UNITED STATES
				SECURITIES AND EXCHANGE COMMISSION
				Washington, DC 20549
				FORM 10‐Q(Mark One)[ X ] QUARTERLY REPORT PURSUANT
				TO SECTION 13 OR 15(d) OF THE SECURITIES
				EXCHANGE ACT OF 1934For the quarterly period ended December 31,
				2006
				
				or[    ] TRANSITION
				REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
				EXCHANGE ACT OF 1934For the
				transition period from                                                                  
				toCommission File Number 001-16845PFF BANCORP, INC.(Exact name of registrant as specified in its charter)DELAWARE
				95-4561623(State or other jurisdiction of
				incorporation or organization)
				(I.R.S.
				Employer I.D. No.)9337 Milliken Avenue, Rancho Cucamonga, California 
				91730(Address of principal executive offices)(909) 941-5400(Registrant's telephone number, including area code)Not Applicable
				(Former name, former address and former fiscal year, if
				changed since last report)Indicate by check mark whether the registrant (1) has filed all
				reports required to be filed by Section 13 or 15(d) of the
				Securities Exchange Act of 1934 during the preceding 12 months
				(or for such shorter period that the registrant was required to
				file such reports), and (2) has been subject to such filing
				requirements for the past 90 days.     Yes
				X    No  .Indicate by check mark whether the registrant is a large
				accelerated filer, an accelerated filer, or a non-accelerated
				filer.  See definition of "accelerated filer and large
				accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
				one):
				Large accelerated
				filer X   
				Accelerated filer       
				Non- accelerated filer  .Indicate by check mark whether the registrant is a shell company
				(as defined in rule 12b-2 of the Exchange Act).
				Yes    
				No X .The registrant had 24,612,349 shares of common stock, par value
				$.01 per share, outstanding as of January 31, 2007.


---

PFF
	BANCORP, INC. AND SUBSIDIARIES Form 10-Q Table of
	Contents  PART I
				FINANCIAL
				INFORMATION (Unaudited)
				PAGEItem 1
				Financial
				Statements
				
				Consolidated
				Balance Sheets as of December 31, 2006 and March 31, 2006
				1Consolidated
				Statements of Earnings for the three and nine months ended
				December 31, 2006 and 2005
				2Consolidated
				Statements of Comprehensive Earnings for the three and nine
				months endedDecember 31, 2006 and 2005
				3Consolidated
				Statement of Stockholders' Equity for the nine months ended
				December 31, 2006
				4Consolidated
				Statements of Cash Flows for the nine months ended
				December 31, 2006
				and 2005
				5Notes to
				Unaudited Consolidated Financial Statements
				6Item 2
				Management's
				Discussion and Analysis of Financial Condition and
				Results of
				Operations
				14Item 3
				Quantitative and
				Qualitative Disclosures about Market Risk
				26Item 4
				Controls and
				Procedures
				26PART II
				OTHER
				INFORMATIONItem 1
				Legal Proceedings
				27Item 1A
				Risk Factors
				27Item 2
				Unregistered
				Sales of Equity Securities and Use of Proceeds
				27Item 3
				Defaults Upon
				Senior Securities
				27Item 4
				Submission of
				Matters to a Vote of Security Holders
				27Item 5
				Other Information
				27Item 6
				Exhibits
				27SIGNATURES
				
				28


---

PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. PFF BANCORP, INC. AND SUBSIDIARIES
	CONSOLIDATED BALANCE SHEETS
	(Dollars in thousands, except per share data) December 31,
				2006
				
				March 31,
				2006(Unaudited)AssetsCash and cash equivalents
				$
				67,819
				
				$
				58,831Investment
				securities held-to-maturity (estimated fair value of
				$6,621 at December 31, 2006, and $6,567 at March 31, 2006)
				
				6,715
				
				
				6,724Investment securities
				available-for-sale, at fair value
				
				33,688
				
				
				60,092Mortgage-backed securities
				available-for-sale, at fair value
				
				223,483
				
				
				229,470Loans held-for-sale
				
				1,557
				
				
				795Loans and leases
				receivable, net (net of allowances for loan and lease losses 
				of $42,106 at
				December 31, 2006 and $37,126 at March 31, 2006)
				
				4,118,206
				
				
				3,839,779Federal Home Loan Bank (FHLB)
				stock, at cost
				
				45,492
				
				
				39,307Accrued interest receivable
				
				25,258
				
				
				21,278Assets acquired through
				foreclosure, net
				
				-
				
				
				8,728Property and equipment, net
				
				53,290
				
				
				44,303Prepaid expenses and other assets
				
				39,427
				
				
				31,483Total assets
				$
				4,614,935
				
				$
				4,340,790Liabilities and Stockholders' EquityLiabilities:Deposits
				$
				3,238,854
				
				$
				3,057,309FHLB advances and
				other borrowings
				
				877,700
				
				
				822,000Junior subordinated
				debentures
				
				56,702
				
				
				56,702Accrued expenses and
				other liabilities
				
				41,022
				
				
				41,048Total liabilities
				
				4,214,278
				
				
				3,977,059Commitments and contingencies
				
				-
				
				
				-Stockholders' equity:Preferred stock, $.01
				par value.  Authorized 2,000,000
				     
				shares; none issued
				
				-
				
				
				-Common stock, $.01 par
				value.  Authorized 59,000,000
				     
				shares; issued and outstanding 24,610,459 and 24,493,472 at
				December 31, 2006 and March 31, 2006, respectively
				
				245
				
				
				244Additional paid-in
				capital
				
				180,899
				
				
				175,581Retained earnings
				
				226,172
				
				
				195,591Accumulated other
				comprehensive losses
				
				(6,659
				)
				
				(7,685
				)Total stockholders' equity
				
				400,657
				
				
				363,731Total liabilities and stockholders' equity
				$
				4,614,935
				
				$
				4,340,790
  See accompanying notes to the unaudited consolidated financial statements. 1   PFF
	BANCORP, INC. AND SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF EARNINGS(Dollars in thousands, except per share data)
	(Unaudited)  For the Three Months Ended
				December 31,
				For the Nine Months Ended
				December 31,2006
				
				2005
				
				2006
				
				2005Interest income:Loans and
				leases receivable
				$      
				82,751
				
				$       
				62,102
				
				$   239,539
				
				$    
				177,331Mortgage-backed securities
				2,648
				
				2,422
				
				8,025
				
				6,969Investment
				securities and deposits
				1,578
				
				1,067
				
				4,750
				
				3,316Total interest income
				86,977
				
				65,591
				
				252,314
				
				187,616Interest expense:Deposits
				28,550
				
				16,056
				
				76,966
				
				43,757Borrowings
				13,269
				
				6,486
				
				37,460
				
				18,189Total interest expense
				41,819
				
				22,542
				
				114,426
				
				61,946Net interest
				income
				45,158
				
				43,049
				
				137,888
				
				125,670Provision for
				loan and lease losses
				1,900
				
				1,875
				
				4,920
				
				3,095Net interest
				income after provision for loan and
				lease
				losses
				43,258
				
				41,174
				
				132,968
				
				122,575Non-interest
				income:Deposit
				and related fees
				3,519
				
				3,268
				
				10,192
				
				9,684Loan and
				servicing fees
				566
				
				666
				
				1,737
				
				1,761Trust,
				investment and insurance fees
				1,529
				
				1,185
				
				4,353
				
				3,361Gain on
				sale of loans, net
				81
				
				31
				
				164
				
				134Gain on
				sale of securities, net
				-
				
				-
				
				271
				
				923Mark-to-market on interest rate swaps
				(35
				)
				-
				
				(357
				)
				-Other
				non-interest income
				349
				
				279
				
				1,754
				
				772Total non-interest income
				6,009
				
				5,429
				
				18,114
				
				16,635Non-interest
				expense:General
				and administrative:Compensation and benefits
				14,595
				
				13,171
				
				43,926
				
				39,880Occupancy and equipment
				4,190
				
				3,871
				
				12,215
				
				10,928Marketing and professional services
				3,088
				
				2,746
				
				9,405
				
				8,393Other general and administrative
				4,136
				
				3,705
				
				11,410
				
				10,353Total general and administrative
				26,009
				
				23,493
				
				76,956
				
				69,554Foreclosed
				asset operations, net
				(355
				)
				5
				
				(470
				)
				14Total non-interest expense
				25,654
				
				23,498
				
				76,486
				
				69,568Earnings before
				income taxes
				23,613
				
				23,105
				
				74,596
				
				69,642Income
				taxes
				9,970
				
				9,935
				
				31,485
				
				30,755Net earnings
				$        13,643
				
				$       
				13,170
				
				$      
				43,111
				
				$     
				38,887Basic earnings
				per share
				$           
				0.56
				
				$           
				0.55
				
				$          1.76
				
				$         
				1.60Weighted average
				shares outstanding for basic
  earnings per share calculation
				24,557,623
				
				24,136,345
				
				24,500,157
				
				24,263,328Diluted earnings
				per share
				$           
				0.55
				
				$           
				0.53
				
				$         
				1.74
				
				$        
				1.56Weighted average
				shares outstanding for diluted
  earnings per share calculation
				24,893,341
				
				24,754,168
				
				24,819,134
				
				24,900,187
  See accompanying notes to the unaudited consolidated financial statements.  2  PFF BANCORP, INC. AND SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
	(Dollars in thousands)
	(Unaudited)   For the Nine Months Ended
				December 31,
				For
				the Nine Months Ended
				December 31,2006
				
				2005
				
				
				2006
				
				2005Net earnings
				$     13,643
				
				$   
				13,170
				
				
				$     43,111
				
				$   
				38,887Other
				comprehensive earnings (losses), net of income tax expense
				(benefit) of $267 and $(246) for three months ended December 31,
				2006 and 2005, and $743 and $(329) for the nine months ended
				December 31, 2006 and 2005:Change in
				unrealized gains (losses) on:Investment securities available-for-sale, at fair value
				11
				
				20
				
				
				89
				
				209Mortgage-backed securities available-for-sale,
				at fair value
				357
				
				(516
				)
				
				1,204
				
				(103
				)Reclassification of realized securities gains included
       in earnings
				-
				
				-
				
				
				(174
				)
				(785
				)Reclassification of realized gains on interest rate
				swaps included in earnings
				-
				
				-
				
				
				(93
				)
				-Change in
				fair value of interest rate swaps
				-
				
				157
				
				
				-
				
				225Other
				comprehensive earnings (losses)
				368
				
				(339
				)
				
				1,026
				
				(454
				)Comprehensive
				earnings
				$    
				14,011
				
				$    
				12,831
				
				
				$    
				44,137
				
				$   
				38,433
  See accompanying notes to the unaudited consolidated financial statements.  3




PFF
	BANCORP, INC. AND SUBSIDIARIES
	CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
	(Dollars in thousands, except per share data)
	(Unaudited)  Number of
				Shares
				
				Common
				Stock
				Additional
				Paid-in
				Capital
				
				Retained
				Earnings
				
				Accumulated
				Other
				Comprehensive
				Losses
				
				TotalBalance at March
				31, 2006
				24,493,472
				
				$   
				244
				$ 
				175,581
				
				$  
				195,591
				
				$
				(7,685
				)
				$ 
				363,731Net earnings
				-
				
				-
				-
				
				43,111
				
				
				-
				
				43,111Stock issued for
				2004 incentive plan
				41,706
				
				-
				-
				
				-
				
				
				-
				
				-Amortization
				under share-based payment plans
				-
				
				-
				3,480
				
				-
				
				
				-
				
				3,480Stock options
				exercised
				75,281
				
				1
				603
				
				-
				
				
				-
				
				604Dividends ($0.17
				per share for June, September and December 2006)
				-
				
				-
				-
				
				(12,530
				)
				
				-
				
				(12,530
				)Changes in
				unrealized losses on securities available-for-sale, net
				-
				
				-
				-
				
				-
				
				
				1,119
				
				1,119Changes in
				unrealized gains on
				interest rate swaps, net
				-
				
				-
				-
				
				-
				
				
				(93
				)
				(93
				)Tax benefit from
				share-based payment plans
				-
				
				-
				1,235
				
				-
				
				
				-
				
				1,235Balance at
				December 31, 2006
				24,610,459
				
				$   
				245
				$ 
				180,899
				
				$  
				226,172
				
				$
				(6,659
				)
				$ 
				400,657
  See accompanying notes to the unaudited consolidated financial statements.  4


PFF BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)(Unaudited)Nine Months Ended December 31,2006
				
				2005Cash flows from
				operating activities:Net earnings
				$
				43,111
				
				$
				38,887Adjustments to
				reconcile net earnings to net cash provided by operating
				activities:Amortization of premiums, net of discount accretion on loans,
				leases
				and securities and deferred loan origination fees, net
				
				(16,331
				)
				
				(13,180
				)Dividends on FHLB stock
				
				(1,609
				)
				
				(1,866
				)Provisions for losses on loans, leases and foreclosed asset
				operations
				
				4,920
				
				
				3,095Gains on sales of loans, securities available-for-sale, real
				estate and
				property and equipment
				
				(1,491
				)
				
				(1,022
				)Depreciation and amortization of property and equipment
				
				3,400
				
				
				2,762Loans originated for sale
				
				(12,666
				)
				
				(11,975
				)Proceeds from sale of loans held-for-sale
				
				12,068
				
				
				12,874Amortization of share-based payment plans
				
				3,480
				
				
				4,857Decrease in market value on interest rate swaps
				
				357
				
				
				-Amortization of deferred issuance cost on junior subordinated
				debt
				
				60
				
				
				52Other, net
				
				(4,304
				)
				
				(5,149
				)Net cash provided by operating activities
				
				30,995
				
				
				29,335Cash flows from
				investing activities:Loans and leases originated for investment
				
				(1,868,364
				)
				
				(1,984,170
				)Increase (decrease) in construction loans in process
				
				(27,946
				)
				
				86,821Purchases of loans held-for-investment
				
				(8,497
				)
				
				(44,630
				)Principal payments on loans and leases
				
				1,638,029
				
				
				1,850,928Principal payments on mortgage-backed securities
				available-for-sale
				
				50,004
				
				
				55,210Principal payments on investment securities-available-for-sale
				
				1,464
				
				
				10,035Purchases of investment securities available-for-sale
				
				(25,000
				)
				
				(20,000
				)Purchases of mortgage-backed securities available-for-sale
				
				(42,449
				)
				
				(50,766
				)Redemption (purchases) of FHLB stock, net
				
				(4,576
				)
				
				8,808Proceeds from maturity of investment securities
				available-for-sale
				
				45,000
				
				
				-Proceeds from sale of investment securities available-for-sale
				
				5,337
				
				
				1,315Proceeds from sale of property and equipment
				
				1,218
				
				
				2Purchases of property and equipment
				
				(12,781
				)
				
				(15,943
				)Net cash used in investing activities
				
				(248,561
				)
				
				(102,390
				)Cash flows from
				financing activities:Net
				change in deposits
				
				181,545
				
				
				149,905Proceeds from long-term FHLB advances and other borrowings
				
				779,800
				
				
				408,150Repayment of long-term FHLB advances and other borrowings
				
				(714,100
				)
				
				(380,000
				)Net
				change in short-term FHLB advances and other borrowings
				
				(10,000
				)
				
				(68,673
				)Proceeds from issuance of junior subordinated debentures
				
				-
				
				
				25,774Proceeds from exercise of stock options
				
				604
				
				
				1,886Cash
				dividends
				
				(12,530
				)
				
				(11,007
				)Excess tax benefit from share-based payment plans
				
				1,235
				
				
				3,454Purchases of treasury stock
				
				-
				
				
				(23,352
				)Net cash provided by financing activities
				
				226,554
				
				
				106,137Net increase in cash and cash equivalents
				
				8,988
				
				
				33,082Cash and cash
				equivalents, beginning of period
				
				58,831
				
				
				44,844Cash and cash
				equivalents, end of period
				$
				67,819
				
				$
				77,926Supplemental
				information:Interest paid
				$
				110,504
				
				$
				59,977Income taxes paid
				$
				31,300
				
				$
				24,960Non-cash
				investing and financing activities:Net transfers
				from loans and leases receivable to assets acquired through
				foreclosure
				$
				-
				
				$
				8,390                                                               See
	accompanying notes to the unaudited consolidated financial statements.  5


PFF BANCORP,
INC. AND SUBSIDIARIES

Notes to
Unaudited Consolidated Financial Statements

(1)  Basis of
	Consolidation   The accompanying unaudited
	consolidated financial statements include the accounts of PFF Bancorp, Inc.
	and its wholly-owned subsidiaries PFF Bank & Trust, Glencrest Investment
	Advisors, Inc. ("Glencrest") and Diversified Builder Services, Inc. ("DBS")
	(collectively "Bancorp", "we", "us" and "our").  Our business is
	conducted primarily through PFF Bank & Trust and its subsidiary, Pomona
	Financial Services, Inc. (collectively, the "Bank").  Pomona Financial
	Services, Inc. includes the accounts of Diversified Services, Inc. Glencrest
	includes the accounts of Glencrest Insurance Services, Inc. The Bancorp owns
	100% of the common stock of two unconsolidated special purpose business
	trusts "PFF Bancorp Capital Trust I" and "PFF
	Bancorp Capital Trust II" created for the purpose of issuing capital
	securities. All material intercompany balances and transactions have been
	eliminated in consolidation.   Our unaudited consolidated
	financial statements have been prepared in accordance with accounting
	principles generally accepted in the United States of America for interim
	financial information and with the instructions to Form 10-Q and Rule 10-01
	of Regulation S-X.  Accordingly, they do not include all of the
	information and footnotes required by accounting principles generally
	accepted in the United States of America for complete financial statements. 
	In our opinion, all adjustments (consisting principally of normal recurring
	accruals) necessary for a fair presentation have been included.  We
	have made certain reclassifications to the prior year's consolidated
	financial statements to conform to the current presentation.  The
	results of operations for the three and nine months ended December 31, 2006
	are not necessarily indicative of results that may be expected for the
	entire fiscal year ending March 31, 2007.   These interim consolidated
	financial statements should be read in conjunction with our consolidated
	financial statements, and the notes thereto, included in our Form 10-K for
	the year ended March 31, 2006.   (2)  Current
	Accounting Issues   In February 2006, the
	Financial Accounting Standards Board ("FASB") issued Statement of Financial
	Accounting Standards ("SFAS") 155, "Accounting for Certain Hybrid Financial
	Instruments, an amendment of SFAS 133 and SFAS 140" ("SFAS 155"). This
	Statement permits fair value remeasurement for any hybrid financial
	instrument that contains an embedded derivative that otherwise would require
	bifurcation; clarifies which interest-only strips and principal-only strips
	are not subject to SFAS 133; establishes a requirement to evaluate interests
	in securitized financial assets to identify interests that are freestanding
	derivatives or hybrid financial instruments that contain an embedded
	derivative requiring bifurcation; clarifies that concentrations of credit
	risks in the form of subordinations are not embedded derivatives; and amends
	SFAS 140 to eliminate the prohibition on a Qualified Special Purpose Entity
	from holding a derivative financial instrument that pertains to a beneficial
	interest other than another derivative financial instrument.  In
	January 2007, the FASB clarified SFAS 155 and exempted most prepayable
	assets from the provisions of SFAS 155 that would have required
	mark-to-market of those assets through income if purchased at a discount to
	par, which includes all pass-through securities and most structured agency
	and non-agency mortgage-backed securities.   SFAS 155 is effective
	for all financial instruments acquired or issued after the beginning of an
	entity's first fiscal year that begins after September 15, 2006. Early
	adoption of this statement is allowed. We do not expect the adoption of SFAS
	155 to have a material impact on our consolidated financial statements.   In March 2006, the FASB
	issued SFAS 156, "Accounting for Servicing of Financial Assets, an amendment
	of SFAS 140," ("SFAS 156"). SFAS 156 requires that an entity separately
	recognize a servicing asset or a servicing liability when it undertakes an
	obligation to service a financial asset under a servicing contract in
	certain situations. Such servicing assets or servicing liabilities are
	required to be measured initially at fair value, if practicable. SFAS 156
	also allows an entity to measure its servicing assets and servicing
	liabilities subsequently using either the amortization method, which existed
	under SFAS 140, or the fair value measurement method. SFAS 156 will be
	effective in the fiscal year beginning April 1, 2007. We do not expect the
	adoption of SFAS 156 to have a material impact on our consolidated financial
	statements.   In June 2006, the FASB issued
	Interpretation 48, "Accounting for Uncertainty in Income Taxes - an
	Interpretation of SFAS 109" ("FIN 48"), which clarifies the accounting for
	uncertainty in income taxes recognized in an enterprise's financial
	statements in accordance with SFAS 109, "Accounting for Income Taxes." FIN
	48 prescribes a recognition threshold and measurement attribute for the
	financial statement recognition and measurement of a tax position taken or
	expected to be taken in a tax return. We will be required to adopt FIN 48 in
	the fiscal year beginning April 1, 2007. We are currently assessing the
	impact that the adoption of FIN 48 will have on our consolidated financial
	statements.  6


PFF BANCORP,
INC. AND SUBSIDIARIES

Notes to
Unaudited Consolidated Financial Statements

(Continued)

In September 2006, the FASB
	issued SFAS 157 "Fair Value Measurements" ("SFAS 157"), which provides a
	revised definition of fair value, guidance on the methods used to measure
	fair value and also expands financial statement disclosure requirements for
	fair value information. SFAS 157 establishes a fair value hierarchy that
	distinguishes between assumptions based on market data from independent
	sources ("observable inputs") and a reporting entity's internal assumptions
	based upon the best information available when external market data is
	limited or unavailable ("unobservable inputs"). The fair value hierarchy in SFAS 157 prioritizes inputs within three levels. Quoted prices in active
	markets have the highest priority (Level 1) followed by observable inputs
	other than quoted prices (Level 2) and unobservable inputs having the lowest
	priority (Level 3).   The Statement is effective for financial
	statements issued for fiscal years beginning after November 15, 2007, with
	earlier application allowed for entities that have not issued financial
	statements in the fiscal year of adoption. We are currently assessing the
	impact that the adoption of SFAS 157 will have on our consolidated financial
	statements.  In September 2006, the FASB
	issued SFAS 158, "Employers' Accounting for Defined Benefit Pension and
	Other Postretirement Plans, an amendment of SFAS 87, SFAS 88, SFAS 106 and
	SFAS 132R" ("SFAS 158"), which requires an employer that sponsors a defined
	benefit plan to recognize the funded status of a benefit plan, measured as
	the difference between plan assets at fair value and the projected benefit
	obligation (for defined benefit pension plans) or the accumulated benefit
	obligation (for other postretirement benefit plans) in its statement of
	financial position. SFAS 158 also requires recognition of amounts previously
	deferred and amortized under SFAS 87 and SFAS 106 in other comprehensive
	income in the period in which they occur. Under SFAS 158, plan assets and
	obligations must be measured as of the fiscal year end. SFAS 158 is
	effective for fiscal years ending after December 15, 2006.   We do
	not expect the adoption of SFAS 158 to have a significant effect on our
	consolidated financial statements.  In September 2006, the
	Securities and Exchange Commission released Staff Accounting Bulletin 108,
	"Quantifying Financial Statement Misstatements" ("SAB 108").   SAB
	108 clarifies that the evaluation of financial statement misstatements must
	be made based on all relevant quantitative and qualitative factors; this is
	referred to as a "dual approach." The adoption of SAB 108 is effective for
	our fiscal year ending March 31, 2007. SAB 108 permits companies to
	initially apply its provision either by restating prior financial
	statements, or recording the cumulative effect of initially applying the
	dual approach. We are currently assessing the impact that the adoption of
	SAB 108 will have on our consolidated financial statements.  7                           PFF
	BANCORP, INC. AND SUBSIDIARIES Notes to
	Unaudited Consolidated Financial Statements (Continued)  (3)  Share-Based
	payment Plans   In December 2004, the FASB
	issued SFAS 123R, "Share-Based Payment, an Amendment of FASB Statement No.
	123"  ("SFAS 123R").  SFAS 123R requires companies to recognize in
	the statement of operations the grant-date fair value of stock options and
	other equity-based compensation issued to employees and directors. SFAS 123R
	is effective for fiscal years beginning after June 15, 2005.  We
	adopted SFAS 123R beginning with our first quarter of fiscal 2006, and the
	impact was not material to our consolidated financial statements.  2006 Equity Incentive Plan   During September 2006, our
	stockholders approved the PFF Bancorp, Inc. 2006 Equity Incentive Plan (the
	"2006 Plan").  The 2006 Plan authorizes the granting of 2,953,234
	options or 1,476,617 restricted stock awards to Directors or employees. 
	Additionally, any options or awards previously granted under the share-based
	payment plans described below that expire, lapse or otherwise terminate for
	any reason without having been settled in full will become available for
	issuance under the 2006 Plan.   A summary of our nonvested
	awards to employees that vest based on a combination of service and
	performance as of December 31, 2006 and changes during the nine months ended
	December 31, 2006 are presented below:


|                                 |         | Weighted Average
|-------------------------------- | ------- | ----------------
|                                 |         | Grant
		Date    
|                                 | Shares  | Fair
		Value    
|Nonvested at April 1,
		2006     | -       | $               
|Granted                          | 307,398 |                 
|Vested                           | -       |                 
|Forfeited                        | -       |                 
|Nonvested at December 31,
		2006 | 307,398 | $               

Based upon current
	performance levels, for both the three and nine months ended December 31,
	2006, compensation expense associated with the 2006 Plan was $653,000. 
	As of December 31, 2006, there was $4.3 million of total unrecognized
	compensation cost related to nonvested awards granted under the 2006 Plan. 
	The unrecognized compensation cost is expected to be recognized over a
	weighted average period of 2.46 years.   2004 Equity Incentive Plan  During September 2004, our
	stockholders approved the PFF Bancorp, Inc. 2004 Equity Incentive Plan (the
	"2004 Plan").  The 2004 Plan authorized the granting of 1,112,632
	options or 556,315 restricted stock awards to Directors or employees. 
	For the three and nine months ended December 31, 2006 and 2005, based upon
	current performance levels, compensation expense associated with the 2004
	Plan was $369,000 and $1.8 million, respectively, and $970,000 and $2.6
	million, respectively.  As of December 31, 2006, there was $2.1 million
	of total unrecognized compensation cost related to non-vested awards granted
	under the 2004 Plan.  The unrecognized compensation cost is expected to
	be recognized over a weighted average period of 1.1 years.   8   PFF
	BANCORP, INC. AND SUBSIDIARIES Notes to
	Unaudited Consolidated Financial Statements (Continued)  A summary of our nonvested
	awards principally to directors that vest based solely on service as of
	December 31, 2006 and 2005 and changes during the nine months ended December
	31, 2006 and 2005 are presented below:          Weighted AverageGrant DateShares
			Fair ValueNonvested at April 1,
			2006
			81,900
			$
			28.59Granted
			-
			
			-Vested
			(29,550)
			
			28.59Forfeited
			-
			
			-Nonvested at December
			31, 2006
			52,350
			$
			28.59      Weighted AverageGrant DateShares
			Fair ValueNonvested at April 1,
			2005
			-
			$
			-Granted
			81,900
			
			28.59Vested
			-
			
			-Forfeited
			-
			
			-Nonvested at December
			31, 2005
			81,900
			$
			28.59    A summary of activity of our
	nonvested awards to employees that vest based on a combination of service
	and performance as of December 31, 2006 and 2005 is presented below:    Weighted AverageGrant DateShares
			Fair ValueNonvested at April 1,
			2006
			329,565
			$
			27.50Granted
			-
			
			-Vested
			(41,406)
			
			28.05Forfeited
			(21,176)
			
			27.46Nonvested at December
			31, 2006
			266,983
			$
			27.42    Weighted AverageGrant DateShares
			Fair ValueNonvested at April 1,
			2005
			-
			$
			-Granted
			441,100
			
			27.45Vested
			-
			
			-Forfeited
			(8,680
			)
			27.42Nonvested at December
			31, 2005
			432,420
			$
			27.45    1996 and 1999 Incentive
	Plans   During October 1996, our
	stockholders approved the PFF Bancorp, Inc. 1996 Incentive Plan (the "1996
	Plan"). During September 1999, our stockholders approved the PFF Bancorp,
	Inc. 1999 Incentive Plan (the "1999 Plan"). The 1996 Plan authorized the
	granting of options to purchase our common stock, option related awards, and
	grants of common stock. The 1999 Plan authorized the granting of options to
	purchase our common stock.  9    PFF
	BANCORP, INC. AND SUBSIDIARIES Notes to
	Unaudited Consolidated Financial Statements (Continued)  A summary of option activity
	under the 1996 and 1999 Plans as of December 31, 2006 and 2005, and changes
	during the nine months ended December 31, 2006 and 2005 are presented below:   For
			the Nine Months Ended December 31, 2006Weighted AverageWeighted Average
			Remaining
			
			AggregateShares
			
			
			Exercise Price
			Contractual Term
			
			Intrinsic Value(Dollars in thousands, except per share data)Outstanding at April
			1, 2006
			602,993
			
			$
			12.49
			-
			$
			-Granted
			-
			
			
			-
			-
			
			-Exercised
			(76,103
			)
			
			8.36
			-
			
			-Forfeited or expired
			(840
			)
			
			15.33
			-
			
			-Outstanding at
			December 31, 2006
			526,050
			
			$
			13.08
			4.86
			$
			11,271Exercisable at
			December 31, 2006
			526,050
			
			$
			13.08
			4.86
			$
			11,271     For
			the Nine Months Ended December 31, 2005Weighted AverageWeighted Average
			Remaining
			
			AggregateShares
			
			
			Exercise Price
			Contractual Term
			
			Intrinsic Value(Dollars in thousands, except per share data)Outstanding at April
			1, 2005
			1,019,615
			
			$
			10.82
			-
			$
			-Granted
			-
			
			
			-
			-
			
			-Exercised
			(259,697
			)
			
			7.26
			-
			
			-Forfeited or expired
			(2,813
			)
			
			9.39
			-
			
			-Outstanding at
			December 31, 2005
			757,105
			
			$
			12.05
			4.7
			$
			13,983Exercisable at
			December 31, 2005
			748,800
			
			$
			12.01
			4.7
			$
			13,864   No options were granted
	during the three and nine months ended December 31, 2006 and 2005.  The
	total intrinsic value of options exercised was $165,000 and $2.2 million
	during the three and nine months ended December 31, 2006, compared to $1.8
	million and $5.8 million during the three and nine months ended December 31,
	2005, respectively.  Cash received from options exercised under the
	1996 and 1999 Plans for the three and nine months ended December 31, 2006
	was $44,000 and $604,000, respectively, compared to $550,000 and $1.9
	million for the three and nine months ended December 31, 2005, respectively. 
	The tax benefit recognized for the tax deductions from options exercised
	totaled $22,000 and $828,000 for the three and nine months ended December
	31, 2006, respectively, compared to $737,000 and $2.3 million for the three
	and nine months ended December 31, 2005, respectively.   The fair value of each option
	is estimated on the grant date using the Black-Scholes model that applies
	the following assumptions:  volatility is based on the historical
	volatility of our stock; the expected term of options granted represents the
	period of time the options granted are expected to be outstanding; the
	risk-free rate is the yield from United States government securities with
	the same terms as the life of the options; dividend yield is calculated
	using the anticipated dividend payout rate of the stock over the life of the
	option.   Compensation expense under
	the 1996 and 1999 Plans was $2,000 and $14,000 for the three and nine months
	ended December 31, 2006, based upon the vesting of 347 options and 3,080
	options, respectively, compared to $23,000 and $86,000 for the three and
	nine months ended December 31, 2005 based upon the vesting of 3,309 options
	and 12,351 options, respectively.  10  PFF
	BANCORP, INC. AND SUBSIDIARIES Notes to
	Unaudited Consolidated Financial Statements (Continued)


(4)  Earnings Per
	Share  Earnings per share ("EPS") is
	calculated on both a basic and diluted basis, excluding common shares in
	treasury. Basic EPS is calculated by dividing net earnings available to
	common stockholders by the weighted average common shares outstanding during
	the period.  Diluted EPS includes the potential dilution resulting from
	the assumed exercise of stock options, including the effect of shares
	exercisable under our share-based payment plans.   The following table presents
	a reconciliation of the numerators and denominators of the basic and diluted
	EPS computations for the three months ended December 31, 2006 and 2005.   For the Three Months Ended December 31,2006
				
				2005Earnings
				(Numerator)
				Shares
				(Denominator)
				Per-Share
				Amount
				
				Earnings
  (Numerator)
				Shares
				(Denominator)
				Per-Share
				Amount(Dollars in thousands, except per share data)Net Earnings
				$
				13,643
				
				
				
				
				$
				13,170Basic EPSEarnings
				available to common stockholders
				
				13,643
				24,557,623
				$
				0.56
				
				
				13,170
				24,136,345
				$
				0.55Effect of Dilutive SecuritiesOptions and stock
				awards
				
				
				335,718
				
				
				
				
				
				617,823Diluted EPSEarnings
				available to common stockholders
   and assumed conversions
				$
				13,643
				24,893,341
				$
				0.55
				
				$
				13,170
				24,754,168
				$
				0.53
  The exercise price of all
		options was less than the average market price of the common shares
		during the three month period ended December 31, 2006 and 2005.  As
		a result, there were no options excluded from the computation of
		earnings per share due to anti-dilution.
		
		11  PFF
	BANCORP, INC. AND SUBSIDIARIES Notes to
	Unaudited Consolidated Financial Statements (Continued)                The following table presents
	a reconciliation of the numerators and denominators of the basic and diluted
	EPS computations for the nine months ended December 31, 2006 and 2005.   For the Nine Months Ended December 31,2006
				
				2005Earnings
				(Numerator)
				Shares
				(Denominator)
				Per-Share
				Amount
				
				Earnings
  (Numerator)
				Shares
				(Denominator)
				Per-Share
				Amount(Dollars in thousands, except per share data)Net Earnings
				$
				43,111
				
				
				
				
				$
				38,887Basic EPSEarnings
				available to common stockholders
				
				43,111
				24,500,157
				$
				1.76
				
				
				38,887
				24,263,328
				$
				1.60Effect of Dilutive SecuritiesOptions and stock
				awards
				
				
				318,977
				
				
				
				
				
				636,859Diluted EPSEarnings
				available to common stockholders
				and assumed conversions
				$
				43,111
				24,819,134
				$
				1.74
				
				$
				38,887
				24,900,187
				$
				1.56
  The exercise price of all
		options was less than the average market price of the common shares
		during the nine month period ended December 31, 2006 and 2005.  As
		a result, there were no options excluded from the computation of
		earnings per share due to anti-dilution.












12

---

PFF BANCORP,
INC. AND SUBSIDIARIES

Notes to
Unaudited Consolidated Financial Statements

(Continued)



(5)  Derivative
	Hedging Activities   The Company entered into
	financial derivatives in order to mitigate exposure to the issuance of its
	junior subordinated debentures.   On September 30, 2004, we
	entered into an interest rate swap with a financial institution in the
	notional amount of $30.0 million for a period of five years.  This
	interest rate swap was transacted concurrent with and for the purpose of
	hedging the cash outflows from $30.0 million of variable rate junior
	subordinated debentures against increasing interest rates.  The terms
	of the interest rate swap require us to pay a fixed rate of 6.08 percent and
	receive three month LIBOR plus 2.20 percent quarterly on dates which mirror
	those of the junior subordinated debentures through the termination of the
	interest rate swap on November 23, 2009.  We recognize all derivatives
	on the balance sheet at fair value based on dealer quotes.  At December
	31, 2006, the interest rate swap with a notional amount of $30.0 million had
	a fair value of $821,000.  The periodic net settlement of this swap
	decreased interest expense by $126,000 and $330,000 for the three and nine
	months ended December 31, 2006.   On September 16, 2005, we
	entered into an interest rate swap with a financial institution in the
	notional amount of $10.0 million for a period of five years.  The
	interest rate swap was transacted concurrent with and for the purpose of
	hedging the cash outflows from a portion of an additional $25.0 million of
	variable rate junior subordinated debentures against increasing interest
	rates.  The terms of the interest rate swap require us to pay a fixed
	rate of 5.98 percent and receive three month LIBOR plus 1.52 percent
	quarterly on dates which mirror those of the junior subordinated debentures
	through the termination of the interest rate swap on November 23, 2010. 
	At December 31, 2006, the interest rate swap with a notional amount of $10.0
	million had a fair value of $137,000.  The periodic net settlement of
	this swap decreased interest expense by $27,000 and $65,000 for the three
	and nine months ended December 31, 2006.  We have determined that the
	above interest rate swaps do not qualify for hedge treatment under the
	provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging
	Activities", as amended ("SFAS 133").  As a result, non-cash charges of
	$35,000 and $357,000 representing the decreases in market value of the
	interest rate swaps for the three and nine month ended December 31, 2006
	have been recorded as a component of other non-interest income in the
	Statement of Earnings.  Future changes in market value will also be
	recorded as a component of non-interest income.  While the provisions
	of SFAS 133 require that these interest rate swaps be considered unhedged
	derivatives for accounting purposes, from both economic substance and cash
	flow standpoints, the interest rate swaps have been and will continue to be
	fully effective in hedging the floating rate nature of the junior
	subordinated debentures.  13


Item 2.  Management's
	Discussion and Analysis of Financial Condition and Results of Operations  Average Balance Sheets  The following table sets
	forth certain information relating to our average balances of assets,
	liabilities and equity for the three months ended December 31, 2006 and
	2005.  The yields and costs are derived by dividing interest income or
	expense by the average balance of interest-earning assets or
	interest-bearing liabilities, respectively, for the periods shown. 
	Average balances are generally derived from average daily balances. 
	The yields and costs include fees that are considered adjustments to yields.  Three Months Ended December 31,2006
					2005Average
					Balance
					Interest
					Average
					Yield/
					Cost
					Average
					Balance
					Interest
					Average
					Yield/
					Cost(Dollars in thousands)Assets:Interest-earning assets:Interest-earnings deposits and short-term investments
					
					12,375
					$
					150
					4.81
					%
					$
					8,241
					$
					108
					5.20
					%Investment securities, net
					
					60,169
					
					758
					5.00
					
					
					62,471
					
					531
					3.37Mortgage-backed securities, net
					
					231,319
					
					2,648
					4.58
					
					
					238,453
					
					2,422
					4.06Loans and leases receivable, net
					
					4,105,702
					
					82,751
					8.03
					
					
					3,468,485
					
					62,102
					7.13FHLB stock
					
					45,294
					
					670
					5.87
					
					
					37,183
					
					428
					4.57Total interest-earning assets
					
					4,454,859
					
					86,977
					7.78
					
					
					3,814,833
					
					65,591
					6.85Non-interest-earning assets
					
					168,544
					
					
					
					
					
					168,089Total assets
					$
					4,623,403
					
					
					
					
					$
					3,982,922Liabilities and Stockholders'
					Equity:Deposits:Non-interest bearing demand accounts
					$
					284,160
					
					-
					0.00
					
					$
					304,525
					
					-
					0.00Interest-bearing demand accounts
					
					327,239
					
					374
					0.45
					
					
					427,616
					
					602
					0.56Savings accounts
					
					145,155
					
					153
					0.42
					
					
					168,835
					
					128
					0.30Money market accounts
					
					860,519
					
					8,389
					3.87
					
					
					888,340
					
					5,516
					2.46Certificate accounts
					
					1,575,038
					
					19,634
					4.95
					
					
					1,074,062
					
					9,810
					3.62Total Deposits
					
					3,192,111
					
					28,550
					3.55
					
					
					2,863,378
					
					16,056
					2.22FHLB advances and other borrowings
					
					922,702
					
					12,379
					5.32
					
					
					632,569
					
					5,644
					3.54Junior subordinated debentures
					
					56,702
					
					890
					6.28
					
					
					56,702
					
					842
					5.94Total interest-bearing liabilities
					
					4,171,515
					
					41,819
					3.98
					
					
					3,552,649
					
					22,542
					2.52Non-interest-bearing liabilities
					
					54,963
					
					
					
					
					
					81,204Total liabilities
					
					4,226,478
					
					
					
					
					
					3,633,853Stockholder's equity
					
					396,925
					
					
					
					
					
					349,069Total liabilities and stockholders' equity
					$
					4,623,403
					
					
					
					
					$
					3,982,922Net interest income
					
					
					$
					45,158
					
					
					
					
					$
					43,049Net interest spread
					
					
					
					
					3.80
					
					
					
					
					
					4.33Net interest margin
					
					
					
					
					4.05
					
					
					
					
					
					4.51Ratio of interest-earning assets to interest-bearing
					liabilities
					106.79
					%
					
					
					107.38
					%  14   Average Balance Sheets  The following table sets
	forth certain information relating to our average balances of assets,
	liabilities and equity for the nine months ended December 31, 2006 and 2005. 
	The yields and costs are derived by dividing interest income or expense by
	the average balance of interest-earning assets or interest-bearing
	liabilities, respectively, for the periods shown.  Average balances are
	generally derived from average daily balances.  The yields and costs
	include fees that are considered adjustments to yields.


|                                                                      | Nine Months Ended December 31,
|--------------------------------------------------------------------- | ------------------------------
|                                                                      | 2006                          
|                                                                      | Average
					Balance          
|                                                                      | (Dollars in thousands)        
|Assets:                                                               |                               
|Interest-earning assets:                                              |                               
|Interest-earnings deposits and short-term investments                 |                               
|Investment securities, net                                            |                               
|Mortgage-backed securities, net                                       |                               
|Loans and leases receivable, net                                      |                               
|FHLB stock                                                            |                               
|Total interest-earning assets                                         |                               
|Non-interest-earning assets                                           |                               
|Total assets                                                          | $                             
|                                                                      |                               
|Liabilities and Stockholders'
					Equity:                            |                               
|Deposits:                                                             |                               
|Non-interest bearing demand accounts                                  | $                             
|Interest-bearing demand accounts                                      |                               
|Savings accounts                                                      |                               
|Money market accounts                                                 |                               
|Certificate accounts                                                  |                               
|Total Deposits                                                        |                               
|FHLB advances and other borrowings                                    |                               
|Junior subordinated debentures                                        |                               
|Total interest-bearing liabilities                                    |                               
|Non-interest-bearing liabilities                                      |                               
|Total liabilities                                                     |                               
|Stockholder's equity                                                  |                               
|Total liabilities and stockholders' equity                            | $                             
|Net interest income                                                   |                               
|Net interest spread                                                   |                               
|Net interest margin                                                   |                               
|Ratio of interest-earning assets to interest-bearing
					liabilities | 106.69                        

15

---



Rate/Volume Analysis   The following table presents
	the extent to which changes in interest rates and changes in the volume of
	interest-earning assets and interest-bearing liabilities have affected our
	interest income and interest expense during the periods indicated. 
	Information is provided in each category with respect to:  (i) changes
	attributable to changes in volume (changes in volume multiplied by prior
	rate); (ii) changes attributable to changes in rate (changes in rate
	multiplied by prior volume); (iii) changes attributable to changes in
	rate/volume (change in rate multiplied by change in volume); and (iv) the
	net change.   Three Months Ended December 31, 2006
			
			Nine Months Ended December 31, 2006Compared to
			
			Compared toThree Months Ended December 31, 2005
			
			Nine Months Ended December 31, 2005Increase (Decrease)
			
			Increase (Decrease)Due
			to
			
			Due
			toVolume
			
			Rate
			Rate/
			Volume
			
			Net
			
			Volume
			
			Rate
			Rate/
			Volume
			
			Net(In
			thousands)Interest-earning assets:Interest-earning deposits and
      short-term investments
			$     
			54
			
			(8
			)
			(4
			)
			42
			
			$    
			9
			
			40
			
			1
			
			50Investment securities, net
			(20
			)
			256
			
			(9
			)
			227
			
			(21
			)
			978
			
			(12
			)
			945Mortgage-backed securities, net
			(72
			)
			306
			
			(8
			)
			226
			
			81
			
			964
			
			11
			
			1,056Loans receivable, net
			11,358
			
			7,857
			
			1,434
			
			20,649
			
			29,028
			
			28,512
			
			4,668
			
			62,208FHLB stock
			93
			
			122
			
			27
			
			242
			
			102
			
			313
			
			24
			
			439Total interest-earning assets
			11,413
			
			8,533
			
			1,440
			
			21,386
			
			29,199
			
			30,807
			
			4,692
			
			64,698Interest-bearing liabilities:Demand deposit accounts
			(141
			)
			(114
			)
			27
			
			(228
			)
			(423
			)
			(385
			)
			80
			
			(728
			)Savings accounts
			(18
			)
			50
			
			(7
			)
			25
			
			(45
			)
			152
			
			(17
			)
			90Money market accounts
			(173
			)
			3,144
			
			(98
			)
			2,873
			
			(958
			)
			7,707
			
			(470
			)
			6,279Certificate accounts
			4,576
			
			3,579
			
			1,669
			
			9,824
			
			12,689
			
			9,949
			
			4,930
			
			27,568FHLB advances and other borrowings
			2,589
			
			2,844
			
			1,302
			
			6,735
			
			4,884
			
			10,459
			
			3,125
			
			18,468Junior subordinated debentures
			-
			
			48
			
			-
			
			48
			
			712
			
			65
			
			26
			
			803Total interest-bearing liabilities
			6,833
			
			9,551
			
			2,893
			
			19,277
			
			16,859
			
			27,947
			
			7,674
			
			52,480Change in net interest income
			$  
			4,580
			
			(1,018
			)
			(1,453
			)
			2,109
			
			$  
			12,340
			
			2,860
			
			(2,982
			)
			12,218                                  Forward-Looking Statements  "Safe Harbor" statement under
	the Private Securities Litigation Reform Act of 1995: This Form 10-Q
	contains forward-looking statements that are subject to risks and
	uncertainties, including, but not limited to, changes in economic conditions
	in our market areas, changes in policies by regulatory agencies, the impact
	of competitive loan and deposit products, the quality or composition of our
	loan or investment portfolios, fluctuations in interest rates and changes in
	the relative differences between short and long-term interest rates, levels
	of nonperforming assets and operating results, the impact of domestic or
	world events on our loan and deposit inflows and outflows and other risks
	detailed from time to time in our filings with the Securities and Exchange
	Commission. We caution readers not to place undue reliance on
	forward-looking statements.  We do not undertake and specifically
	disclaim any obligation to revise or update any forward-looking statements
	to reflect the occurrence of anticipated or unanticipated events or
	circumstances after the date of such statements.  These risks could
	cause our actual results for fiscal year 2007 and beyond to differ
	materially from those expressed in any forward-looking statements by, or on
	behalf of, us.  16           Critical Accounting Policies Our management has established various accounting policies, which govern the
	application of accounting principles generally accepted in the United States
	of America in the preparation of our consolidated financial statements. 
	The significant accounting policies are described in our Annual Report on
	Form 10-K for the year ended March 31, 2006 and there has not been any
	material change in those policies since that date, other than changes
	discussed in this report. Certain accounting policies require significant
	estimates and assumptions, which have a material impact on the carrying
	value of certain assets and liabilities, and these are considered to be
	critical accounting policies.  The estimates and assumptions used are
	based on historical experience and other factors, which we believe are
	reasonable under the circumstances.  Actual results could differ
	significantly from these estimates and assumptions which could have a
	material impact on the carrying values of assets and liabilities at the
	balance sheet dates and on the results of operations for the reporting
	periods.  The following represents critical accounting policies that
	require the most significant estimates and assumptions that are particularly
	susceptible to significant change in the preparation of the consolidated
	financial statements:  Allowance for losses on
		loans and leases.  For further information, see "Comparison of
		Financial Condition at December 31, 2006 and March 31, 2006" in this
		Form 10-Q and "Item 1 - Business - Lending Activities - Allowance for
		Loan and Lease Losses", "Item 1- Foreclosed Assets" and "Notes 5 and 6
		to the Consolidated Financial Statements" in our March 31, 2006 Annual
		Report on Form 10-K.  Other-Than-Temporary
	Impairment.  For further information, see "Item 1 - Business -
	Investment Activities" and "Notes 2 and 3 to the Consolidated Financial
	Statements" in our March 31, 2006 Annual Report on Form 10-K.  Financial Derivatives.
		For further information, see "Item 1 -- Financial Statements - Note 5 -
		Derivative Hedging Activities" in this Form 10-Q and "Note 13 to the
		Consolidated Financial Statements" in our March 31, 2006 Annual Report
		on Form 10-K. 17    Comparison of Operating Results for the Three Months Ended December 31, 2006
	and 2005   Overview   The following discussion
	compares the results of operations for the three months ended December 31,
	2006 with the corresponding period of 2005. This discussion should be read
	in conjunction with the consolidated financial statements and footnotes
	included therein.   We recorded net earnings of
	$13.6 million or $0.55 per diluted share for the three months ended December
	31, 2006 compared to net earnings of $13.2 million or $0.53 per diluted
	share for the comparable period of 2005.   Net interest income rose $2.1
	million or 5 percent to $45.2 million for the current quarter compared to
	the same quarter of 2005.  On a sequential quarter basis, net interest
	income decreased $700,000 or 2 percent.  Net interest margin contracted
	46 basis points to 4.05% between the quarters ended December 31, 2005 and
	2006 and contracted 11 basis points on a sequential quarter basis.  Construction, commercial
	business, commercial real estate and consumer loans (the "Four-Cs")
	increased $578.3 million or 31 percent to $2.46 billion or 60 percent of
	loans and leases receivable, net, compared to $1.88 billion or 53 percent of
	loans and leases receivable, net, one year ago. Based on end of period
	balances, the Four-Cs increased $37.0 million or 2 percent on a sequential
	quarter basis, including a $28.1 million increase in commercial construction
	loans.  On an average balance basis, the Four-Cs increased $96.3
	million or 4 percent on a sequential quarter basis.  At December 31,
	2006, our construction loan portfolio, net of loans in process, included
	$1.05 billion of residential construction loans including land loans and
	$131.2 million of commercial construction loans as compared to $887.8
	million of residential construction loans including land loans and $124.2
	million of commercial construction loans at March 31, 2006.  Our loan origination focus
	continues to be on the Four-Cs.  Four-Cs originations totaled $419.9
	million or 85 percent of total originations in the current quarter, compared
	to $472.4 million or 81 percent of total originations for the comparable
	period of the prior year.  The Four-Cs originations include $43.0
	million and $38.6 million originated by DBS during the quarters ended
	December 31, 2006 and 2005, respectively.  At December 31, 2006, DBS
	had outstanding loans receivable, net, of $104.0 million compared to $76.1
	million one year ago.  The majority of DBS's loans are classified as
	construction and land.  Average total deposits
	increased $328.7 million or 11 percent compared to the quarter ended
	December 31, 2005 and increased $294.3 million from the quarter ended March
	31, 2006.  The average balance of certificates of deposits ("CDs")
	increased $501.0 million while the average balance of lower cost passbook,
	money market and demand deposits ("core deposits") decreased $172.2 million
	from one year ago.  At December 31, 2006, core deposits totaled $1.64
	billion or 51 percent of total deposits, compared to $1.69 billion or 55
	percent of total deposits at March 31, 2006 and $1.74 billion or 60 percent
	of total deposits one year ago. Non-interest-bearing demand deposits
	averaged $284.2 million or 9 percent of average total deposits for the
	current quarter compared to $304.5 million or 11 percent of average total
	deposits for the comparable quarter of 2005. Deposits, particularly core
	deposits, provide a more preferable source of funding than Federal Home Loan
	Bank ("FHLB") advances and other borrowings. However, as and to the extent
	competitive or market factors do not allow us to meet our funding needs with
	deposits, FHLB advances and other borrowings provide a readily available
	source of liquidity.  At December 31, 2006, FHLB advances and other
	borrowings increased $55.7 million to $877.7 million or 21 percent of total
	liabilities from $822.0 million or 21 percent of total liabilities at March
	31, 2006.   Non-accrual loans were $1.5
	million or 0.03 percent of gross loans and leases at December 31, 2006
	compared to $1.1 million or 0.03 percent of gross loans and leases at March
	31, 2006 and $1.6 million or 0.04 percent of gross loans and leases at
	December 31, 2005.  The distribution of the non-accrual loan balance of
	$1.5 million as of December 31, 2006 by loan type was $708,000
	single-family, $558,000 consumer and $250,000 commercial business.  18    During the quarter ended
	December 31, 2006, we recorded a $355,000 gain on sale of the 20 home
	development in Murrieta, California which had been placed into receivership
	in December 2005.  The gain on sale is classified in foreclosed asset
	operations in our statement of earnings.   We did not repurchase any
	shares of our common stock during the current quarter.  At December 31,
	2006, 954,310 shares remain under a 1.0 million share repurchase
	authorization adopted by our Board of Directors on October 26, 2005.   At December 31, 2006, our
	consolidated capital to assets ratio was 8.68%.  The Bank's core and
	total risk-based capital ratios were 8.72% and 11.26%, respectively,
	compared to 5.00% and 10.00%, respectively, needed to be considered "Well
	Capitalized."  Our internal target floors for the Bank's core and total
	risk-based capital ratios are 7.75% and 11.00%, respectively. For further information relating to our risk-based capital ratios, see
	"Liquidity and Capital Resources" in this Form 10-Q.   Net Interest Income  Net interest income is the
	difference between interest and dividends earned on loans and leases,
	mortgage-backed securities and other investment securities and other
	interest-earning investments (collectively, "interest-earnings assets") and
	the interest paid on deposits and borrowings ("interest-bearing
	liabilities"). The spread between the yield on interest-earning assets and
	the cost of interest-bearing liabilities and the relative dollar amounts of
	these assets and liabilities are the principle items affecting net interest
	income.  Our net interest income
	totaled $45.2 million for the quarter, up 5 percent or $2.1 million from
	$43.0 million for the quarter ended December 31, 2005.  This increase
	was attributable primarily to a $640.0 million or 17 percent increase in
	average interest-earning assets from the comparable period of the prior
	year, partially offset by a 46 basis point decrease in our net interest
	margin for the current quarter compared with the year ago period.  The
	average balance of the Four-Cs increased $615.3 million or 34 percent
	between the quarters ended December 31, 2005 and 2006, which contributed to
	the increase of $637.2 million or 18 percent in the average balance of loans
	and leases receivable, net. Highly competitive pricing of deposits in our
	markets has exacerbated the effect of the inversion of the yield curve over
	the past year. These factors, in combination with a larger portion of our
	funding being in certificate accounts and borrowings, have resulted in a 146
	basis point increase in our cost of funds for the current quarter as
	compared to the same period last year. This exceeded the 93 basis point
	increase in our earning assets yield for the current quarter as compared to
	the same period last year. As a result, our net interest spread and net
	interest margin for the three months ended December 31, 2006 were 3.80% and
	4.05%, respectively, compared to 4.33% and 4.51%, respectively for the same
	period last year.  We believe that the
	competitive pressures on deposit rates and customer preference for
	certificate accounts will continue to put pressure on our net interest
	margin. Certificate accounts which will reprice or mature during the quarter
	ending March 31, 2007 total $441.7 million and have a weighted average rate
	of 4.90%.   Reflecting the higher
	interest rate environment and the sensitivity of our loan and lease
	portfolio to changes in rates, the average yield on loans and leases
	receivable, net, increased 90 basis points to 8.03% for the quarter ended
	December 31, 2006 as compared to the quarter ended December 31, 2005. 
	Loan and lease principal repayments totaled $502.8 million for the quarter
	ended December 31, 2006 compared to $605.3 million for the same period of
	2005.  Expressed as an annualized percentage of average loans and
	leases receivable, net, this represented 49 percent
	of the portfolio compared to 70 percent for the quarter ended December 31,
	2005.  Premium amortization, net of discount accretion on the loan and
	lease portfolio for the quarters ended December 31, 2006 and 2005 was
	$229,000 and $253,000, respectively.  Amortization of loan origination
	fees and extension fees, net, increased to $3.5 million and $1.4 million,
	respectively, for the quarter ended December 31, 2006 compared to $3.4
	million and $1.1 million for the comparable period of 2005.  For the
	quarter ended December 31, 2006, this fee amortization increased yield on
	average loans receivable, net, and yield on average interest-earning assets
	by 49 basis points and 45 basis points, respectively, compared to 53 basis
	points and 48 basis points for the comparable period of 2005.   Our average cost of
	interest-bearing liabilities increased 146 basis points to 3.98% for the
	quarter ended December 31, 2006 as compared to the quarter ended December
	31, 2005.  Our average cost of deposits rose 133 basis points to 3.55%
	for   the quarter ended December 31, 2006 as compared to the
	quarter ended  19   December 31, 2005, while our average cost of FHLB advances,
	other borrowings and junior subordinated debentures rose 164 basis points
	over that same time period.  Compared to the quarter ended December 31,
	2005, the average balance of our deposit portfolio increased $328.7 million
	or 11 percent to $3.19 billion or 77 percent of our average interest-bearing
	liabilities compared to 81 percent of average interest-bearing liabilities
	for the comparable period of 2005.   Provision for Loan and Lease
	Losses  We recorded a $1.9 million
	provision for loan and lease losses for the quarter ended December 31, 2006
	which reflects the cautious approach we are taking to credit evaluation in
	light of the slower levels of absorption in some segments of the residential
	housing market.  While all of our construction loans remain on full
	accrual status and there are no specific allowances assigned to any loans in
	that portfolio, we believe that current market conditions warrant an
	increase in the level of general valuation allowance assigned to our
	construction loan portfolio.  At December 31, 2006, the Allowance for
	Loan and Lease Losses ("ALLL") was $42.1 million or 0.89% of gross loans and
	leases compared to $37.1 million or 0.83% of gross loans and leases at March
	31, 2006.  We will continue to monitor and modify the ALLL based upon
	economic conditions, loss experience, changes in portfolio composition, and
	other factors.   Non-Interest Income  Total non-interest income
	increased $580,000 or 11 percent to $6.0 million between the quarters ended
	December 31, 2006 and 2005.   Deposit and Related
	Fees   Deposit and related fees
	increased 8 percent or $251,000 to $3.5 million for the current quarter.  
	Approximately 55 percent of the increase in deposit and related fees was
	attributable to non-recurring fees collected on certain transaction
	accounts.   Monthly service charges and overdraft fees increased
	$344,000 to $3.1 million for the current quarter.  At December 31,
	2006, we had 70,000 transaction accounts compared to 69,000 accounts at
	December 31, 2005.   Loan and Servicing Fees   Loan and servicing fees
	decreased $100,000 or 15 percent to $566,000 for the current quarter. 
	Amortization of our mortgage servicing rights ("MSR") asset was $3,000 and
	$12,000 for the quarters ended December 31, 2006 and 2005, respectively. 
	At December 31, 2006, our MSR asset was $280,000.   Trust, Investment and
	Insurance Fees   Trust, investment and
	insurance fees increased $344,000 or 29 percent to $1.5 million for the
	quarter ended December 31, 2006. The increase in fees is a result of an
	increase in market value of trust and investment assets under management or
	advisory by Glencrest and the Bank's trust department to $732.6 million at
	December 31, 2006, compared to $603.7 million at December 31, 2005. 
	These assets under management or advisory include $592.3 million managed or
	advised by Glencrest at December 31, 2006 compared to $451.1 million at
	December 31, 2005.  The average annual fee per dollar of assets managed
	or advised by Glencrest and the Bank's trust department was approximately 53
	basis points for the quarter ended December 31, 2006 compared to 54 basis
	points for the comparable period of 2005.  Gain on Sale of Loans   Our community banking
	business strategy does not include aggressively pursuing the origination of
	loans for sale. Accordingly, the principal balances of loans sold during the
	quarters ended December 31, 2006 and 2005 were $5.3 million and $3.5
	million, respectively.  This activity generated net gains on sales of
	$81,000 and $31,000 for the quarters ended December 31, 2006 and 2005,
	respectively.  20      Gain on Sale of
	Securities   We generally follow a "buy
	and hold" strategy with respect to our securities portfolio.  While the
	overwhelming majority of our securities portfolio is classified as
	"available for sale," our securities sales activity has been and is expected
	to continue to be infrequent.   Non-Interest Expense   Non-interest expense and
	general and administrative ("G&A") expense increased $2.5 million or 11
	percent to $26.0 million for the quarter ended December 31, 2006 as compared
	to the same period last year.  Compensation and benefit expense
	accounted for approximately 57 percent of the increase in total G&A expense. 
	The increase in G&A expense primarily reflects the direct and indirect costs
	associated with the growth in our deposit and lending operations. On a
	sequential quarter basis, G&A expense increased $1.3 million or 5 percent
	from $24.7 million at September 30, 2006 to $26.0 million at December 31,
	2006. Excluding a $700,000 non-recurring reduction to benefit accruals in
	the quarter ended September 30, 2006 and a $264,000 fraudulent check loss
	during the quarter ended December 31, 2006, G&A expense increased $380,000
	or 1 percent between the quarters ended September 30 and December 31, 2006.   The ratio
	of G&A expense to average assets decreased 11 basis points to 2.25%, on an
	annualized basis for the quarter ended December 31, 2006 compared to 2.36%
	for the comparable period of 2005.  Our efficiency ratio was 50.83% for
	the current quarter compared to 48.46% for the comparable period of 2005.   Income Taxes  Income taxes and the
	effective tax rates were $10.0 million and 42.2 percent, respectively, for
	the current quarter compared to $9.9 million and 43.0 percent for the
	quarter ended December 31, 2005.   Comparison of Operating
	Results for the Nine Months Ended December 31, 2006 and 2005   Overview   The following discussion
	compares the results of operations for the nine months ended December 31,
	2006 with the corresponding period of 2005. This discussion should be read
	in conjunction with the consolidated financial statements and footnotes
	included therein.   We recorded net earnings of
	$43.1 million or $1.74 per diluted share for the nine months ended December
	31, 2006 compared to net earnings of $38.9 million or $1.56 per diluted
	share for the comparable period of 2005.   Net Interest Income  Our net interest income
	totaled $137.9 million for the nine months ended December 31, 2006, up 10
	percent or $12.2 million from $125.7 million for the comparable period of
	2005.  Average interest-earning assets increased $568.5 million or 15
	percent between the nine months ended December 31, 2005 and 2006 and net
	interest margin decreased 20 basis points to 4.20% for the nine months ended
	December 31, 2006 from 4.40% for the same period of 2005.  The average
	balance of the Four-Cs increased $558.0 million or 31 percent between the
	nine months ended December 31, 2005 and 2006, which accounted for the
	increase of $563.3 million or 16 percent in the average balance of loans and
	leases receivable, net.   The average yield on loans
	and leases receivable, net, increased 110 basis points between the nine
	months ended December 31, 2005 and 2006 to 7.94%.  Loan and lease
	principal repayments totaled $1.64 billion for the nine months ended
	December 31, 2006 compared to $1.85 billion for the comparable period of
	2005.  Expressed as an annualized percentage of average loans and
	leases receivable, net, this represented 54 percent and 72 percent of the
	portfolio for the nine months ended December 31, 2006 and 2005,
	respectively.  Premium amortization, net of discount accretion on the
	loan and lease portfolio for the nine months ended December 31, 2006 was
	$794,000 compared to $1.1 million for the comparable period of 2005. 
	Amortization of loan origination fees and extension fees, net, increased to
	$11.7 million and $4.7 million, respectively, for the nine months ended
	December 31, 2006 compared to $10.7 million and $3.1 million for the  21   comparable period of 2005.  For the nine months ended December 31,
	2006, this fee amortization increased yield on average loans receivable,
	net, and yield on average interest-earning assets by 55 basis points and 51
	basis points, respectively, compared to 54 basis points and 49 basis points,
	respectively, for the comparable period of 2005.   Our average cost of
	interest-bearing liabilities increased 139 basis points to 3.71% between the
	nine months ended December 31, 2005 and 2006.  Our average cost of
	deposits rose 119 basis points between the nine months ended December 31,
	2005 and 2006 while our average cost of FHLB advances, other borrowings and
	junior subordinated debentures rose 198 basis points. The increase in our
	average cost of interest-bearing liabilities was partially mitigated by the
	continued growth and increasing utilization of deposits as our principal and
	preferable source of funding.  The average balance of our deposit
	portfolio increased $327.9 million or 12 percent to $3.13 billion or 76
	percent of our average interest-bearing liabilities.   Provision for Loan and Lease
	Losses  We recorded a $4.9 million
	provision for loan and lease losses for the nine months ended December 31,
	2006 compared to $3.1 million for the comparable period of 2005. For further
	information, see "Item 2. Management's Discussion and Analysis of Financial
	Condition and Results of Operations - Comparison of Operating Results for
	the Three Months Ended December 31, 2006 and 2005 - Provision for Loan and
	Lease Losses" in this Form 10-Q.  Additionally, in the prior quarters
	of this fiscal year, which includes June 30, 2006 and September 30, 2006, we
	recorded increases in provision for loan and lease losses related to
	increases in our classified assets and overall increases in our loan
	portfolio.  For further information, see "Comparison of Financial
	Condition at December 31, 2006 and March 31, 2006" in this Form 10-Q.   Non-Interest Income  Total non-interest income
	increased $1.5 million to $18.1 million for the nine months ended December
	31, 2006.  Excluding gain on sale of securities of $271,000 and
	$923,000 for the nine months ended December 31, 2006 and 2005, respectively,
	gain on sale of a former administrative building of $716,000 and non-cash
	charge of $357,000 associated with interest rate swaps for the nine months
	ended December 31, 2006, total non-interest income increased $1.8 million to
	$17.5 million for the nine months ended December 31, 2006 compared to $15.7
	million for the comparable period of 2005.   Deposit and Related
	Fees   Deposit and related fees
	totaled $10.2 million for the nine months ended December 31, 2006, up
	$508,000 or 5 percent from the comparable period in 2005.  This
	increase reflects fee income of $744,000 associated with transaction
	accounts, partially offset by a decrease of $249,000 in ATM service fees
	associated with our decision to waive charges for use of foreign or non-bank
	ATMs by our customers.   Loan and Servicing Fees   Loan and servicing fees were
	relatively flat at $1.7 million for the nine months ended December 31, 2006
	and 2005.   Trust, Investment and
	Insurance Fees   Trust, investment and
	insurance fees were $4.4 million for the nine months ended December 31,
	2006, an increase of $1.0 million or 30 percent from the comparable period
	of 2005, which reflects the increase in assets under management or advisory
	by Glencrest and the Bank's trust department.  Gain on Sale of Loans   The net gain on sale of loans
	was $164,000 on $11.9 million of principal sold for the nine months ended
	December 31, 2006 compared to a net gain of $134,000 on $12.7 million of
	principal sold during the same period last year.    22   Gain on Sale of
	Securities   Securities with cost bases
	aggregating $5.1 million and $393,000 were sold during the nine months ended
	December 31, 2006 and 2005, generating gains on sales of $271,000 and
	$923,000, respectively.   Non-Interest Expense   Non-interest expense
	increased $6.9 million or 10 percent to $76.5 million for the nine months
	ended December 31, 2006 as compared to the same period last year.  G&A
	expense increased $7.4 million or 11 percent between the nine months ended
	December 31, 2006 and 2005 to $77.0 million.  ESOP expenses were $2.4
	million and $2.3 million for the nine months ended December 31, 2006, and
	2005.   The ratio of G&A expense to
	average assets improved to 2.26%, on an annualized basis for the nine months
	ended December 31, 2006 compared to 2.34% for the comparable period of 2005. 
	Our efficiency ratio was 49.33% for the nine months ended December 31, 2006
	compared to 48.88% for the comparable period of 2005.   Income Taxes  Our effective income tax
	rates were 42.2 percent and 44.2 percent for the nine months ended December
	31, 2006 and 2005.  The reduction in our effective tax rate was
	attributable principally to a reduction in the non-deductible portion of
	ESOP expense.   Comparison of Financial
	Condition at December 31, 2006 and March 31, 2006  Total assets were $4.61
	billion at December 31, 2006 compared to $4.34 billion at March 31, 2006. 
	Loans and leases receivable, net, totaled $4.12 billion at December 31,
	2006, a $278.4 million increase from $3.84 billion at March 31, 2006. 
	The balance of our Four-Cs increased $289.6 million or 13 percent from $2.17
	billion at March 31, 2006 to $2.46 billion at December 31, 2006.  These
	loan balances are shown net of undisbursed construction loan funds of $585.9
	million and $596.2 million at December 31 and March 31, 2006, respectively. 
	These undisbursed balances represent funds that will be disbursed and begin
	earning interest as construction progresses.   At December 31, 2006, the
	ALLL was $42.1 million or 0.89% of gross loans and leases compared to $37.1
	million or 0.83% of gross loans and leases at March 31, 2006.  Assets
	classified "Substandard" under our Internal Asset Review ("IAR") system were
	$24.4 million, net of specific allowances of $153,000 at December 31, 2006
	compared to $16.6 million, net of specific allowances of $27,000 at March
	31, 2006.  The $24.4 million of assets classified as Substandard
	primarily consisted of 27 commercial business loans totaling $23.2 million. 
	Special Mention assets increased $18.5 million to $70.6 million at December
	31, 2006 compared to $52.1 million at March 31, 2006.  The increase in
	Special Mention assets is primarily related to commercial business loans.  
	At December 31, 2006 and March 31, 2006, we had no assets classified as
	"Doubtful" or "Loss".   The ALLL is maintained at an
	amount management considers adequate to cover probable losses on loans and
	leases receivable. The determination of the adequacy of the ALLL is
	influenced to a significant degree by the evaluation of the loan and lease
	portfolio by our IAR function.  The IAR system is designed to identify
	problem loans and leases and probable losses.  As the percentage of our
	loan and lease portfolio comprised by the Four-Cs has increased, the IAR
	function has become increasingly important not only for the timely and
	accurate identification of probable losses, but also to minimize our
	exposure to such losses through early intervention.  Among the factors
	taken into account by the IAR function in identifying probable losses and
	determining the adequacy of the ALLL are the nature, level and severity of
	classified assets, historical loss experience adjusted for current economic
	conditions, and composition of the loan and lease portfolio by type. 
	In addition, various regulatory agencies, as an integral part of their
	examination process, periodically review the Bank's ALLL.  Such
	agencies may require the Bank to make additional provisions for loan and
	lease losses based upon information available at the time of the review. 
	We will continue to monitor and modify our ALLL as economic conditions, loss
	experience, changes in asset quality, portfolio composition and other
	factors dictate.  23     The following table sets
	forth activity in our ALLL.   Three Months Ended
				Nine Months EndedDecember 31,
				December 31,2006
				2005
				2006
				2005(Dollars in thousands)Beginning
				balance
				$
				40,289
				
				$
				34,482
				
				$
				37,126
				
				$
				33,302Provision for
				loan losses
				
				1,900
				
				
				1,875
				
				
				4,920
				
				
				3,095Charge-offs
				
				(152
				)
				
				(2,553
				)
				
				(260
				)
				
				(2,721
				)Recoveries
				
				69
				
				
				35
				
				
				320
				
				
				163Ending balance
				$
				42,106
				
				$
				33,839
				
				$
				42,106
				
				$
				33,839
   The charge-offs of $260,000
	for the nine months ended December 31, 2006 included $186,000 related to
	commercial business loans and $74,000 related to consumer loans.  The
	charge-offs of $2.7 million for the nine months ended December 31, 2005
	include $2.1 million applicable to the 20 home development in Murrieta,
	California which was placed into receivership and moved to assets acquired
	through foreclosure in December 2005, prior to being sold at a $355,000 gain
	in December 2006.   Total liabilities were $4.21
	billion at December 31, 2006, an increase of $237.2 million from $3.98
	billion at March 31, 2006. Deposits increased $181.5 million to $3.24
	billion or 77 percent of total liabilities at December 31, 2006 compared to
	$3.06 billion or 77 percent of total liabilities at March 31, 2006. 
	Reflecting a widening rate differential between certificate accounts and
	interest-bearing liquid accounts arising from increases in the general level
	of interest rates, core deposits decreased $45.3 million while certificate
	accounts increased $226.8 million during the past nine months.  At
	December 31, 2006, non-interest bearing demand deposits were $284.3 million
	or 9 percent of total deposits compared to $313.6 million or 10 percent of
	total deposits at March 31, 2006.   Total stockholders' equity
	increased $37.0 million to $400.7 million at December 31, 2006 compared to
	$363.7 million at March 31, 2006. The increase in total stockholders' equity
	was comprised principally of increases due to net earnings of $43.1 million
	and $5.3 million in additional paid in capital attributable to the exercise
	of 75,281 stock options, the associated tax benefit and the amortization of
	shares under our share-based payment plan, partially offset by cash
	dividends of $12.5 million.   Liquidity and Capital
	Resources   The objective of liquidity
	management is to ensure that we have the continuing ability to meet our
	funding needs on a cost-effective basis.  Our most liquid assets are
	cash and short-term investments.  The levels of these assets are
	dependent on our operating, financing, lending and investing activities
	during any given period.   Our primary sources of funds
	are deposits, principal and interest payments on loans, leases and
	securities, FHLB advances and other borrowings, and to a lesser extent,
	proceeds from the sale of loans and securities.  While maturities and
	scheduled amortization of loans, leases and securities are predictable
	sources of funds, deposit flows and loan and security prepayments are
	greatly influenced by the general level of interest rates, economic
	conditions and competition.   The Office of Thrift
	Supervision has no statutory liquidity requirement, but rather a policy,
	consistent with that of the other Federal banking regulatory agencies, that
	liquidity be maintained at a level which provides for safe and sound banking
	practices and financial flexibility.  Our internal policy is to seek to
	maintain at approximately three percent the ratio of cash and readily
	marketable debt securities to total deposits, (our "defined liquidity
	ratio").  In determining the adequacy of liquidity and borrowing
	capacity, we also consider large customer deposit concentrations,
	particularly with respect to core deposits, which provide immediate
	withdrawal opportunity.  At December 31, 2006, our
	largest core deposit relationship was $53.0 million and our ten largest core
	deposit relationships aggregated $121.1 million.   At December 31, 2006, our
	defined average liquidity ratio was 3.82% and our defined average liquidity
	ratio for the nine months ended December 31, 2006 was 4.06%.  As an
	additional component of liquidity management, we seek to maintain sufficient
	mortgage loan and securities collateral at the FHLB to enable us to  24   immediately borrow an amount equal to at least five percent of the Bank's
	total assets.  At December 31, 2006, our immediate borrowing capacity
	from the FHLB was $481.8 million or eleven percent of the Bank's total
	assets. Additionally, we have the capability to borrow funds from the
	Federal Reserve Bank discount window.  As of December 31, 2006, our
	borrowing capacity at the Federal Reserve Bank was approximately $30.1
	million.  We also had $17.3 million of immediate borrowing capacity at
	December 31, 2006, under a $60.0 million line of credit with a commercial
	bank.   Our strategy is to manage
	liquidity by investing excess cash flows in higher yielding interest-earning
	assets, such as loans, leases and securities, or paying down FHLB advances
	and other borrowings, depending on market conditions.  Conversely, if
	the need for funds is not met through deposits and cash flows from loans,
	leases and securities, we initiate FHLB advances and other borrowings or, if
	necessary and of economic benefit, sell loans and/or securities.  Only
	when no other alternatives exist will we constrain loan and lease
	originations as a means of addressing a liquidity shortfall.  We have
	not found it necessary to constrain loan and lease originations due to
	liquidity considerations.   Our cash flows are comprised
	of three primary classifications: cash flows from operating activities,
	investing activities and financing activities.   Net cash provided by
	operating activities was $31.0 million for the nine months ended December
	31, 2006 compared to $29.3 million for the comparable period of the prior
	year.  The increase in net cash provided by operating activities is
	primarily due to an increase in net earnings between the nine months ended
	December 31, 2005 and 2006, partially offset by an increase in amortization
	of net deferred loan origination fees, an increase in income tax receivable
	and an increase in our accrued interest receivable during the nine month
	ended December 31, 2006.   Investing activities consist
	primarily of disbursements for loan and lease originations, purchases of
	loans, leases and securities, offset by principal collections on loans,
	leases and securities and to a lesser degree proceeds from the sale of
	securities. The levels of cash flows from investing activities are
	influenced by the general level of interest rates.   Net cash used in investing
	activities was $248.6 million and $102.4 million for the nine months ended
	December 31, 2006 and 2005, respectively.  The increase in net cash
	used in investing activities between the nine months ended December 31, 2006
	was attributable principally to a decrease in principal payments on loans
	and leases of $212.9 million and a net decrease in construction loans in
	process of $114.8 million, partially offset by a decrease of $115.8 million
	in loans and leases originations, a decrease of $36.1 million in the
	purchase of loans held for investment and an increase of $45.0 million
	related to proceeds   from the maturity of investment securities
	available-for-sale.   Cash flows provided by
	financing activities were $226.6 million for the nine months ended December
	31, 2006 compared to $106.1 million for the comparable period of 2005. 
	Financing activities consist primarily of net activity in deposit accounts
	and FHLB advances and other borrowings. Our net increases in deposits were
	$181.5 million and $149.9 million for the nine months ended December 31,
	2006 and 2005, respectively.  During the nine months ended December 31,
	2006, we increased our use of FHLB advances and other borrowings by $55.7
	million, net, compared to a decrease of $40.5 million, net for the
	comparable period of 2005.   At December 31, 2006, the
	Bank exceeded all of its regulatory capital requirements with tangible
	capital of $393.1 million, or 8.72% of adjusted total assets, which is above
	the required level of $67.6 million, or 1.5%; core capital of $393.1
	million, or 8.72% of adjusted total assets, which is above the required
	level of $180.3 million, or 4.0%; and total risk-based capital of $432.0
	million, or 11.26% of risk-weighted assets, which is above the required
	level of $306.8 million, or 8.0%.  Our internal policy is to maintain
	our total risk-based capital ratio at approximately 11.00%.  Based on
	our expectations of continued Four-Cs loan growth, we do not expect to be in
	a position to upstream cash from the Bank to the Company for the next
	several quarters.  However, the Company has sufficient cash flow
	available to it from DBS as well as from a $60.0 million revolving line of
	credit with a commercial bank, $17.3 million of which was available at
	December 31, 2006, to meet all of its funding requirements, including
	dividends paid to shareholders.  The Company also has the ability to
	issue additional junior subordinated debentures should the need for
	additional funding arise.     25   We currently have no material
	contractual obligations or commitments for capital expenditures. At December
	31, 2006, we had outstanding commitments to originate and purchase loans of
	$72.5 million and none, respectively, compared to $286.0 million and $10.4
	million, respectively, at December 31, 2005.  Standby letters of credit
	are conditional commitments we issue to guarantee the performance of a
	customer to a third party.  At December 31, 2006 and 2005, we had
	standby letters of credit of $31.0 million and $40.8 million, respectively. 
	We anticipate that we will have sufficient funds available to meet our
	commitments. Certificate accounts that are scheduled to mature in less than
	one year from December 31, 2006 totaled $1.45 billion.  We expect that
	we will retain a substantial portion of the funds from maturing CD accounts
	at maturity either in certificate or liquid accounts.  In response to
	the increases in short-term interest rates initiated by the Federal Reserve,
	as well as competitive market forces, rates on CDs have increased
	disproportionately to those of more liquid accounts.  As a result, we
	have seen a shift in customer behavior back towards CDs.  We anticipate
	that this shift in consumer preference will continue as and to the extent
	general market conditions create continued widening of the rate differential
	between CDs and liquid accounts.   Segment Reporting   Through our branch network,
	lending operations and investment advisory offices, we provide a broad range
	of financial services to individuals and companies located primarily in
	Southern California.  These services include demand, CDs, and savings
	deposits; real estate, business and consumer lending; cash management; trust
	services; investment advisory services and diversified financial services
	for homebuilders.  While our chief decision makers monitor the revenue
	streams of our various products and services, operations are managed and
	financial performance is evaluated on a company-wide basis. 
	Accordingly, we consider all of our operations are aggregated in one
	reportable operating segment.  Item 3. Quantitative
	and Qualitative Disclosures about Market Risk  We believe there have been no
	significant changes to our qualitative and quantitative disclosures of
	market risk (consisting primarily of interest rate risk) during the nine
	months ended December 31, 2006, from those which are disclosed in our Annual
	Report on Form 10-K for the fiscal year ended March 31, 2006.   Item 4. Controls and
	Procedures   Our management, including our
	Chief Executive Officer and Chief Financial Officer, has evaluated the
	effectiveness of our disclosure controls and procedures (as defined in
	Exchange Act Rules 13a-15(e) and 15d - 15(e)) as of the end of the period
	covered by this report.  Based upon that evaluation, the Chief
	Executive Officer and Chief Financial Officer concluded that our disclosure
	controls and procedures are effective, as of December 31, 2006, to ensure
	that information relating to us, which is required to be disclosed in the
	reports we file with the Securities and Exchange Commission under the
	Exchange Act, is (i) recorded, processed, summarized and reported as and
	when required and (ii) accumulated and communicated to our management,
	including our principal executive officer and principal financial officer,
	as appropriate to allow timely decisions regarding required disclosures.   There has been no change in
	our internal control over financial reporting identified in connection with
	the evaluation that occurred during our last fiscal quarter that has
	materially affected, or that is reasonably likely to materially affect, our
	internal control over financial reporting.  26              PART II -- OTHER
			INFORMATIONPFF
			BANCORP, INC. AND SUBSIDIARIESItem 1.
			Legal Proceedings.Other than ordinary
			routine litigation incidental to our business, neither we, nor any
			of our subsidiaries or any of their properties, are the subject of
			any material pending legal proceeding and, to the best of our
			knowledge, no such proceedings are contemplated by any governmental
			authorities. Item 1A.
			Risk Factors.There have been no
			material changes to the risk factors previously disclosed in Part I.
			Item 1A of the Company's Annual Report on Form 10-K for the year
			ended March 31, 2006.   Item 2.
			Unregistered Sales
			of Equity Securities and Use of Proceeds.We did not repurchase
			any shares of our common stock during the quarter ended December 31,
			2006.  At December 31, 2006, the maximum amount of shares that
			were available to be repurchased was 954,310 shares under a 1.0
			million share repurchase authorization adopted by our Board of
			Directors on October 26, 2005.   Item 3
			Defaults Upon Senior
			Securities.NoneItem 4.
			Submission of
			Matters to a Vote of Security Holders.None  Item 5.
			Other Information.NoneItem 6.
			Exhibits.31.1
			Rule
			13a-14(a)/15d-14(a) Certifications32.1
			Section 1350
			Certifications


27

---



PFF
			BANCORP, INC. AND SUBSIDIARIES
			SIGNATURESPursuant to the
			requirements of the Securities Exchange Act of 1934, the Registrant
			has duly caused this report to be signed on its behalf by the
			undersigned, thereunto duly authorized.PFF BANCORP, INC.DATED: February 9,
			2007
			BY: /s/ KEVIN
			MCCARTHYKevin McCarthy
			President, Chief Executive Officer and DirectorDATED: February 9,
			2007
			BY: /s/ GREGORY C.
			TALBOTTGregory C. Talbott
			Senior Executive Vice
			President,
			Chief Operating
			Officer/Chief Financial Officer
			and Treasurer




28