capital (to Risk Weighted Assets)
    
    
    174,034
    
    
    
    9.7
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    107,811
    
    
    
    6.0
  Matrix Financial.
 UW Investment Services.
 UW Trust Company.
  F-42




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Memorandums of Understanding with the Office of Thrift Supervision.
        F-43




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 14. Shareholders Equity
 Stock Option Plans
       F-44




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Non-Vested Restricted Stock AwardsOutstanding
    
    
    Stock Options OutstandingWeighted AverageShares Available
    
    
    
    
    
    
    Grant  Date of
    
    
    
    
    
    
    Weighted Averagefor Grant
    
    
    Number of Shares
    
    
    Fair Value
    
    
    Number of Shares
    
    
    Exercise PriceOutstanding at January 1, 2009
    
    
    1,027,307
    
    
    
    104,248
    
    
    $
    19.84
    
    
    
    1,034,535
    
    
    $
    19.37Granted
    
    
    (170,178
    )
    
    
    86,348
    
    
    
    9.44
    
    
    
    83,830
    
    
    
    6.18Director shares
    
    
    (25,606
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or cancelled
    
    
    56,088
    
    
    
    (10,305
    )
    
    
    19.06
    
    
    
    (45,943
    )
    
    
    18.64Vested stock awards
    
    
    
    
    
    
    (21,726
    )
    
    
    20.14Outstanding at December 31, 2009
    
    
    887,611
    
    
    
    158,565
    
    
    $
    14.19
    
    
    
    1,072,422
    
    
    $
    18.37
   Options Outstanding
    
    
    Options ExercisableWeighted AverageRemainingWeighted Average
    
    
    Contractual Life in
    
    
    
    
    
    
    Weighted AverageNumber of Shares
    
    
    Exercise Price
    
    
    years
    
    
    Number of Shares
    
    
    Exercise PriceExercise Price Range:$0.00  8.89
    
    
    41,300
    
    
    $
    2.91
    
    
    
    9.94
    
    
    
    
    
    
    $
    8.90  13.00
    
    
    94,740
    
    
    
    10.61
    
    
    
    8.99
    
    
    
    10,440
    
    
    
    11.6413.01  18.00
    
    
    74,444
    
    
    
    16.72
    
    
    
    8.37
    
    
    
    14,888
    
    
    
    16.7218.01  20.00
    
    
    515,585
    
    
    
    19.01
    
    
    
    6.14
    
    
    
    301,814
    
    
    
    19.0220.01  21.00
    
    
    128,780
    
    
    
    20.25
    
    
    
    7.22
    
    
    
    62,099
    
    
    
    20.2421.01  22.00
    
    
    48,764
    
    
    
    21.30
    
    
    
    7.77
    
    
    
    19,505
    
    
    
    21.3022.01  23.00
    
    
    110,676
    
    
    
    22.83
    
    
    
    6.41
    
    
    
    67,404
    
    
    
    22.8423.01  24.01
    
    
    58,133
    
    
    
    23.31
    
    
    
    6.43
    
    
    
    32,599
    
    
    
    23.271,072,422
    
    
    $
    18.37
    
    
    
    6.94
    
    
    
    508,749
    
    
    $
    19.82
   F-45




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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
   Years Ended December 31,2009
    
    2008
    
    2007Expected Volatility
    
    55.30%  71.50%
    
    25.20%  51.00%
    
    25.70%  27.40%Expected dividend yield
    
    2.54%  4.78%
    
    1.27%  2.70%
    
    0.93%  1.19%Risk-free interest rate
    
    2.90%  3.72%
    
    2.67%  3.99%
    
    4.12%  4.77%Expected term (in years)
    
    6.19  6.58
    
    6.18  6.91
    
    5.50  7.00WA grant date Fair Value
    
    $.69  $3.10
    
    $2.21  $3.57
    
    $3.13  $5.51Options granted
    
    83,830
    
    170,880
    
    186,052Options forfeited
    
    (45,943)
    
    (35,928)
    
    (16,643)
   F-46




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Employee Stock Purchase Plan
  Stock Repurchase Plan
  15. Defined Contribution Plan
   F-47




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 16. Total Comprehensive Income
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Net (loss) income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141Other comprehensive income (loss):Change in net unrealized losses
    
    
    (49,370
    )
    
    
    (35,668
    )
    
    
    (4,468
    )Non-credit-related impairment losses on held to maturity securities
    
    
    (6,197
    )
    
    
    
    
    
    
    Add: Reclassification adjustments for losses (gains) included in net (loss) income
    
    
    83,573
    
    
    
    4,110
    
    
    
    (98
    )Net unrealized holding gains (losses)
    
    
    28,006
    
    
    
    (31,558
    )
    
    
    (4,566
    )Income tax expense (benefit)
    
    
    10,623
    
    
    
    (11,970
    )
    
    
    (1,732
    )Other comprehensive income (loss)
    
    
    17,383
    
    
    
    (19,588
    )
    
    
    (2,834
    )Total comprehensive (loss) income
    
    $
    (24,662
    )
    
    $
    (9,636
    )
    
    $
    7,307
 17. Commitments, Contingencies, Off-Balance-Sheet Arrangements and Related Party Transactions
 Sale-leaseback of United Western Financial Center
 Guarantees,
  F-48




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Leases,
 Cash
    
    
    Accrual
    
    
    Deferred
    
    
    Deferred
    
    
    Net RentRent (1)
    
    
    Rent (2)
    
    
    Rent (3)
    
    
    Gain (4)
    
    
    Expense (5)(Dollars in thousands)2010
    
    $
    1,314
    
    
    $
    1,367
    
    
    $
    53
    
    
    $
    1,123
    
    
    $
    2442011
    
    
    1,357
    
    
    
    1,367
    
    
    
    10
    
    
    
    1,123
    
    
    
    2442012
    
    
    1,399
    
    
    
    1,367
    
    
    
    (32
    )
    
    
    1,123
    
    
    
    2442013
    
    
    1,442
    
    
    
    1,367
    
    
    
    (75
    )
    
    
    1,123
    
    
    
    2442014
    
    
    1,484
    
    
    
    1,367
    
    
    
    (117
    )
    
    
    1,123
    
    
    
    244Thereafter
    
    
    2,697
    
    
    
    2,394
    
    
    
    (303
    )
    
    
    1,962
    
    
    
    432Total
    
    $
    9,693
    
    
    $
    9,229
    
    
    $
    (464
    )
    
    $
    7,577
    
    
    $
    1,652
 (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 remaining $7.6 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. Leases
  (Dollars in thousands)2010
    
    $
    6312011
    
    
    5692012
    
    
    4952013
    
    
    4192014
    
    
    432Thereafter
    
    
    1,273$
    3,819
  Financial Instruments with Off-Balance-Sheet Risk
   F-49




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
   Contingencies  Liabilities and Guarantees
     F-50




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Contingencies  Legal
  United Western Bancorp, Inc . United Heritage Financial Group, Inc. and United Heritage Life
Insurance Company v. First Matrix Investment Services Corporation
 United Western Bancorp, Inc. and UW Trust Company. William R. and Carolyn Richoz, et al. v.
United Western Trust Company f/k/a Sterling Trust and United Western Bancorp, Inc.
  F-51




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 United Western Bank . Ward Enterprises, LLC v. Daniel E. McCabe et al. including United
Western Bank.
 United Western Bank . Anita Hunter et. al. v. Citibank, N.A. et al. including United Western
Bank
 United Western Bank . Highpoint Vista, LLC et al. v. United Western Bank et al
  F-52




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Related Party Transactions
  18. Fair Value Measurements
   Level 1:
    
    Inputs to the valuation methodology are quoted prices, unadjusted, for
identical assets or liabilities in active markets. A quoted price in an active market
provides the most reliable evidence of fair value and shall be used to measure fair
value whenever available.
 Level 2:
    
    Inputs to the valuation methodology include quoted prices for similar
assets or liabilities in active markets; inputs to the valuation methodology include
quoted prices for identical or similar assets or liabilities in markets that are not
active; or inputs to the valuation methodology that are derived principally from or can
be corroborated by observable market data by correlation or other means.
  F-53




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Level 3:
    
    Inputs to the valuation methodology are unobservable and significant to the
fair value measurement. Level 3 assets and liabilities include financial instruments
whose value is
determined using discounted cash flow methodologies, as well as instruments
for which the determination of fair value requires significant management
judgment or estimation.
     
    
    Agency securities are reported at fair value using Level 1 inputs. Management believes
Level 1 is appropriate for agency securities due to the relative availability of pricing
transparency for such securities in the marketplace.
 
    
    Nonagency securities (private label) collateralized by mortgage obligations are reported
at fair value using Level 2 inputs. Management believes Level 2 is appropriate for these
securities because the Company obtains fair value measurements from three primary sources.
Two are widely known pricing services including an independent pricing service that is
utilized by the FHLBank of Topeka. The other is an independent third party that provides
management with fair market valuations for securities identified by management as requiring
additional analysis in order to ascertain fair value in accordance with ASC Topic 820,
Fair Value Measurements and Disclosures.Management has direct observable data for these
securities based on this pricing service and based on other market data that is available.
This data that is available includes market research of various well known firms and
includes information on yield, duration, repayment, defaults, delinquency and other
factors. Management is comfortable with the data utilized by the pricing service based on
our review of documentation and discussion with personnel from these entities.
  F-54




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Generally, if a security has received one rating from a Nationally Recognized Securities
Ratings Organization (NRSRO) that is below investment grade or the security has a
collateral coverage ratio of less than or equal to 1.0 (these populations are substantially
the same) we obtain a fair market value estimate from the independent consultant. The
independent consultant provides estimated cash flows from which fair value and OTTI are
determined. These cash flow estimates are most significantly impacted by assumptions about
voluntary repayments, the level of defaults, and loss severity.
 
    
    At December 31, 2008 the Company owned nonagency securities collateralized by
payment-option-adjustable-rate mortgages, which were reported at fair value using Level 3
inputs. The fair value of payment-option-adjustable-rate mortgages were determined through
an independent third party using cash flow models and assumptions as to the future
performance of the underlying loan pools. Management concluded that this value was based on
unobservable market data because the fair value was determined through proprietary cash
flow models. While management believes the assumptions used by the third party were
reasonable, since the cash flow models were based on assumptions about future events and
future performance of the underlying collateral, they were based on unobservable market
data. Further, management believes the valuation of payment-option-adjustable-rate mortgage
backed securities was less certain due to the age of the securities as these were a 2006
vintage origination and the behavior of these instruments was comparatively unknown as
compared to other mortgage-backed securities that did not have performance history in
stressed markets. These securities were sold during 2009.
  Loans held for sale
 Mortgage servicing rights.
  F-55




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Impaired securities. Available for sale securities .
 Impaired loans.
  Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets for
    
    
    Other Observable
    
    
    Other Unobservable
    
    
    TotalIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Fair(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Value(Dollars in thousands)2009Investment securities available-for-saleMortgage backed securities-agency/residential
    
    $
    12,213
    
    
    $
    
    
    
    $
    
    
    
    $
    12,213SBA securities
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    121Collateralized mortgage obligations private
    
    
    
    
    
    
    20,797
    
    
    
    
    
    
    
    20,797Total investment securities available-for-sale
    
    $
    12,213
    
    
    $
    20,918
    
    
    $
    
    
    
    $
    33,1312008Investment securities available-for-saleMortgage backed securities-agency/residential
    
    $
    15,628
    
    
    $
    
    
    
    $
    
    
    
    $
    15,628SBA securities
    
    
    
    
    
    
    223
    
    
    
    
    
    
    
    223Collateralized mortgage obligations
    
    
    
    
    
    
    27,788
    
    
    
    
    
    
    
    27,788Mortgage-backed securities collateralized by option arm mortgage loans
    
    
    
    
    
    
    
    
    
    
    15,934
    
    
    
    15,934Total investment securities available-for-sale
    
    $
    15,628
    
    
    $
    28,011
    
    
    $
    15,934
    
    
    $
    59,573
  F-56




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Investment securitiesavailable-for sale(Dollars in thousands)Balance January 1, 2009
    
    $
    15,934Loss realized in earnings
    
    
    (46,980
    )Included in other comprehensive income
    
    
    31,452Settlements
    
    
    (406
    )Transfers in and/or out of Level 3
    
    
    Balance December 31, 2009
    
    $
    
  Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    Unobservable
    
    
    TotalIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Fair(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Value(Dollars in thousands)Assets at December 31, 2009:Loans held for sale
    
    
    
    
    
    
    
    
    
    $
    260,757
    
    
    $
    260,757Impaired loans
    
    
    
    
    
    
    
    
    
    
    25,050
    
    
    
    25,050Mortgage Servicing Rights
    
    
    
    
    
    
    
    
    
    
    7,344
    
    
    
    7,344Other-than-temporarily impaired securities
    
    
    
    
    
    
    
    
    
    
    38,966
    
    
    
    38,966Assets at December 31, 2008:Loans held for sale
    
    
    
    
    
    
    
    
    
    $
    291,620
    
    
    $
    291,620Impaired loans
    
    
    
    
    
    
    
    
    
    
    1,658
    
    
    
    1,658Mortgage Servicing Rights
    
    
    
    
    
    
    
    
    
    
    9,496
    
    
    
    9,496Other-than-temporarily impaired securities
    
    
    
    
    
    
    
    
    
    
    6,581
    
    
    
    6,581
  F-57




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    Unobservable
    
    
    TotalIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Fair(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Value(Dollars in thousands)Assets at December 31, 2009:Foreclosed real estate, net
    
    
    
    
    
    
    
    
    
    $
    16,350
    
    
    $
    16,350
    December 31,2009
    
    
    2008Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    586,380
    
    
    $
    586,380
    
    
    $
    22,880
    
    
    $
    22,880Investment securities  available for sale
    
    
    33,131
    
    
    
    33,131
    
    
    
    59,573
    
    
    
    59,573Investment securities  held to maturity
    
    
    357,068
    
    
    
    292,474
    
    
    
    498,464
    
    
    
    429,526Loans held for sale, net
    
    
    260,757
    
    
    
    260,757
    
    
    
    291,620
    
    
    
    291,620Loans held for investment, net
    
    
    1,150,105
    
    
    
    1,129,007
    
    
    
    1,233,301
    
    
    
    1,239,399FHLBank stock
    
    
    9,388
    
    
    
    N/A
    
    
    
    29,046
    
    
    
    N/AAccrued interest receivable
    
    
    7,023
    
    
    
    7,023
    
    
    
    8,973
    
    
    
    8,973Financial liabilities:Deposits
    
    $
    1,993,513
    
    
    $
    1,994,066
    
    
    $
    1,724,672
    
    
    $
    1,727,182Custodial escrow balances
    
    
    31,905
    
    
    
    31,905
    
    
    
    29,697
    
    
    
    29,697FHLBank borrowings
    
    
    180,607
    
    
    
    190,792
    
    
    
    226,721
    
    
    
    242,620Borrowed money
    
    
    108,635
    
    
    
    111,158
    
    
    
    119,265
    
    
    
    124,630Junior subordinated debentures
    
    
    30,442
    
    
    
    16,726
    
    
    
    30,442
    
    
    
    29,759Accrued interest payable
    
    
    2,218
    
    
    
    2,218
    
    
    
    1,902
    
    
    
    1,902
  F-58




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
     e.g. i.e.
    F-59




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 19. Parent Company Condensed Financial Information
  December 31,2009
    
    
    2008(Dollars in thousands)Condensed Balance SheetsAssets:Cash
    
    $
    9,610
    
    
    $
    9,023Investment securities  held to maturity
    
    
    6,120
    
    
    
    Loans held for investment
    
    
    4,026
    
    
    
    Other receivables
    
    
    33
    
    
    
    49Premises and equipment, net
    
    
    391
    
    
    
    410Other assets
    
    
    2,157
    
    
    
    1,889Investment in and advances to subsidiaries
    
    
    220,514
    
    
    
    165,900Total assets
    
    $
    242,851
    
    
    $
    177,271Liabilities and shareholders equity:Total debt (a)
    
    $
    60,442
    
    
    $
    68,442Other liabilities (b)
    
    
    22,758
    
    
    
    6,880Total liabilities
    
    
    83,200
    
    
    
    75,322Shareholders equity:Common stock
    
    
    3
    
    
    
    1Additional paid-in capital
    
    
    107,161
    
    
    
    23,856Retained earnings
    
    
    57,747
    
    
    
    100,348Accumulated other comprehensive loss
    
    
    (5,260
    )
    
    
    (22,256
    )Total shareholders equity
    
    
    159,651
    
    
    
    101,949Total liabilities and shareholders equity
    
    $
    242,851
    
    
    $
    177,271
 (a)
    
    See Note 9 and Note 11 for additional information regarding debt.(b)
    
    Other liabilities includes $2.1 million of deferred revenue, $2.1 million of accounts
payables and accrued liabilities, $4.8 million of deferred tax liabilities, and $13.8
million of taxes owed to subsidiaries, substantially all of which will be repaid upon
receipt of the Companys tax refund from its NOL carryback.  F-60




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Years ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Condensed Statements of OperationsIncome:Interest income
    
    $
    734
    
    
    $
    14
    
    
    $
    29Other-than-temporary impairment on securities, net
    
    
    (12,697
    )
    
    
    
    
    
    
    Other
    
    
    320
    
    
    
    65
    
    
    
    88Total (loss) income
    
    
    (11,643
    )
    
    
    79
    
    
    
    117Expenses:Compensation and employee benefits
    
    
    5,132
    
    
    
    5,109
    
    
    
    4,941Interest on borrowed money
    
    
    3,601
    
    
    
    3,583
    
    
    
    4,953Occupancy and equipment
    
    
    571
    
    
    
    684
    
    
    
    667Professional fees
    
    
    1,433
    
    
    
    1,234
    
    
    
    543Redemption of junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    1,487Other general and administrative
    
    
    (560
    )
    
    
    (667
    )
    
    
    (368
    )Total expenses
    
    
    10,177
    
    
    
    9,943
    
    
    
    12,223Loss before income taxes and equity income of subsidiaries
    
    
    (21,820
    )
    
    
    (9,864
    )
    
    
    (12,106
    )Income taxes (a)
    
    
    
    
    
    
    
    
    
    
    Loss before equity income of subsidiaries
    
    
    (21,820
    )
    
    
    (9,864
    )
    
    
    (12,106
    )Equity (loss) income of subsidiaries
    
    
    (20,225
    )
    
    
    19,816
    
    
    
    22,247Net (loss) income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141
 (a)
    
    The Companys tax sharing agreement requires each entity to calculate its income taxes
on a stand alone basis. Generally subsidiaries pay the Parent an amount equal to its individual
current income tax provision calculated on the basis of the subsidiary filing a separate return.
The Parent, as it carries debt for the benefit of all subsidiaries incurs net operating losses.  F-61




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 Years ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Condensed Statements of Cash FlowsOperating activities:Net (Loss) income
    
    $
    (42,045
    )
    
    $
    9,952
    
    
    $
    10,141Adjustments to reconcile net income to net cash from operating activities:Equity loss (income) of subsidiaries
    
    
    20,225
    
    
    
    (19,816
    )
    
    
    (22,247
    )Dividends from subsidiaries
    
    
    14,535
    
    
    
    8,612
    
    
    
    9,966Share based compensation expense
    
    
    1,475
    
    
    
    1,487
    
    
    
    1,012Write-down on other-than-temporary impairment of securities
    
    
    12,697
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    232
    
    
    
    232
    
    
    
    827Unrealized loss on securities available for sale
    
    
    
    
    
    
    
    
    
    
    (2,834
    )Changes in assets and liabilities:Increase (decrease) in other liabilities
    
    
    15,878
    
    
    
    1,712
    
    
    
    (705
    )Decrease (increase) in other receivables and other assets
    
    
    (260
    )
    
    
    3,860
    
    
    
    (2,371
    )Net cash from operating activities
    
    
    22,737
    
    
    
    6,039
    
    
    
    (6,211
    )Investing activities:Purchases of premises and equipment
    
    
    (204
    )
    
    
    (257
    )
    
    
    (199
    )Return of investment in and advances to subsidiaries, net
    
    
    (95,865
    )
    
    
    (12,156
    )
    
    
    8,722Proceeds from the prepayment of held to maturity securities
    
    
    792
    
    
    
    
    
    
    
    Principal repayments on loans held for investment
    
    
    256
    
    
    
    
    
    
    
    Net cash from investing activities
    
    
    (95,021
    )
    
    
    (12,413
    )
    
    
    8,523Financing activities:Net change in borrowed money  revolving lines of credit
    
    
    
    
    
    
    23,000
    
    
    
    5,000Borrowed money  (repayment) advance on term line
    
    
    (8,000
    )
    
    
    (6,000
    )
    
    
    6,000Redemption of capital securities of subsidiary trust
    
    
    
    
    
    
    
    
    
    
    (25,774
    )Proceeds from issuance of common stock, net
    
    
    81,814
    
    
    
    212
    
    
    
    311Stock option exercise
    
    
    
    
    
    
    
    
    
    
    12Repurchase of common stock
    
    
    
    
    
    
    (1,605
    )
    
    
    (1,251
    )Dividends paid
    
    
    (943
    )
    
    
    (1,742
    )
    
    
    (1,747
    )Net cash from financing activities
    
    
    72,871
    
    
    
    13,865
    
    
    
    (17,449
    )Increase (decrease) in cash
    
    
    587
    
    
    
    7,491
    
    
    
    (15,137
    )Cash at beginning of year
    
    
    9,023
    
    
    
    1,532
    
    
    
    16,669Cash at end of year
    
    $
    9,610
    
    
    $
    9,023
    
    
    $
    1,532Supplemental disclosure of non-cash activityLoan transferred to a subsidiary of the parent in exchange for 
held-to-maturity securities
    
    $
    20,012
    
    
    $
    
    
    
    $
    
 20. Quarterly Financial Data (Unaudited)
   F-62




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Dollars in thousands, except share data)2009Operations:Net interest income before provision for credit losses
    
    $
    16,225
    
    
    $
    17,034
    
    
    $
    18,380
    
    
    $
    18,675Provision for credit losses
    
    
    14,467
    
    
    
    10,106
    
    
    
    6,278
    
    
    
    4,181Noninterest (loss) income
    
    
    (30,865
    )
    
    
    41
    
    
    
    (45,401
    )
    
    
    5,698Noninterest expense
    
    
    20,916
    
    
    
    21,026
    
    
    
    19,799
    
    
    
    15,151(Loss) income from continuing operations before income taxes
    
    
    (50,023
    )
    
    
    (14,057
    )
    
    
    (53,098
    )
    
    
    5,041Income tax (benefit) provision
    
    
    (9,398
    )
    
    
    (5,363
    )
    
    
    (19,360
    )
    
    
    1,554(Loss) income from continuing operations
    
    $
    (40,625
    )
    
    $
    (8,694
    )
    
    $
    (33,738
    )
    
    $
    3,487Discontinued operations:Income (loss) from discontinued operations, net of income
taxes
    
    
    
    
    
    
    
    
    
    
    37,736
    
    
    
    (211
    )Net (loss) income
    
    $
    (40,625
    )
    
    $
    (8,694
    )
    
    $
    3,998
    
    
    $
    3,276Net income per share data:Basic
    
    $
    (1.40
    )
    
    $
    (0.95
    )
    
    $
    0.55
    
    
    $
    0.45Diluted
    
    $
    (1.40
    )
    
    $
    (0.95
    )
    
    $
    0.55
    
    
    $
    0.452008Operations:Net interest income before provision for credit losses
    
    $
    20,847
    
    
    $
    21,042
    
    
    $
    19,886
    
    
    $
    20,210Provision for credit losses
    
    
    2,373
    
    
    
    2,203
    
    
    
    2,132
    
    
    
    1,891Noninterest income
    
    
    1,973
    
    
    
    (1,228
    )
    
    
    2,222
    
    
    
    2,537Noninterest expense
    
    
    17,315
    
    
    
    16,929
    
    
    
    15,700
    
    
    
    16,186Income from continuing operations before income taxes
    
    
    3,132
    
    
    
    682
    
    
    
    4,276
    
    
    
    4,670Income tax provision (benefit)
    
    
    766
    
    
    
    (807
    )
    
    
    1,281
    
    
    
    1,395Income from continuing operations
    
    $
    2,366
    
    
    $
    1,489
    
    
    $
    2,995
    
    
    $
    3,275Discontinued operations:(Loss) income from discontinued operations, net of income
taxes
    
    
    (334
    )
    
    
    2
    
    
    
    70
    
    
    
    89Net income
    
    $
    2,032
    
    
    $
    1,491
    
    
    $
    3,065
    
    
    $
    3,364Net income per share data:Basic
    
    $
    0.28
    
    
    $
    0.21
    
    
    $
    0.42
    
    
    $
    0.46Diluted
    
    $
    0.28
    
    
    $
    0.21
    
    
    $
    0.42
    
    
    $
    0.46
  F-63




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 21. Segments of the Company and Related Information
 Segment Reporting:
  F-64




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Custodial andCommunity
    
    
    Advisory
    
    
    Mortgage
    
    
    AllBanking
    
    
    Services
    
    
    Banking
    
    
    Others
    
    
    Total(Dollars in thousands)2009Total interest income
    
    $
    99,147
    
    
    $
    
    
    
    $
    922
    
    
    $
    1,438
    
    
    $
    101,507Total interest expense
    
    
    27,592
    
    
    
    
    
    
    
    21
    
    
    
    3,580
    
    
    
    31,193Net interest income
    
    
    71,555
    
    
    
    
    
    
    
    901
    
    
    
    (2,142
    )
    
    
    70,314Provision for credit losses
    
    
    35,032
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,032Net interest income after provision for credit losses
    
    
    36,523
    
    
    
    
    
    
    
    901
    
    
    
    (2,142
    )
    
    
    35,282Total noninterest income
    
    
    (64,814
    )
    
    
    428
    
    
    
    3,648
    
    
    
    (9,789
    )
    
    
    (70,527
    )Total noninterest expense
    
    
    61,592
    
    
    
    1,118
    
    
    
    5,401
    
    
    
    8,781
    
    
    
    76,892Income (loss) from continuing operations before
income taxes
    
    
    (89,883
    )
    
    
    (690
    )
    
    
    (852
    )
    
    
    (20,712
    )
    
    
    (112,137
    )Income tax (benefit) provision
    
    
    (26,105
    )
    
    
    (227
    )
    
    
    (247
    )
    
    
    (5,988
    )
    
    
    (32,567
    )Income (loss) from continuing operations
    
    
    (63,778
    )
    
    
    (463
    )
    
    
    (605
    )
    
    
    (14,724
    )
    
    
    (79,570
    )Segment assets
    
    
    2,447,456
    
    
    
    2,303
    
    
    
    30,923
    
    
    
    45,490
    
    
    
    2,526,1722008Total interest income
    
    $
    113,413
    
    
    $
    
    
    
    $
    1,354
    
    
    $
    250
    
    
    $
    115,017Total interest expense
    
    
    29,425
    
    
    
    
    
    
    
    42
    
    
    
    3,565
    
    
    
    33,032Net interest income
    
    
    83,988
    
    
    
    
    
    
    
    1,312
    
    
    
    (3,315
    )
    
    
    81,985Provision for credit losses
    
    
    8,599
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,599Net interest income after provision for credit losses
    
    
    75,389
    
    
    
    
    
    
    
    1,312
    
    
    
    (3,315
    )
    
    
    73,386Total noninterest income
    
    
    (1,182
    )
    
    
    1,164
    
    
    
    4,289
    
    
    
    1,233
    
    
    
    5,504Total noninterest expense
    
    
    52,589
    
    
    
    814
    
    
    
    5,815
    
    
    
    6,912
    
    
    
    66,130Income (loss) from continuing operations before
income taxes
    
    
    21,618
    
    
    
    350
    
    
    
    (214
    )
    
    
    (8,994
    )
    
    
    12,760Income tax (benefit) provision
    
    
    4,475
    
    
    
    72
    
    
    
    (44
    )
    
    
    (1,868
    )
    
    
    2,635Income (loss) from continuing operations
    
    
    17,143
    
    
    
    278
    
    
    
    (170
    )
    
    
    (7,126
    )
    
    
    10,125Segment assets
    
    
    2,271,592
    
    
    
    2,467
    
    
    
    6,143
    
    
    
    133,051
    
    
    
    2,413,2532007Total interest income
    
    $
    119,608
    
    
    $
    
    
    
    $
    1,574
    
    
    $
    377
    
    
    $
    121,559Total interest expense
    
    
    47,723
    
    
    
    
    
    
    
    86
    
    
    
    4,908
    
    
    
    52,717Net interest income
    
    
    71,885
    
    
    
    
    
    
    
    1,488
    
    
    
    (4,531
    )
    
    
    68,842Provision for credit losses
    
    
    2,312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,312Net interest income after provision for credit losses
    
    
    69,573
    
    
    
    
    
    
    
    1,488
    
    
    
    (4,531
    )
    
    
    66,530Total noninterest income
    
    
    5,107
    
    
    
    647
    
    
    
    5,943
    
    
    
    1,326
    
    
    
    13,023Total noninterest expense
    
    
    50,419
    
    
    
    826
    
    
    
    7,422
    
    
    
    7,418
    
    
    
    66,085Income (loss) from continuing operations before
income taxes
    
    
    24,261
    
    
    
    (179
    )
    
    
    9
    
    
    
    (10,623
    )
    
    
    13,468Income tax (benefit) provision
    
    
    5,968
    
    
    
    (44
    )
    
    
    2
    
    
    
    (2,611
    )
    
    
    3,315Income (loss) from continuing operations
    
    
    18,293
    
    
    
    (135
    )
    
    
    7
    
    
    
    (8,012
    )
    
    
    10,153Segment assets
    
    
    2,119,178
    
    
    
    3,946
    
    
    
    46,355
    
    
    
    126,311
    
    
    
    2,295,790
  F-65




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 22. New Accounting Standards
 Recently Issued Accounting Standards
  ASC Topic 320, Investments  Debt and Equity Securities.
 ASC Topic 805, Business Combinations.
  F-66




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 ASC Topic 810, Consolidation.
  ASC Topic 820, Fair Value Measurements and Disclosures.
   F-67




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  ASC Topic 825 Financial Instruments.
 ASC Topic 860, Transfers and Servicing.
 23. Public Offering of Common Stock
   F-68




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
 24. Sale of Interest in Matrix Settlement and Clearances Services, LLC
    25. Discontinued Operations  Sale of UW Trust Assets
   F-69




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##### Table of Contents



United Western Bancorp, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements (continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands, except share information)Net interest income after provision for credit losses
    
    $
    
    
    
    $
    
    
    
    $
    Noninterest income
    
    
    7,410
    
    
    
    9,357
    
    
    
    7,960Noninterest expense
    
    
    5,256
    
    
    
    9,629
    
    
    
    7,979Operating income (loss) before taxes from discontinued operations
    
    
    2,154
    
    
    
    (272
    )
    
    
    (19
    )Income tax provision (benefit)
    
    
    768
    
    
    
    (99
    )
    
    
    (7
    )Operating income (loss) from discontinued operations
    
    
    1,386
    
    
    
    (173
    )
    
    
    (12
    )Gain on sale of certain assets and operations of UW Trust net of income tax
provision of $19,852, $0, and $0, respectively
    
    
    36,139
    
    
    
    
    
    
    
    Income (loss) from discontinued operations, net of income taxes
    
    $
    37,525
    
    
    $
    (173
    )
    
    $
    (12
    )Income (loss) from discontinued operations of UW Trust, per share  basic
    
    $
    2.86
    
    
    $
    (0.02
    )
    
    $
    Income (loss) from discontinued operations of UW Trust, per share  assuming dilution
    
    $
    2.86
    
    
    $
    (0.02
    )
    
    $
    
   F-70