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| [X]  | ANNUAL REPORT      PURSUANT TO SECTION 13 OR 15(d)                           |
|-----------|-----------------------------------------------------------------------------------|
|      | OF THE SECURITIES      EXCHANGE ACT OF 1934                                  |
|      | For the Fiscal Year Ended      December 31, 2008                             |
|      | OR                                                                           |
| [X]  | TRANSITION REPORT      PURSUANT TO SECTION 13 OR 15(d)                       |
|      | OF THE SECURITIES      EXCHANGE ACT OF 1934                                  |
|      |                                                                              |
|      | For the Transition      Period from  _____ to  _____________  |

| Delaware                                       | 95-4087449                                   |
|-----------------------------------------------------|---------------------------------------------------|
| (State or other      jurisdiction of           | (I. R. S. Employer      Identification No.)  |
| incorporation or      organization)            |                                              |
|                                                |                                              |
| 12555 W. Jefferson      Blvd                   |                                              |
| Los Angeles,      California                   | 90066                                        |
| (Address of      principal executive offices)  | (Zip      Code)                              |

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|           |   |              |   |                                                                                                                         |   | Page  |
|----------------|--------|-------------------|--------|------------------------------------------------------------------------------------------------------------------------------|--------|------------|
| Part I    |   | Item    1.   |   | Business                                                                                                                |   | 4     |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    1A.  |   | Risk      Factors                                                                                                       |   | 29    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    1B.  |   | Unresolved Staff      Comments                                                                                          |   | 37    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    2.   |   | Properties                                                                                                              |   | 37    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    3.   |   | Legal      Proceedings                                                                                                  |   | 37    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    4.   |   | Submission of      Matters to a Vote of Security Holders                                                                |   | 37    |
|           |   |              |   |                                                                                                                         |   |       |
| Part II   |   | Item    5.   |   | Market      for Registrant’s Common Equity, Related Stockholder Matters and      Issuer Purchases of Equity Securities |   | 38    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    6.   |   | Selected Financial      Data                                                                                            |   | 40    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    7.   |   | Management's      Discussion and Analysis of Financial Condition and Results of Operations                                   |   | 41    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    7A.  |   | Quantitative      and Qualitative Disclosure About Market Risk                                                          |   | 59    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    8.   |   | Financial      Statements and Supplementary Data                                                                        |   | 62    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   |              |   | Notes to      Consolidated Financial Statements                                                                         |   | 66    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   |              |   | Report of      Independent Registered Public Accounting Firm                                                            |   | 95    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    9.   |   | Changes in and      Disagreements With Accountants on Accounting and Financial Disclosure                                    |   | 96    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    9A.  |   | Controls and      Procedures                                                                                            |   | 96    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    9B.  |   | Other      Information                                                                                                  |   | 96    |
|           |   |              |   |                                                                                                                         |   |       |
| Part III  |   | Item    10.  |   | Directors, Executive      Officers and Corporate Governance                                                             |   | 98    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    11.  |   | Executive      Compensation                                                                                             |   | 98    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    12.  |   | Security Ownership      of Certain Beneficial Owners and Management      and Related Stockholder Matters                |   | 98    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    13.  |   | Certain      Relationships and Related Transactions, and Director      Independence                                     |   | 98    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   | Item    14.  |   | Principal Accountant      Fees and Services                                                                             |   | 98    |
|           |   |              |   |                                                                                                                         |   |       |
| Part IV   |   | Item    15.  |   | Exhibits and      Financial Statement Schedules                                                                         |   | 99    |
|           |   |              |   |                                                                                                                         |   |       |
|           |   |              |   | Signatures                                                                                                              |   | 100   |

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|                                                            | Loan      Maturity Analysis |      |
|-----------------------------------------------------------------|-----------------------------|-----------|
|                                                            | TotalBalance                |      |   | 1      Yearor      Less |   |   | >      1 Yearto      5 Years |   |   | >      5-10Years |   |   | >      10-20 Years |   |   | >      20-30 Years |   |   | >      30 Years |   |
|                                                            | (Dollars      in thousands) |      |
| Interest      rate sensitive loans:                             |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AMLs                                                            | $                           | 4,291,234 |   |   | $ | 453,617 |   |   | $ | 309,220 |   |   | $ | 489,012 |   |   | $ | 1,134,552 |   |   | $ | 1,245,934 |   |   | $ | 658,899 |   |
| Hybrid      Fixed/Adjustable     loans |                        | 2,154,514 |   |   |   | 14,876 |   |   |   | 36,692 |   |   |   | 120,955 |   |   |   | 595,698 |   |   |   | 1,024,695 |   |   |   | 361,598 |   |
| Fixed      rate loans                                           |                        | 20,063    |   |   |   | 4,177 |   |   |   | 3,232 |   |   |   | 5,557 |   |   |   | 4,922 |   |   |   | 2,175 |   |   |   | — |   |
| Commercial      business loans                                  |                        | 79,378    |   |   |   | 20,621 |   |   |   | 58,757 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Land      loans                                                 |                        | 4,201     |   |   |   | 1,014 |   |   |   | 3,187 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Consumer      and other loans                                   |                        | 35,015    |   |   |   | 8,875 |   |   |   | 26,140 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total                                                           | $                           | 6,584,405 |   |   | $ | 503,180 |   |   | $ | 437,228 |   |   | $ | 615,524 |   |   | $ | 1,735,172 |   |   | $ | 2,272,804 |   |   | $ | 1,020,497 |   |
|                                                            |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                           |   | 2008                        |    |   | %      of Total |   |    | 2007   |   |   | %      of Total |   |   | 2006   |    |   | %      of Total |   |    | 2005   |   |   | %      of Total |   |   | 2004   |    |   | %      of Total |   |
|--------------------------------|--------|-----------------------------|---------|--------|-----------------|--------|---------|--------|--------|--------|-----------------|--------|--------|--------|---------|--------|-----------------|--------|---------|--------|--------|--------|-----------------|--------|--------|--------|---------|--------|-----------------|--------|
|                           |   | (Dollars      in thousands) |    |
| Non-accrual      loans:        |   |                        |    |   |            |   |    |   |   |   |            |   |   |   |    |   |            |   |    |   |   |   |            |   |   |   |    |   |            |   |
|   Single      family |   | $                           | 403,777 |   |            |   | 100     | %      |   | $      | 179,679         |   |   |   | 99.6    | %      |            | $      | 18,474  |   |   |   | 99.9            | %      |   | $      | 3,569   |   |            |   | 71.9 | % |   | $ | 4,590 |   |   |   | 92.1 | % |
|   Multi-family       |   |                        | 41      |   |            |   | — |   |   |   | —         |   |   |   | — |   |            |   | — |   |   |   | —         |   |   |   | — |   |            |   | — |   |   |   | 391 |   |   |   | 7.8 |   |
|   Commercial         |   |                        | — |   |            |   | — |   |   |   | 720             |   |   |   | 0.4     |   |            |   | 12      |   |   |   | 0.1             |   |   |   | 1,364   |   |            |   | 27.5 |   |   |   | — |   |   |   | — |   |
|   Consumer           |   |                        | — |   |            |   | — |   |   |   | 14              |   |   |   | — |   |            |   | 11      |   |   |   | —         |   |   |   | 13      |   |            |   | 0.2 |   |   |   | 4 |   |   |   | 0.1 |   |
|   Business           |   |                        | — |   |            |   | — |   |   |   | —         |   |   |   | — |   |            |   | — |   |   |   | —         |   |   |   | 20      |   |            |   | 0.4 |   |   |   | — |   |   |   | — |   |
| Total      non-accrual loans   |   | $                           | 403,818 |   |            |   | 100     | %      |   | $      | 180,413         |   |   |   | 100.0   | %      |            | $      | 18,497  |   |   |   | 100.0           | %      |   | $      | 4,966   |   |            |   | 100.0 | % |   | $ | 4,985 |   |   |   | 100.0 | % |

----

|                                   |   | At December 31,  |
|----------------------------------------|--------|-----------------------|
|                                   |   |                  |  2008 |   |   |   |  2007 |   |   |   |  2006 |
|                                   |   |                  |   |   |   |   | (In      thousands) |   |   |   |   |
| Troubled      debt restructuring loans |   | $                     | 572,307 |   |   | $ | 1,799 |   |   | $ | — |
| Non-accrual      loans                 |   |                  | 152,227 |   |   |   | 20,112 |   |   |   |  2,544 |
| Other      impaired loans              |   |                  | 1,257 |   |   |   |   |   |   |   |  2,894 |
|                                   |   | $                     | 725,791 |   |   | $ | 23,536 |   |   | $ | 5,438 |

| Balance      at December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                  |   | $      | 496       |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|---------|
|           Net charge-offs                                                                                                                                                                                                                                                                                                                                                                      |   |   | —   |    |
| Balance      at December 31, 2004                                                                                                                                                                                                                                                                                                                                                                                       |   |   |  496 |    |
|           Net charge-offs                                                                                                                                                                                                                                                                                                                                                                           |   |   | (1,596    | )       |
|      Provision      for loan      losses                                                          |   |   | 1,100     |    |
| Balance      at December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                       |   |   | —   |    |
|           Net charge-offs                                                                                                                                                                                                                                                                                                                                                                      |   |   | —   |    |
| Balance      at December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                  |   |   | —   |    |
|           Provision for loan losses                                                                                                                                                                                                                                                                                                                                                            |   |   | 555       |    |
| Balance      at December 31, 2007                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 555       |    |
|           Provision for loan losses                                                                                                                                                                                                                                                                                                                                                            |   |   | 62,256    |    |
| Yield      adjustment on troubled      debt restructurings (1)                                                                                                                                                                                                                                                                                                                                 |   |   | (4,898    | )  |
|           Net charge-offs                                                                                                                                                                                                                                                                                                                                                                           |   |   | (11,178   | )  |
| Balance      at December 31, 2008                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 46,735    |    |

----

|                                                                          |                | December      31,            |    |
|-------------------------------------------------------------------------------|---------------------|------------------------------|---------|
|                                                                          |                | 2008                         |    |   | 2007 |   |   | 2006 |   |
|                                                                          | (In      thousands) |
|   Impaired      loans without a valuation allowance                 |                | $                            | 18,050  |   |   |   | 16,606 |   |   | $ | 5,438 |   |
|   Impaired      loans with a valuation allowance               |                | $                            | 754,476 |   |   |   | 7,485 |   |   | $ | — |   |
|   Valuation      allowances related to impaired loans               |                | $                            | (46,735 | ) |   |   | (555 | ) |   | $ | — |   |
|                                                                          |                |                         |    |   |   |   |   |   |   |   |   |   |
|   Non-accrual      loans                                            |                | $                            | 403,818 |   |   |   | 180,413 |   |   | $ | 18,497 |   |
|                                                                          |                |                         |    |   |   |   |   |   |   |   |   |   |
|                                                                          |                |                         |    |
|                                                                          |                | Year      Ended December 31, |    |
|                                                                          |                | 2008                         |    |   | 2007 |   |   | 2006 |   |
|                                                                          | (In      thousands) |
|   Average      investment in impaired loans                         |                | $                            | 363,328 |   |   | $ | 13,278 |   |   | $ | 6,767 |   |
|   Total      interest income recognized on impaired loans           |                | $                            | 16,203  |   |   | $ | 549 |   |   | $ | 689 |   |
|   Interest      income recognized on a cash basis on impaired loans |                | $                            | 12,773  |   |   | $ | 508 |   |   | $ | 562 |   |

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|                                            |   | Year      Ended December 31, |     |
|-------------------------------------------------|--------|------------------------------|----------|
|                                            |   | 2008                         |     |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                            |   | (In      thousands)          |     |
| Beginning      general loan valuation allowance |   | $                            | 127,503  |   |   | $ | 109,768 |   |   | $ | 97,558 |   |   | $ | 78,675 |   |   | $ | 75,238 |   |
| Provision      for loan losses                  |   |                         | 508,544  |   |   |   | 31,845 |   |   |   | 12,400 |   |   |   | 18,650 |   |   |   | 3,000 |   |
| Charge-offs,      net of recoveries:            |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                              |   |                         | (353,203 | ) |   |   | (13,977 | ) |   |   | (35 | ) |   |   | 11 |   |   |   | 120 |   |
| Multi-family                                    |   |                         | —  |   |   |   | — |   |   |   | 2 |   |   |   | 189 |   |   |   | 237 |   |
| Commercial                                      |   |                         | (2,037   | ) |   |   | (52 | ) |   |   | (53 | ) |   |   | 85 |   |   |   | (7 | ) |
| Non-real      estate                            |   |                         | (622     | ) |   |   | (81 | ) |   |   | (104 | ) |   |   | (52 | ) |   |   | 87 |   |
| Total      net (charge-offs) recoveries         |   |                         | (355,862 | ) |   |   | (14,110 | ) |   |   | (190 | ) |   |   | 233 |   |   |   | 437 |   |
| Ending      general loan valuation allowance    |   | $                            | 280,185  |   |   | $ | 127,503 |   |   | $ | 109,768 |   |   | $ | 97,558 |   |   | $ | 78,675 |   |
|                                            |   |                         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                             |   | December      31,           |    |
|----------------------------------|--------|-----------------------------|---------|
|                             |   | 2008                        |    |   | %      ofTotal |   |   | 2007 |   |   | %      ofTotal |   |   | 2006 |   |   | %      ofTotal |   |   | 2005 |   |   | %      ofTotal |   |   | 2004 |   |   | %      ofTotal |   |
|                             |   | (Dollars      in thousands) |    |
| Real      estate loans:          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Single      family   |   | $                           | 265,331 |   |   |   | 94.7 | % |   | $ | 116,191 |   |   |   | 91.1 | % |   | $ | 83,934 |   |   |   | 76.5 | % |   | $ | 68,329 |   |   |   | 70.0 | % |   | $ | 48,271 |   |   |   | 61.4 | % |
|   Multi-family         |   |                        | 8,208   |   |   |   | 2.9 |   |   |   | 6,352 |   |   |   | 5.0 |   |   |   | 17,686 |   |   |   | 16.1 |   |   |   | 20,486 |   |   |   | 21.0 |   |   |   | 19,570 |   |   |   | 24.9 |   |
|   Commercial           |   |                        | 1,885   |   |   |   | 0.7 |   |   |   | 1,760 |   |   |   | 1.4 |   |   |   | 2,395 |   |   |   | 2.2 |   |   |   | 3,221 |   |   |   | 3.3 |   |   |   | 5,053 |   |   |   | 6.4 |   |
|   Land                 |   |                        | 86      |   |   |   | 0.0 |   |   |   | 85 |   |   |   | 0.1 |   |   |   | — |   |   |   | — |   |   |   | 148 |   |   |   | 0.2 |   |   |   | 508 |   |   |   | 0.6 |   |
| Total      real estate loans     |   |                        | 275,510 |   |   |   | 98.3 | % |   |   | 124,388 |   |   |   | 97.6 |   |   |   | 104,015 |   |   |   | 94.8 |   |   |   | 92,184 |   |   |   | 94.5 |   |   |   | 73,402 |   |   |   | 93.3 |   |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-real      estate loans:      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Commercial           |   |                        | 4,010   |   |   |   | 1.4 |   |   |   | 2,439 |   |   |   | 1.9 |   |   |   | 3,626 |   |   |   | 3.3 |   |   |   | 2,855 |   |   |   | 2.9 |   |   |   | 2,618 |   |   |   | 3.3 |   |
|   Consumer             |   |                        | 694     |   |   |   | 0.3 |   |   |   | 674 |   |   |   | 0.5 |   |   |   | 2,127 |   |   |   | 1.9 |   |   |   | 2,519 |   |   |   | 2.6 |   |   |   | 2,655 |   |   |   | 3.4 |   |
|   Other                |   |                        | (29     | ) |   |   | — |   |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total      non-real estate loans |   |                        | 4,675   |   |   |   | 1.7 | % |   |   | 3,115 |   |   |   | 2.4 |   |   |   | 5,753 |   |   |   | 5.2 |   |   |   | 5,374 |   |   |   | 5.5 |   |   |   | 5,273 |   |   |   | 6.7 |   |
| Total                            |   | $                           | 280,185 |   |   |   | 100.0 | % |   | $ | 127,503 |   |   |   | 100.0 | % |   | $ | 109,768 |   |   |   | 100.0 | % |   | $ | 97,558 |   |   |   | 100.0 | % |   | $ | 78,675 |   |   |   | 100.0 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                      |   | Year      Ended December 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                      |   | 2008                         |     |   | 2007 |   |   | 2006 |   |
| Beginning      balance                                                                                                                                                                                                                                                                                                                                                               |   | $                       | 21,090   |   |   | $ |  1,094 |   |   | $ | — |   |
|  Acquisitions                                                                                                                                                                                                                                                                                                                                                                        |   |                         | 338,686  |   |   |   | 45,685 |   |   |   | 1,523 |   |
|           Write-downs                                                                                                                                                                                                                                                                                                                                                 |   |                         | (23,753  | ) |   |   | (4,241 | ) |   |   | (59 | ) |
|           Sales                                                          |   |                         | (218,359 | ) |   |   | (21,448 | ) |   |   | (370 | ) |
| Ending      balance                                                                                                                                                                                                  |   | $                            | 117,664  |   |   | $ | 21,090 |   |   | $ | 1,094 |   |

|                                                                     |   | At      December 31,        |    |
|--------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                     |   | 2008                        |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                                     |   | (Dollars      in thousands) |    |
| Collateralized      mortgage obligations (“CMO’s”)     |   | $                           | 318,454 |   |   | $ | 313,274 |   |   | $ | 311,467 |   |   | $ | 293,453 |   |   | $ | 249,781 |   |
| Unrealized      gain on securities available-for-sale                    |   |                        | 4,594   |   |   |   | 3,514 |   |   |   | 383 |   |   |   | 564 |   |   |   | 805 |   |
|                                                                     |   | $                           | 323,048 |   |   | $ | 316,788 |   |   | $ | 311,850 |   |   | $ | 294,017 |   |   | $ | 250,586 |   |
| Weighted      average yield on interest-earning investments end ofperiod |   |                        | 5.48    | % |   |   | 5.56 | % |   |   | 5.51 | % |   |   | 4.15 | % |   |   | 2.82 | % |

----

|                                                             |   | December      31,   |   |
|------------------------------------------------------------------|--------|---------------------|--------|
|                                                             |   | 2008                |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                             |   | (In      thousands) |   |
| FHLMC      and FNMA mortgage-backed securities (at fair value):  |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Secured      by single family dwellings        |   | $                   | 38,054 |   |   | $ | 43,411 |   |   | $ | 53,290 |   |   | $ | 69,581 |   |   | $ | 91,308 |   |
|    Secured      by multi-family dwellings         |   |                | 2,450  |   |   |   | 3,024 |   |   |   | 3,907 |   |   |   | 4,673 |   |   |   | 5,751 |   |
| Total      mortgage-backed securities                            |   | $                   | 40,504 |   |   | $ | 46,435 |   |   | $ | 57,197 |   |   | $ | 74,254 |   |   | $ | 97,059 |   |
| Weighted      average yield on MBS at the end of the period |   |                | 3.95   | % |   |   | 5.61 | % |   |   | 5.54 | % |   |   | 4.13 | % |   |   | 3.13 | % |
|                                                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                        | During      the Year Ended December 31, |      |
|---------------------------------------------|-----------------------------------------|-----------|
|                                        | 2008                                    |      |   |   | 2007 |   |   |   | 2006 |   |
|                                        | AverageBalance                          |      | AverageRate |   |   |   | AverageBalance |   | AverageRate |   |   |   | AverageBalance |   | AverageRate |   |
|                                        | (Dollars      in thousands)             |      |
| Passbook      accounts                      | $                                       | 71,915    |   | 1.22 | % |   |   | $ | 86,185 |   | 1.44 | % |   |   | $ | 107,296 |   | 1.26 | % |
| Money      market deposit accounts          |                                    | 937,703   |   | 3.03 |   |   |   |   | 918,367 |   | 4.17 |   |   |   |   | 884,007 |   |  3.79 |   |
| Interest-bearing      checking accounts     |                                    | 159,021   |   | 0.43 |   |   |   |   | 167,300 |   | 0.37 |   |   |   |   | 196,818 |   | 0.32 |   |
| Non-interest      bearing checking accounts |                                    | 376,627   |   | — |   |   |   |   | 405,369 |   | — |   |   |   |   | 387,091 |   | — |   |
| Fixed-term      certificate accounts        |                                    | 2,675,469 |   | 4.22 |   |   |   |   | 3,268,331 |   | 5.27 |   |   |   |   | 3,850,539 |   | 4.82 |   |
|                                        | $                                       | 4,220,735 |   | 3.39 | % |   |   | $ | 4,845,552 |   | 4.38 | % |   |   | $ | 5,425,751 |   | 4.07 | % |

----

|                                                                                           | At      December 31,        |      |
|------------------------------------------------------------------------------------------------|-----------------------------|-----------|
|                                                                                           | 2008                        |      |   |   | 2007 |   |   |   | 2006 |   |
|                                                                                           | Amount                      |      | % |   |   |   | Amount |   | % |   |   |   | Amount |   | % |   |
|                                                                                           | (Dollars      in thousands) |      |
| Variable      rate non-term accounts:                                                          |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money      market deposit accounts (weighted average rate of 2.39%, 4.05% and      4.12%       | $                           | 864,281   |   | 18 | % |   |   | $ | 952,933 |   | 23 | % |   |   | $ | 887,933 |   | 15 | % |
| Interest-bearing      checking accounts (weighted average rate of 0.33%, 0.34% and      0.34%) |                        | 148,504   |   | 3 |   |   |   |   | 157,775 |   | 4 |   |   |   |   | 172,297 |   | 3 |   |
| Passbook      accounts (weighted average rate of 1.05%, 1.37% and 1.31%)                       |                        | 64,909    |   | 1 |   |   |   |   | 75,153 |   | 2 |   |   |   |   | 93,155 |   | 2 |   |
| Non-interest      bearing checking accounts                                                    |                        | 328,969   |   | 7 |   |   |   |   | 353,298 |   | 8 |   |   |   |   | 361,973 |   | 6 |   |
|                                                                                           |                        | 1,406,663 |   | 29 |   |   |   |   | 1,539,159 |   | 37 |   |   |   |   | 1,515,358 |   | 26 |   |
| Fixed-rate      term certificate accounts:                                                     |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Under      six-month term (weighted average rate of 2.66%, 4.99% and      5.29%)               |                        | 280,371   |   | 6 |   |   |   |   | 661,055 |   | 16 |   |   |   |   | 659,843 |   | 11 |   |
| Six-month      term (weighted average rate of 3.11%, 4.88% and 5.11%)                          |                        | 796,222   |   | 16 |   |   |   |   | 388,617 |   | 9 |   |   |   |   |  724,280 |   | 12 |   |
| Nine-month      term (weighted average rate of 3.62%, 5.10% and 5.16%)                         |                        | 654,663   |   | 13 |   |   |   |   | 454,130 |   | 11 |   |   |   |   | 623,038 |   | 11 |   |
| One      year to 18-month term (weighted average rate of 3.83%, 5.02% and      5.05%)          |                        | 1,662,647 |   | 34 |   |   |   |   | 1,057,739 |   | 26 |   |   |   |   | 2,289,550 |   | 39 |   |
| Two      year to 30-month term (weighted average rate of 4.24%, 4.73% and      4.24%)          |                        | 79,141    |   | 2 |   |   |   |   | 15,423 |   | 0 |   |   |   |   | 19,904 |   | 0 |   |
| Over      30-month term (weighted average rate of 4.17%, 4.09% and      3.80%)                 |                        | 27,649    |   | 0 |   |   |   |   | 40,569 |   | 1 |   |   |   |   | 57,908 |   | 1 |   |
|                                                                                           |                        | 3,500,693 |   | 71 |   |   |   |   | 2,617,533 |   | 63 |   |   |   |   | 4,374,523 |   | 74 |   |
| Total      deposits (weighted average rate of 2.96%, 4.11% and 4.44%)                          | $                           | 4,907,356 |   | 100 | % |   |   | $ | 4,156,692 |   | 100 | % |   |   | $ | 5,889,881 |   | 100 | % |

| Maturing      in:                                                                                                                                                                                                                                                                                                                                                                |   |   |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|           1 month or      less                                                      |   | $      | 91,048  |   |
|  Over      1 month to 3 months                                                                                                                                                                                                                                                                                                                                              |   |   | 95,190  |   |
|           Over 3 months to 6      months                                                                                                                                                     |   |   | 300,172 |   |
|           Over 6 months to 12      months                                                                                                                                                                                                      |   |   | 430,527 |   |
|           Over 12      months                                                                                          |   |   | 12,101  |   |
|        Total                                                                             |   | $      | 929,038 |   |

----

----

|                                                |   |     End      of Period |      |   |           | MaximumMonth-End      Outstanding BalanceDuring      the Period |   |   |   |     Average |   |
|-----------------------------------------------------|--------|--------------------------------------------|-----------|--------|----------------|-----------------------------------------------------------------|--------|--------|--------|---------------------------------|--------|
|                                                |   | Outstanding                                |      | Rate   |           |                                                            |   |   |   |                            |   | Outstanding |   | Rate |   |
|                                                |   | (Dollars      in thousands)                |      |
| 2008                                                |   |                                       |      |   |           |                                                            |   |   |   |                            |   |   |   |   |   |
| Short-term      FHLB advances                       |   | $                                          | 2,060,000 |   | 2.55           | %                                                               |   |   | $      | 2,313,000                       |   |   |   | $ | 2,104,210 |   | 3.59 | % |
| Short-term      FRB advances                        |   |                                       | 25,000    |   | 0.60           | %                                                               |   |   |   | 25,000                          |   |   |   |   | 6,250 |   | 0.70 | % |
| Securities      sold under agreements to repurchase |   | $                                          | —   |   |   — |                                                            |   |   | $      | 370,000                         |   |   |   | $ | 195,000 |   | 2.95 | % |
|                                                |   |                                       |      |   |           |                                                            |   |   |   |                            |   |   |   |   |   |   |   |   |
| 2007                                                |   |                                       |      |   |           |                                                            |   |   |   |                            |   |   |   |   |   |   |   |   |
| Short-term      FHLB advances                       |   | $                                          | 1,959,000 |   | 4.69           | %                                                               |   |   | $      | 1,959,000                       |   |   |   | $ | 1,452,497 |   | 5.24 | % |
| Securities      sold under agreements to repurchase |   | $                                          | 120,000   |   | 5.25           | %                                                               |   |   | $      | 947,448                         |   |   |   | $ | 692,014 |   | 5.35 | % |
|                                                |   |                                       |      |   |           |                                                            |   |   |   |                            |   |   |   |   |   |   |   |   |
| 2006                                                |   |                                       |      |   |           |                                                            |   |   |   |                            |   |   |   |   |   |   |   |   |
| Short-term      FHLB advances                       |   | $                                          | 1,455,000 |   | 5.31           | %                                                               |   |   | $      | 4,087,000                       |   |   |   | $ | 2,755,833 |   | 4.96 | % |
| Securities      sold under agreements to repurchase |   | $                                          | 978,448   |   | 5.37           | %                                                               |   |   | $      | 1,163,684                       |   |   |   | $ | 1,006,344 |   | 4.98 | % |

----

----

----

----

----

----

----

----

----

|   | · | the      liquidity of our common stock; |
|--------|--------|-----------------------------------------|

|   | · | the      market price of our common stock; |
|--------|--------|--------------------------------------------|

|   | · | the      number of institutional and other investors that will consider investing      in our common stock; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | the      availability of information concerning the trading prices and volumes of      our common stock; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | the      number of broker-dealers willing to execute trades in shares of our common      stock; and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | our      ability to obtain financing for the continuation of      operations. |
|--------|--------|-------------------------------------------------------------------------------|

----

----

----

| · | Inability      of our borrowers to make timely repayments of their loans, or decreases in      value of real estate collateral securing the payment of such loans      resulting in significant credit losses, which could result in increased      delinquencies, foreclosures and customer bankruptcies, any of which could      have a material adverse effect on our operating  results. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Increased      regulation of our industry, including heightened legal standards and      regulatory requirements or expectations imposed in connection with      recently enacted statutes, such as EESA and the American Recovery and      Reinvestment Act (“ARRA”). Compliance with such regulation will likely      increase our costs and may limit our ability to pursue business      opportunities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Further      disruptions in the capital markets or other events, including actions by      rating agencies and deteriorating investor expectations, may result in an      inability to borrow on favorable terms or at all from other financial      institutions. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Further      increases in FDIC insurance premiums due to the market developments which      have significantly depleted the Deposit Insurance Fund and reduced the      ratio of reserves to insureddeposits. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | announcements      of developments related to ourbusiness; |
|--------|------------------------------------------------------------|

| · | fluctuations      in our results of operations; |
|--------|-------------------------------------------------|

| · | sales      of substantial amounts of our securities into the    marketplace; |
|--------|------------------------------------------------------------------------------|

| · | general      conditions in our markets or the worldwide  economy; |
|--------|-------------------------------------------------------------------|

| · | a      shortfall in revenues or earnings compared to securities analysts’      expectations; |
|--------|----------------------------------------------------------------------------------------------------|

| · | changes      in analysts’ recommendations or  projections; and |
|--------|---------------------------------------------------------------------------|

| · | disclosure      of adverse regulatory developments. |
|--------|-----------------------------------------------------|

----

----

----

----

|   |   | PRICE      RANGE OF COMMON STOCK |   |
|--------|--------|----------------------------------|--------|
|   |   | First      Quarter               |   |   | Second      Quarter |   |   | Third      Quarter |   |   | Fourth      Quarter |   |
|   |   | High                             |   |   | Low |   |   | High |   |   | Low |   |   | High |   |   | Low |   |   | High |   |   | Low |   |
| 2008   |   | $                                | 42.18  |   |   | $ | 27.15 |   |   | $ | 28.12 |   |   | $ | 8.04 |   |   | $ | 20.50 |   |   | $ | 3.99 |   |   | $ | 11.50 |   |   | $ | 1.50 |   |
| 2007   |   |                             | 69.23  |   |   |   | 52.04 |   |   |   | 66.21 |   |   |   | 55.55 |   |   |   | 59.32 |   |   |   | 40.41 |   |   |   | 55.77 |   |   |   | 30.18 |   |

----

|                     |   | 12/31/2003 |   |   | 12/31/2004 |   |   | 12/31/2005 |   |   | 12/31/2006 |   |   | 12/31/2007 |   |   | 12/31/2008 |   |
|-------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| FirstFed      Financial Corp. |   |       | 100.00 |   |       |   | 119.24 |       |   |   | 125.33     |   |   |       | 153.95 |   |       |   | 82.34 |   |   |   | 4.02 |   |
| Savings      & Loan Index |   |       | 100.00 |   |       |   | 110.75 |       |   |   | 113.14     |   |   |       | 129.30 |   |       |   | 72.71 |   |   |   | 59.56 |   |
| NYSE      Market Index        |   |       | 100.00 |   |       |   | 112.92 |       |   |   | 122.25     |   |   |       | 143.23 |   |       |   | 150.88 |   |   |   | 94.76 |   |

----

|                                                                                                   |   | 2008                                               |      |   | 2007   |   |      | 2006   |   |   | 2005      |   |   | 2004   |         |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|--------------|
|                                                                                                   |   | (Dollars      in thousands, except per share data) |      |
| For      the Year Ended December 31:                                                                   |   |                                               |      |   |   |   |      |   |   |   |      |   |   |   |         |
|   Interest      income                                                                       |   | $                                                  | 412,831   |   |   | $      | 597,713   |   |   | $      | 712,622   |   |   | $      | 491,106      |   |   | $ | 271,427 |   |
|   Interest      expense                                                                      |   |                                               | 233,445   |   |   |   | 333,604   |   |   |   | 415,050   |   |   |   | 249,190      |   |   |   | 101,190 |   |
|   Net      interest income                                                                   |   |                                               | 179,386   |   |   |   | 264,109   |   |   |   | 297,572   |   |   |   | 241,916      |   |   |   | 170,237 |   |
|   Provision      for loan losses                                                             |   |                                               | 570,800   |   |   |   | 32,400    |   |   |   | 12,400    |   |   |   | 19,750       |   |   |   | 3,000 |   |
|   Non-interest      income                                                                   |   |                                               | 26,218    |   |   |   | 13,064    |   |   |   | 16,515    |   |   |   | 9,766        |   |   |   | 12,591 |   |
|   Non-interest      expense                                                                  |   |                                               | 98,570    |   |   |   | 83,456    |   |   |   | 77,727    |   |   |   | 73,720       |   |   |   | 66,561 |   |
|   (Loss)      income before income taxes                                                     |   |                                               | (463,766  | )      |   |   | 161,317   |   |   |   | 223,960   |   |   |   | 158,451      |   |   |   | 113,456 |   |
|   Income      taxes                                                                          |   |                                               | (62,114   | )      |   |   | 68,443    |   |   |   | 94,870    |   |   |   | 66,753       |   |   |   | 47,614 |   |
|   Net      (loss) income                                                                     |   |                                               | (401,652  | )      |   |   | 92,874    |   |   |   | 129,090   |   |   |   | 91,698       |   |   |   | 65,842 |   |
| Basic      (loss) earnings per share                                                                   |   |                                               | (29.39    | )      |   |   | 6.07      |   |   |   | 7.79      |   |   |   | 5.55         |   |   |   | 3.95 |   |
| Dilutive      (loss) earnings per share                                                                |   |                                               | (29.39    | )      |   |   | 6.00      |   |   |   | 7.65      |   |   |   | 5.43         |   |   |   | 3.85 |   |
| End      of Year:                                                                                      |   |                                               |      |   |   |   |      |   |   |   |      |   |   |   |         |   |   |   |   |   |
|   Loans      receivable, net (1)                                                             |   |                                               | 6,254,686 |   |   |   | 6,518,214 |   |   |   | 8,517,452 |   |   |   | 9,681,133    |   |   |   | 6,837,945 |   |
|   Mortgage-backed      securities, at fair value                                             |   |                                               | 40,504    |   |   |   | 46,435    |   |   |   | 57,197    |   |   |   |  74,254 |   |   |   | 97,059 |   |
|   Investment      securities, at fair value                                                  |   |                                               | 323,048   |   |   |   | 316,788   |   |   |   | 311,850   |   |   |   | 294,017      |   |   |   | 250,586 |   |
|   Total      assets                                                                          |   |                                               | 7,450,586 |   |   |   | 7,222,981 |   |   |   | 9,295,587 |   |   |   | 10,456,949   |   |   |   | 7,468,983 |   |
|   Deposits                                                                                   |   |                                               | 4,907,356 |   |   |   | 4,156,692 |   |   |   | 5,889,881 |   |   |   | 4,371,657    |   |   |   | 3,761,165 |   |
|   Borrowings                                                                                 |   |                                               | 2,235,000 |   |   |   | 2,354,000 |   |   |   | 2,568,448 |   |   |   | 5,419,184    |   |   |   | 3,191,600 |   |
|   Liabilities                                                                                |   |                                               | 7,191,844 |   |   |   | 6,568,482 |   |   |   | 8,590,872 |   |   |   | 9,886,110    |   |   |   | 6,991,509 |   |
|   Stockholders'      equity                                                                  |   |                                               | 258,742   |   |   |   | 654,499   |   |   |   | 704,715   |   |   |   | 570,839      |   |   |   | 477,474 |   |
|   Book      value per share                                                                  |   |                                               | 18.91     |   |   |   | 47.97     |   |   |   | 42.33     |   |   |   | 34.46        |   |   |   | 28.94 |   |
|   Tangible      book value per share                                                         |   |                                               | 18.91     |   |   |   | 47.94     |   |   |   | 42.25     |   |   |   | 34.25        |   |   |   | 28.62 |   |
| Selected      Ratios:                                                                                  |   |                                               |      |   |   |   |      |   |   |   |      |   |   |   |         |   |   |   |   |   |
|   Return      on average assets                                                              |   |                                               | (5.53     | )%     |   |   | 1.16      | %      |   |   | 1.27      | %      |   |   | 1.01         | % |   |   | 1.12 | % |
|   Return      on average equity                                                              |   |                                               | (78.75    | )%     |   |   | 13.43     | %      |   |   | 20.28     | %      |   |   | 17.64        | % |   |   | 14.54 | % |
|   Ratio      of non-performing assets      to          total assets |   |                                               | 7.00      | %      |   |   | 2.79      | %      |   |   | 0.21      | %      |   |   | 0.05         | % |   |   | 0.07 | % |
|   Effective      net spread                                                                  |   |                                               | 2.58      | %      |   |   | 3.42      | %      |   |   | 2.97      | %      |   |   | 2.69         | % |   |   | 2.99 | % |
|   Ratio      of non-interest expense to          average assets          |   |                                               | 1.36      | %      |   |   | 1.04      | %      |   |   | 0.77      | %      |   |   | 0.81         | % |   |   | 1.13 | % |
| Other      Data:                                                                                       |   |                                               |      |   |   |   |      |   |   |   |      |   |   |   |         |   |   |   |   |   |
| Number      of retail banking offices                                                                  |   |                                               | 39        |   |   |   | 33        |   |   |   | 32        |   |   |   | 30           |   |   |   | 29 |   |
| Number      of lending only offices                                                                    |   |                                               | 1         |   |   |   | 2         |   |   |   | 6         |   |   |   | 6            |   |   |   | 4 |   |

----

----

----

|                                                                                           |   | Year      Ended December 31, |       |
|------------------------------------------------------------------------------------------------|--------|------------------------------|------------|
|                                                                                           |   | Return      onAverageAssets  |       |   | Return      onAverageEquity |   |   | AverageEquity      toAverageAssets |   |
| 2008                |   |                         | (5.53      | )% |   |   | (78.75 | )% |   |   | 7.03 | % |
| 2007                |   |                         | 1.16       |   |   |   | 13.43 |   |   |   | 8.62 |   |
| 2006                                                                                           |   |                         | 1.27       |   |   |   | 20.28 |   |   |   | 6.28 |   |
| 2005                                                                                           |   |                         |  1.01 |   |   |   | 17.64 |   |   |   |  5.72 |   |
| 2004                                                                                           |   |                         |  1.12 |   |   |   |  14.54 |   |   |   |  7.69 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Year      Ended December 31, |          |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                         |          |   |   | 2007 |   |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars      in thousands)  |          |
| Average      loans (1)                                                                                                               |   | $                            | 6,392,096     |   |   |   | $ | 7,246,523 |   |   |   | $ | 9,427,915 |   |
| Average      investment securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |  573,064 |   |   |   |   |  479,668 |   |   |   |   |  576,878 |   |
| Average      interest-earning      assets                                                                                            |   |                         | 6,965,160     |   |   |   |   | 7,726,191 |   |   |   |   | 10,004,793 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Average      deposits                                                                                                                |   |                         | 4,220,735     |   |   |   |   | 4,845,552 |   |   |   |   | 5,425,751 |   |
| Average      borrowings                                                                                                              |   |                         | 2,449,841     |   |   |   |   | 2,278,539 |   |   |   |   | 3,988,806 |   |
| Average      interest-bearing      liabilities                                                                                       |   |                         | 6,670,576     |   |   |   |   | 7,124,091 |   |   |   |   | 9,414,557 |   |
| Excess      of interest-earning assets over interest-bearing    liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                            | 294,584       |   |   |   | $ | 602,100 |   |   |   | $ | 590,236 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Yields      earned on average interest-earning      assets                                                                                                                                                                                                                                                               |   |                         | 5.93          | % |   |   |   | 7.74 | % |   |   |   | 7.12 | % |
| Rates      paid on average interest-bearing      liabilities                                                                                                                                                                                                                                                   |   |                         | 3.50          |   |   |   |   | 4.68 |   |   |   |   | 4.41 |   |
| Interest      rate      spread                                                                                                       |   |                         | 2.43          |   |   |   |   | 3.06 |   |   |   |   | 2.71 |   |
| Effective      net spread (2)                                                                                                        |   |                         | 2.58          |   |   |   |   | 3.42 |   |   |   |   | 2.97 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Interest      on      loans                                                                                                          |   | $                            | 387,328       |   |   |   | $ | 571,727 |   |   |   | $ | 682,716 |   |
| Interest      and dividends on investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                         | 25,503        |   |   |   |   | 25,986 |   |   |   |   | 29,906 |   |
|    Total      interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         | 412,831       |   |   |   |   | 597,713 |   |   |   |   | 712,622 |   |
| Interest      on deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         | 142,891       |   |   |   |   | 212,310 |   |   |   |   | 220,932 |   |
| Interest      on borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         | 90,554        |   |   |   |   | 121,294 |   |   |   |   | 194,118 |   |
|    Total      interest      expense                                                                                   |   |                         | 233,445       |   |   |   |   | 333,604 |   |   |   |   | 415,050 |   |
| Net      interest      income                                                                                                        |   | $                            | 179,386       |   |   |   | $ | 264,109 |   |   |   | $ | 297,572 |   |

|   |  (1)Non-accrual loans are included in the average dollar amount of      loans outstanding. However, generally no income is included for the period      that each such loan was on non-accrual  status. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2)  The      effective net spread is a fraction, the numerator of which is net interest      income and the denominator of which is the average dollar amount of      interest-earning assets. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                 |   | Year      Ended December 31, 2008Versus |    |   | Year      Ended December 31, 2007Versus |   |
|------------------------------------------------------|--------|-----------------------------------------|---------|--------|-----------------------------------------|--------|
|                                                 |   | Year      Ended December 31, 2007       |    |   | Year      Ended December 31, 2006       |   |
|                                                 |   | Change      Due To                      |    |   | Change      Due To                      |   |
|                                                 |   | Volume                                  |    |   | Rate                                    |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
|                                                 |   |                                    |    |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income:                                |   |                                    |    |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                |   | $                                       | (62,148 | )      |                                    | $      | (122,251 | ) |   | $ | (184,399 | ) |   | $ | (168,262 | ) |   | $ | 57,273 |   |   | $ | (110,989 | ) |
| Investments                                          |   |                                    | 4,597   |   |                                    |   | (5,080 | ) |   |   | (483 | ) |   |   | (5,247 | ) |   |   | 1,327 |   |   |   | (3,920 | ) |
|                                                 |   |                                    | (57,551 | )      |                                    |   | (127,331 | )  |   |   | (184,882 | )  |   |   | (173,509 | ) |   |   | 58,600 |   |   |   | (114,909 | ) |
| Interest      expense:                               |   |                                    |    |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Deposits                                       |   |                                    | (25,217 | )      |                                    |   | (44,202 | ) |   |   | (69,419 | ) |   |   | (24,682 | ) |   |   | 16,060 |   |   |   | (8,622 | ) |
|  Borrowings                                     |   |                                    | 8,531   |   |                                    |   | (39,271 | ) |   |   | (30,740 | ) |   |   | (89,447 | ) |   |   | 16,623 |   |   |   | (72,824 | ) |
|     Total      interest expense  |   |                                    | (16,686 | )      |                                    |   | (83,473 | ) |   |   | (100,159 | ) |   |   | (114,129 | ) |   |   | 32,683 |   |   |   | (81,446 | ) |
|    Change      in net interest income |   | $                                       | (40,865 | )      |                                    | $      | (43,858 | ) |   | $ | (84,723 | ) |   | $ | (59,380 | ) |   | $ | 25,917 |   |   | $ | (33,463 | ) |

|                                                                                 | Interest      Rate Spreads and Effective Net Spreads |        |
|--------------------------------------------------------------------------------------|------------------------------------------------------|-------------|
|                                                                                 | Year      Ended December 31,                         |        |
|                                                                                 | 2008                                                 |        |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                                                 | During      Period                                   |        |   | End      of Period |   |   | During      Period |   |   | End      of Period |   |   | During      Period |   |   | End      of Period |   |   | During      Period |   |   | End      of Period |   |   | During      Period |   |   | End      of Period |   |
| Weighted      average yield on loans                                                 |                                                 | 6.06        | % |   |   | 5.45 | % |   |   | 7.89 | % |   |   | 7.53 | % |   |   | 7.24 | % |   |   | 8.13 | % |   |   | 5.54 | % |   |   | 6.60 | % |   |   | 4.92 | % |   |   | 5.02 | % |
| Weighted      average yield on investments                                           |                                                 | 4.45        |   |   |   | 3.12 |   |   |   | 5.42 |   |   |   | 5.42 |   |   |   | 5.18 |   |   |   | 4.77 |   |   |   |     4.01 |   |   |   |     4.28 |   |   |   |     3.12 |   |   |   |     3.07 |   |
| Weighted      average yield on all interest-earning assets                           |                                                 |   5.93 |   |   |   |   5.18 |   |   |   |   7.74 |   |   |   |   7.38 |   |   |   |   7.12 |   |   |   |   7.91 |   |   |   |   5.46 |   |   |   |   6.46 |   |   |   |   4.77 |   |   |   |   4.88 |   |
| Weighted      average rate paid on        deposits                         |                                                 |   3.39 |   |   |   |   3.18 |   |   |   |   4.38 |   |   |   |   4.17 |   |   |   |   4.07 |   |   |   |   4.44 |   |   |   |   2.40 |   |   |   |   3.00 |   |   |   |   1.42 |   |   |   |   1.65 |   |
| Weighted      average rate paid on        borrowings and FHLB advances     |                                                 |   3.70 |   |   |   |   2.91 |   |   |   |   5.32 |   |   |   |   4.80 |   |   |   |   4.87 |   |   |   |   5.37 |   |   |   |   3.40 |   |   |   |   4.19 |   |   |   |   2.55 |   |   |   |   2.57 |   |
| Weighted      average rate paid on all        interest-bearing liabilities |                                                 |   3.50 |   |   |   |   3.09 |   |   |   |   4.68 |   |   |   |   4.39 |   |   |   |   4.41 |   |   |   |   4.72 |   |   |   |   2.92 |   |   |   |   3.65 |   |   |   |   1.91 |   |   |   |   2.06 |   |
|  Interest      rate spread (1)                                                  |                                                 | 2.43        |   |   |   | 2.09 |   |   |   | 3.06 |   |   |   | 2.99 |   |   |   | 2.71 |   |   |   | 3.19 |   |   |   | 2.54 |   |   |   | 2.81 |   |   |   | 2.86 |   |   |   | 2.82 |   |
|  Effective      net spread (2)                                                  |                                                 | 2.58        |   |   |   |   |   |   |   | 3.42 |   |   |   |   |   |   |   | 2.97 |   |   |   |   |   |   |   | 2.69 |   |   |   |   |   |   |   | 2.99 |   |   |   |   |   |
|                                                                                 |                                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | (1)  Weighted      average yield on all interest-earning assets less weighted average rate      paid on all interest-bearingliabilities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2)  Net      interest income divided by average interest-earning      assets. |
|--------|------------------------------------------------------------------------------------------|

----

----

|                                                  |   |   | Non-Interest      ExpenseYear      Ended December 31, |    |
|-------------------------------------------------------|--------|--------|-------------------------------------------------------|---------|
|                                                  |   |   | 2008                                                  |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                  |   |   | (Dollars      in thousands)                           |    |
| Salaries      and Employee Benefits:                  |   |   |                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                              |   |   | $                                                     | 31,775  |   |   | $ | 32,900 |   |   | $ | 28,890 |   |   | $ | 27,850 |   |   | $ | 25,992 |   |
| Incentive      compensation                           |   |   |                                                  | 3,336   |   |   |   | 2,702 |   |   |   | 4,137 |   |   |   | 6,719 |   |   |   | 4,217 |   |
| Payroll      taxes                                    |   |   |                                                  | 2,636   |   |   |   | 2,660 |   |   |   | 2,598 |   |   |   | 2,660 |   |   |   | 2,334 |   |
| Stock      option expense                             |   |   |                                                  | 1,610   |   |   |   | 1,725 |   |   |   | 1,880 |   |   |   | — |   |   |   | — |   |
| Employee      benefit insurance                       |   |   |                                                  | 2,345   |   |   |   | 2,003 |   |   |   | 1,798 |   |   |   | 1,817 |   |   |   | 1,629 |   |
| Bonus      compensation                               |   |   |                                                  | — |   |   |   | 2,919 |   |   |   | 2,296 |   |   |   | 2,057 |   |   |   | 1,500 |   |
| Profit      sharing                                   |   |   |                                                  | 145     |   |   |   | 1,539 |   |   |   | 1,548 |   |   |   | 1,545 |   |   |   | 2,530 |   |
| SERP                                                  |   |   |                                                  | 2,143   |   |   |   | 1,559 |   |   |   | 1,526 |   |   |   | 1,476 |   |   |   | 1,381 |   |
| 401(k)                                                |   |   |                                                  | 635     |   |   |   | 535 |   |   |   | 652 |   |   |   | 416 |   |   |   | 500 |   |
| Other      salaries and benefits                      |   |   |                                                  | 480     |   |   |   | 637 |   |   |   | 644 |   |   |   | 521 |   |   |   | 824 |   |
|                                                  |   |   |                                                  | 45,105  |   |   |   | 49,179 |   |   |   | 45,969 |   |   |   | 45,061 |   |   |   | 40,907 |   |
| Occupancy:                                            |   |   |                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rent...                                               |   |   |                                                  | 8,784   |   |   |   | 7,205 |   |   |   | 5,303 |   |   |   | 5,148 |   |   |   | 4,836 |   |
| Equipment                                             |   |   |                                                  | 2,428   |   |   |   | 2,263 |   |   |   | 2,230 |   |   |   | 2,184 |   |   |   | 1,826 |   |
| Maintenance      costs                                |   |   |                                                  | 1,041   |   |   |   | 1,531 |   |   |   | 1,163 |   |   |   | 912 |   |   |   | 861 |   |
| Other      occupancy                                  |   |   |                                                  | 2,522   |   |   |   | 2,371 |   |   |   | 1,991 |   |   |   | 1,482 |   |   |   | 1,168 |   |
|                                                  |   |   |                                                  | 14,775  |   |   |   | 13,370 |   |   |   | 10,687 |   |   |   | 9,726 |   |   |   | 8,691 |   |
| Other      Operating Expense:                         |   |   |                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Insurance                                             |   |   |                                                  | 794     |   |   |   | 692 |   |   |   | 803 |   |   |   | 896 |   |   |   | 746 |   |
| Amortization      of core deposit intangible          |   |   |                                                  | 463     |   |   |   | 879 |   |   |   | 1,995 |   |   |   | 1,995 |   |   |   | 1,995 |   |
| Data      processing                                  |   |   |                                                  | 2,225   |   |   |   | 2,303 |   |   |   | 2,743 |   |   |   | 2,596 |   |   |   | 2,587 |   |
| Contributions                                         |   |   |                                                  | 211     |   |   |   | 376 |   |   |   | 494 |   |   |   | 492 |   |   |   | 502 |   |
| Professional      services                            |   |   |                                                  | 3,997   |   |   |   | 600 |   |   |   | 524 |   |   |   | 660 |   |   |   | 292 |   |
| Legal      expenses                                   |   |   |                                                  | 2,608   |   |   |   | 566 |   |   |   | 1,718 |   |   |   | 1,598 |   |   |   | 1,839 |   |
| OTS      assessments                                  |   |   |                                                  | 1,787   |   |   |   | 2,153 |   |   |   | 2,260 |   |   |   | 1,125 |   |   |   | 751 |   |
| Federal      deposit insurance premiums               |   |   |                                                  | 4,166   |   |   |   | 2,845 |   |   |   | 1,393 |   |   |   | 504 |   |   |   | 388 |   |
| Telephone                                             |   |   |                                                  | 561     |   |   |   | 663 |   |   |   | 563 |   |   |   | 844 |   |   |   | 775 |   |
| Office      supplies                                  |   |   |                                                  | 749     |   |   |   | 687 |   |   |   | 1,139 |   |   |   | 936 |   |   |   | 833 |   |
| Postage                                               |   |   |                                                  | 920     |   |   |   | 951 |   |   |   | 988 |   |   |   | 965 |   |   |   | 677 |   |
| Subscriptions                                         |   |   |                                                  | 191     |   |   |   | 203 |   |   |   | 236 |   |   |   | 281 |   |   |   | 229 |   |
| Delivery                                              |   |   |                                                  | 590     |   |   |   | 604 |   |   |   | 598 |   |   |   | 638 |   |   |   | 565 |   |
| Other      contracted services                        |   |   |                                                  | 838     |   |   |   | 1,083 |   |   |   | 991 |   |   |   | 1,052 |   |   |   | 820 |   |
| Uninsured      losses                                 |   |   |                                                  | 101     |   |   |   | 389 |   |   |   | 628 |   |   |   | 1,111 |   |   |   | 651 |   |
| Real      estate owned operations                     |   |   |                                                  | 14,217  |   |   |   | 1,526 |   |   |   | 28 |   |   |   | 22 |   |   |   | 36 |   |
| Other      operating costs                            |   |   |                                                  | 3,295   |   |   |   | 3,344 |   |   |   | 2,722 |   |   |   | 2,464 |   |   |   | 2,572 |   |
|                                                  |   |   |                                                  | 37,713  |   |   |   | 19,864 |   |   |   | 19,823 |   |   |   | 18,179 |   |   |   | 16,258 |   |
|                                                  |   |   |                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Advertising                                           |   |   |                                                  | 977     |   |   |   | 1,043 |   |   |   | 1,248 |   |   |   | 754 |   |   |   | 705 |   |
| Total                                                 |   |   | $                                                     | 98,570  |   |   | $ | 83,456 |   |   | $ | 77,727 |   |   | $ | 73,720 |   |   | $ | 66,561 |   |
|                                                  |   |   |                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      expense as %      of average assets |   |   |                                                  | 1.36    | % |   |   | 1.04 | % |   |   | 0.77 | % |   |   | 0.81 | % |   |   | 1.13 | % |

----

|                                   |   | Loan      Originations and Purchases by Property Type |      |
|----------------------------------------|--------|-------------------------------------------------------|-----------|
|                                   |   | Year      Ended December 31,                          |      |
|                                   |   | 2008                                                  |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                   |   | (In      thousands)                                   |      |
| Single      family (one-to-four units) |   | $                                                     | 921,942   |   |   | $ | 652,932 |   |   | $ | 1,929,686 |   |   | $ | 4,329,439 |   |   | $ | 3,095,010 |   |
| Multi-family                           |   |                                                  | 552,527   |   |   |   | 366,236 |   |   |   | 229,332 |   |   |   | 409,201 |   |   |   | 647,326 |   |
| Commercial      real estate            |   |                                                  | —   |   |   |   | 28,460 |   |   |   | 11,757 |   |   |   | 45,001 |   |   |   | 66,010 |   |
| Commercial      business loans         |   |                                                  | 19,290    |   |   |   | 26,146 |   |   |   | 32,275 |   |   |   | 36,197 |   |   |   | 43,226 |   |
| Other                                  |   |                                                  | 34,994    |   |   |   | — |   |   |   | 2,220 |   |   |   | 4,145 |   |   |   | 29,237 |   |
| Total                                  |   | $                                                     | 1,528,753 |   |   | $ | 1,073,774 |   |   | $ | 2,205,270 |   |   | $ | 4,823,983 |   |   | $ | 3,880,809 |   |
|                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Loan      Originations andPurchases      by Loan Type |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Year      Ended December 31,                          |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                                                  |      |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (In      thousands)                                   |      |
| Adjustable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                  |      |   |   |   |   |   |   |
| 12MAT                                                                              |   | $                                                     | 43,188    |   |   | $ | 93,524 |   |   | $ | 502,990 |   |
| CODI                                                                               |   |                                                  | —   |   |   |   | 4,275 |   |   |   | 130,553 |   |
| COFI                                                                               |   |                                                  | 134,914   |   |   |   | 408,235 |   |   |   | 1,259,875 |   |
| LIBOR                                                                              |   |                                                  | 5,935     |   |   |   | 2,165 |   |   |   | — |   |
| Prime                                                                              |   |                                                  | 34,993    |   |   |   | 33,983 |   |   |   | 39,332 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                  | 219,030   |   |   |   | 542,182 |   |   |   | 1,932,750 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                  |      |   |   |   |   |   |   |   |   |   |
| Fixed                                                                              |   |                                                  | 2,770     |   |   |   | 16,295 |   |   |   | 5,016 |   |
| Hybrid                                                                             |   |                                                  | 1,306,953 |   |   |   | 515,297 |   |   |   | 267,504 |   |
| Total                                                                                                       |   | $                                                     | 1,528,753 |   |   | $ | 1,073,774 |   |   | $ | 2,205,270 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Single      Family Loan Originations byBorrower      Documentation Type |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Year      Ended December 31,                                            |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2008                                                                    |    |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (In      thousands)                                                     |    |
| Verified      Income/ Verified      Asset                                                                                                                                                                                                                                                           |   | $                                                                       | 910,089 |   |   | $ | 240,322 |   |   | $ | 356,758 |   |
| Stated      Income/ Verified      Asset                                                                                                                                                                                                                                    |   |                                                                    | 11,853  |   |   |   | 269,129 |   |   |   | 639,756 |   |
| Stated      Income/ Stated      Asset                                                                                                                                                                                                                            |   |                                                                    | — |   |   |   | 68,709 |   |   |   | 568,723 |   |
| No      Income/ No      Asset                                                                                                                                                                             |   |                                                                    | — |   |   |   | 74,772 |   |   |   | 364,449 |   |
| Total                                                                             |   | $                                                                       | 921,942 |   |   | $ | 652,932 |   |   | $ | 1,929,686 |   |

----

|                                                              |   | December      31,   |            |
|-------------------------------------------------------------------|--------|---------------------|-----------------|
|                                                              |   | 2008                |            |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                              |   | (In      thousands) |            |
| REAL      ESTATE LOANS                                            |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |
|  First      trust deed residential loans:                    |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |
|    One-to-four      units                          |   | $                   | 4,378,731       |   |   | $ | 4,652,876 |   |   | $ | 6,444,225 |   |   | $ | 7,361,476 |   |   | $ | 4,585,962 |   |
|    Five      or more units                         |   |                | 1,936,286       |   |   |   | 1,709,815 |   |   |   | 1,811,966 |   |   |   | 1,942,021 |   |   |   | 1,825,564 |   |
|              Residential loans |   |                |  6,315,017 |   |   |   |  6,362,691 |   |   |   |  8,256,191 |   |   |   |  9,303,497 |   |   |   |  6,411,526 |   |
|                                                              |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      REAL ESTATE LOANS                                      |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial      and industrial                  |   |                | 148,841         |   |   |   | 159,052 |   |   |   | 196,569 |   |   |   | 257,560 |   |   |   | 324,805 |   |
|    Construction                                    |   |                | —         |   |   |   | — |   |   |   | — |   |   |   | 4,910 |   |   |   | 20,902 |   |
|    Land                                            |   |                | 4,201           |   |   |   | 4,242 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|    Second      trust deeds                         |   |                | 1,953           |   |   |   | 2,159 |   |   |   | 3,392 |   |   |   | 6,505 |   |   |   | 5,466 |   |
| Real      estate loans                                            |   |                | 6,470,012       |   |   |   | 6,528,144 |   |   |   | 8,456,152 |   |   |   | 9,572,472 |   |   |   | 6,762,699 |   |
|                                                              |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NON-REAL      ESTATE LOANS                                        |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposit      accounts                           |   |                | 1,354           |   |   |   | 2,061 |   |   |   | 825 |   |   |   | 595 |   |   |   | 491 |   |
|    Commercial      business loans                  |   |                | 79,378          |   |   |   | 75,848 |   |   |   | 83,759 |   |   |   | 80,186 |   |   |   | 58,869 |   |
|    Consumer      loans                             |   |                | 33,661          |   |   |   | 33,136 |   |   |   | 44,528 |   |   |   | 57,399 |   |   |   | 60,677 |   |
| Loans      receivable                                             |   |                | 6,584,405       |   |   |   | 6,639,189 |   |   |   | 8,585,264 |   |   |   | 9,710,652 |   |   |   | 6,882,736 |   |
|                                                              |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LESS:                                                             |   |                |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    General      valuation allowance                |   |                | 280,185         |   |   |   | 127,503 |   |   |   | 109,768 |   |   |   | 97,558 |   |   |   | 78,675 |   |
|    Impaired      loan valuation allowances         |   |                | 46,735          |   |   |   | 555 |   |   |   | — |   |   |   | — |   |   |   | 496 |   |
|    Deferred      loan origination (costs) fees     |   |                | 2,799           |   |   |   | (7,083 | ) |   |   | (41,956 | ) |   |   | (68,039 | ) |   |   | (34,380 | ) |
| Net      loans receivable (1)                                     |   | $                   | 6,254,686       |   |   | $ | 6,518,214 |   |   | $ | 8,517,452 |   |   | $ | 9,681,133 |   |   | $ | 6,837,945 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Single      Family Loan Portfolio byBorrower      Documentation Type |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Year      Ended December 31,                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                 |  2008 |   |   |   |  2007 |   |   |   |  2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (In      thousands)                                                  |
| Verified      Income/ Verified      Asset                                                                             |   | $                                                                    | 1,808,445 |   |   | $ | 1,135,358 |   |   | $ | 1,322,883 |   |
| Stated      Income/ Verified      Asset                                                                               |   |                                                                 | 1,087,151 |   |   |   | 1,468,686 |   |   |   | 2,120,962 |   |
| Stated      Income/ Stated      Asset                                                                                 |   |                                                                 | 1,100,672 |   |   |   | 1,506,627 |   |   |   | 2,251,179 |   |
| No      Income/ No      Asset                                                                                         |   |                                                                 | 382,463 |   |   |   | 542,205 |   |   |   | 749,201 |   |
| Total                                                                                                                 |   | $                                                                    | 4,378,731 |   |   | $ | 4,652,876 |   |   | $ | 6,444,225 |   |

----

|                     |   | December      31,   |      |
|--------------------------|--------|---------------------|-----------|
| Original      LTV Ratio: |   | 2008                |      |   | 2007 |   |   | 2006 |   |
|                     |   | (In      thousands) |      |
| <65%                  |   | $                   | 949,119   |   |   | $ | 817,580 |   |   | $ | 1,230,750 |   |
| 65-70%                   |   |                | 535,765   |   |   |   | 505,320 |   |   |   | 722,380 |   |
| 70-75%                   |   |                | 606,856   |   |   |   | 593,386 |   |   |   | 802,885 |   |
| 75-80%                   |   |                | 2,047,508 |   |   |   | 2,348,772 |   |   |   | 3,104,381 |   |
| 80-85%                   |   |                | 46,797    |   |   |   | 73,564 |   |   |   | 111,678 |   |
| 85-90%                   |   |                | 153,273   |   |   |   | 262,719 |   |   |   | 391,128 |   |
| >90%                  |   |                | 39,413    |   |   |   | 51,535 |   |   |   | 81,023 |   |
| Total                    |   | $                   | 4,378,731 |   |   | $ | 4,652,876 |   |   | $ | 6,444,225 |   |

|                           |   | December      31,   |      |
|--------------------------------|--------|---------------------|-----------|
| FICO      Score at Origination |   | 2008                |      |   | 2007 |   |   | 2006 |   |
|                           |   | (In      thousands) |      |
| <620                        |   | $                   | 24,481    |   |   | $ | 27,667 |   |   | $ | 36,428 |   |
| 620-659                        |   |                | 330,096   |   |   |   | 431,307 |   |   |   | 576,947 |   |
| 660-719                        |   |                | 1,784,932 |   |   |   | 2,162,687 |   |   |   | 2,957,784 |   |
| >720                        |   |                | 2,198,022 |   |   |   | 1,982,220 |   |   |   | 2,824,692 |   |
| Not      Available             |   |                | 41,200    |   |   |   | 48,995 |   |   |   | 48,374 |   |
| Total                          |   | $                   | 4,378,731 |   |   | $ | 4,652,876 |   |   | $ | 6,444,225 |   |

|                                  |   | December      31,           |      |
|---------------------------------------|--------|-----------------------------|-----------|
|                                  |   | 2008                        |      |   | 2007 |   |   | 2006 |   |
|                                  |   | (Dollars      in thousands) |      |
|                                  |   |  LoanBalance           |      |   | LTV Ratio |   |   | FICOScore |   |   |  Loan Balance |   |   | LTV Ratio |   |   | FICOScore |   |   |  Loan Balance |   |   | LTV Ratio |   |   | FICOScore |   |
| Verified      Income / Verified Asset |   | $                           | 1,808,445 |   |   |   | 70.2 | % |   |   | 708 |   |   | $ | 1,135,358 |   |   |   | 73.3 | % |   |   | 709 |   |   | $ | 1,322,883 |   |   |   | 73.7 | % |   |   | 706 |   |
| Stated      Income / Verified Asset   |   |                        | 1,087,151 |   |   |   | 73.9 |   |   |   | 711 |   |   |   | 1,468,686 |   |   |   | 74.0 |   |   |   | 715 |   |   |   | 2,120,962 |   |   |   | 73.7 |   |   |   | 717 |   |
| Stated      Income / Stated Asset     |   |                        | 1,100,672 |   |   |   | 74.9 |   |   |   | 712 |   |   |   | 1,506,627 |   |   |   | 74.6 |   |   |   | 714 |   |   |   | 2,251,179 |   |   |   | 73.8 |   |   |   | 716 |   |
| No      Income / No      Asset        |   |                        | 382,463   |   |   |   | 70.7 |   |   |   | 726 |   |   |   | 542,205 |   |   |   | 70.8 |   |   |   | 728 |   |   |   | 749,201 |   |   |   | 69.8 |   |   |   | 729 |   |
|                                  |   | $                           | 4,378,731 |   |   |   | 72.4 | % |   |   | 712 |   |   | $ | 4,652,876 |   |   |   | 73.6 | % |   |   | 715 |   |   | $ | 6,444,225 |   |   |   | 73.3 | % |   |   | 716 |   |

----

|                                     |   | December      31,           |      |
|------------------------------------------|--------|-----------------------------|-----------|
|                                     |   | 2008                        |      |   | 2007 |   |   | 2006 |   |
|                                     |   | (Dollars      in thousands) |      |
| Los      Angeles County                  |   | $                           | 1,233,889 |   |   |   | 28.2 | % |   | $ | 1,148,942 |   |   |   | 24.8 | % |   | $ | 1,589,318 |   |   |   | 24.7 | % |
| San      Francisco Bay Area              |   |                        | 768,262   |   |   |   | 17.5 |   |   |   | 775,303 |   |   |   | 16.7 |   |   |   | 1,124,541 |   |   |   | 17.5 |   |
| Central      California Coast            |   |                        | 598,268   |   |   |   | 13.7 |   |   |   | 592,547 |   |   |   | 12.7 |   |   |   | 856,949 |   |   |   | 13.3 |   |
| San      Diego Area                      |   |                        | 441,631   |   |   |   | 10.1 |   |   |   | 558,452 |   |   |   | 12.0 |   |   |   | 739,995 |   |   |   | 11.5 |   |
| Orange      County                       |   |                        | 479,464   |   |   |   | 10.9 |   |   |   | 428,667 |   |   |   | 9.2 |   |   |   | 580,226 |   |   |   | 9.0 |   |
| San      Bernardino / Riverside Counties |   |                        | 296,624   |   |   |   | 6.8 |   |   |   | 374,303 |   |   |   | 8.0 |   |   |   | 541,412 |   |   |   | 8.4 |   |
| San      Joaquin Valley                  |   |                        | 194,741   |   |   |   | 4.4 |   |   |   | 298,788 |   |   |   | 6.4 |   |   |   | 390,155 |   |   |   | 6.1 |   |
| Sacramento      Valley                   |   |                        | 197,861   |   |   |   | 4.6 |   |   |   | 275,313 |   |   |   | 5.9 |   |   |   | 349,829 |   |   |   | 5.4 |   |
| Other                                    |   |                        | 167,991   |   |   |   | 3.8 |   |   |   | 200,561 |   |   |   | 4.3 |   |   |   | 271,800 |   |   |   | 4.1 |   |
|     Total            |   | $                           | 4,378,731 |   |   |   | 100.0 | % |   | $ | 4,652,876 |   |   |   | 100.0 | % |   | $ | 6,444,225 |   |   |   | 100.0 | % |

| 2003      and Prior           |   | $      | 301,288   |   |   |   | 6.8   | %      |
|-------------------------------|--------|--------|-----------|--------|--------|--------|-------|--------|
| 2004                          |   |   | 567,660   |   |   |   | 13.0  |   |
| 2005                          |   |   | 1,390,979 |   |   |   | 31.8  |   |
| 2006                          |   |   | 876,255   |   |   |   | 20.0  |   |
| 2007                          |   |   | 341,023   |   |   |   | 7.8   |   |
| 2008                          |   |   | 901,526   |   |   |   | 20.6  |   |
|     Total |   | $      | 4,378,731 |   |   |   | 100.0 | %      |

|                     |   | 2009                |    |   | 2010                 |   |   | Thereafter                  |   |
|--------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------|--------|
| Loan-to-value      Ratio |   | Recast      Balance |    |   | Number      of Loans |   |   | Recast      Balance         |   |   | Number      of Loans |   |   | Recast      Balance |   |   | Number      of Loans |   |
|                     |   |                |    |   |                 |   |   | (Dollars      in thousands) |   |   |   |   |   |   |   |
| <      70%            |   | $                   | 68,491  |   |                 |   | 195    |                        |   | $ | 73,393 |   |   |   | 208 |   |   | $ | 87,805 |   |   |   | 197 |   |
| 70-80%                   |   |                | 70,343  |   |                 |   | 156    |                        |   |   | 64,395 |   |   |   | 152 |   |   |   | 82,647 |   |   |   | 132 |   |
| 80-90%                   |   |                | 74,891  |   |                 |   | 174    |                        |   |   | 111,606 |   |   |   | 212 |   |   |   | 93,143 |   |   |   | 143 |   |
| 90-100%                  |   |                | 65,637  |   |                 |   | 139    |                        |   |   | 148,224 |   |   |   | 295 |   |   |   | 161,545 |   |   |   | 253 |   |
| 100-110%                 |   |                | 66,559  |   |                 |   | 134    |                        |   |   | 120,251 |   |   |   | 245 |   |   |   | 193,264 |   |   |   | 338 |   |
| >110%                 |   |                | 50,102  |   |                 |   | 115    |                        |   |   | 176,391 |   |   |   | 396 |   |   |   | 212,674 |   |   |   | 445 |   |
| Grand      total         |   | $                   | 396,023 |   |                 |   | 913    |                        |   | $ | 694,260 |   |   |   | 1,508 |   |   | $ | 831,078 |   |   |   | 1,508 |   |
|                     |   |                |    |   |                 |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                            |   | 2009                |    |   | 2010                 |   |   | Thereafter                  |   |
|---------------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------|--------|
| Projected      Payment Increase |   | Recast      Balance |    |   | Number      of Loans |   |   | Recast      Balance         |   |   | Number      of Loans |   |   | Recast      Balance |   |   | Number      of Loans |   |
|                            |   |                |    |   |                 |   |   | (Dollars      in thousands) |   |   |   |   |   |   |   |
| <      50%                   |   | $                   | 131,784 |   |                 |   | 321    |                        |   | $ | 203,707 |   |   |   | 478 |   |   | $ | 712,048 |   |   |   | 1,281 |   |
| 50-100%                         |   |                | 200,154 |   |                 |   | 455    |                        |   |   | 324,122 |   |   |   | 695 |   |   |   | 110,934 |   |   |   | 209 |   |
| 100-125%                        |   |                | 59,359  |   |                 |   | 126    |                        |   |   | 147,548 |   |   |   | 298 |   |   |   | 5,885 |   |   |   | 14 |   |
| 125-150%                        |   |                | 4,196   |   |                 |   | 10     |                        |   |   | 18,883 |   |   |   | 37 |   |   |   | 2,211 |   |   |   | 4 |   |
| >150%                        |   |                | 530     |   |                 |   | 1      |                        |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Grand      total                |   | $                   | 396,023 |   |                 |   | 913    |                        |   | $ | 694,260 |   |   |   | 1,508 |   |   | $ | 831,078 |   |   |   | 1,508 |   |
|                            |   |                |    |   |                 |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                    |   | December      31, |   |
|---------------------------------------------------------|--------|-------------------|--------|
|                                                    |   | 2008              |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Non-performing      loans to gross loans receivable (1) |   |              | 6.13   | % |   |   | 2.72 | % |   |   | 0.22 | % |   |   | 0.05 | % |   |   | 0.07 | % |
| Non-performing      assets to total assets (2)          |   |              | 7.00   | % |   |   | 2.79 | % |   |   | 0.21 | % |   |   | 0.05 | % |   |   | 0.07 | % |
| Loan      loss allowances to non-performing loans (3)   |   |              | 81     | % |   |   | 71 | % |   |   | 593 | % |   |   | 1,965 | % |   |   | 1,588 | % |
| Loan      loss allowances to gross loans receivable (4) |   |              | 4.97   | % |   |   | 1.93 | % |   |   | 1.28 | % |   |   | 1.00 | % |   |   | 1.15 | % |

| (1) | Loans      receivable are before deducting unrealized loan fees, the general      valuation allowance and valuation allowances for impaired      loans. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Non-performing      assets are net of valuation allowances related to those      assets. |
|-----|------------------------------------------------------------------------------------------|

| (3) | Loan      loss allowances, including the general valuation allowance and valuation      allowances for impaired loans. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (4) | General      valuation allowance plus the allowances for impaired loans as a percentage      of loans receivable before deducting unrealized loan fees, the general      valuation allowance and valuation allowances for impaired      loans. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |   | Non-Performing      Assets |    |
|-----------------------------------------------------|--------|----------------------------|---------|
|                                                |   | December      31,          |    |
|                                                |   | 2008                  |    |   | 2007  |   |   | 2006  |   |   | 2005  |   |   | 2004  |   |
|                                                |   | (Dollars in thousands)     |    |
|                                                |   | $                     |    |   |   |  % |   |   | $  |   |   |   |  % |   |   | $  |   |   |   |  % |   |   | $  |   |   |   |  % |   |   | $  |   |   |   |  % |   |
|                                                |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate owned:                             |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                                  |   | $                          | 117,664 |   |   |   | 23 | % |   | $ | 21,090 |   |   |   | 10 | % |   | $ | 1,094 |   |   |   | 6 | % |   | $ | — |   |   |   | — | % |   | $ | — |   |   |   | — | % |
| Less:      general valuation allowance              |   |                       | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total      real estate owned                        |   |                       | 117,664 |   |   |   | 23 |   |   |   | 21,090 |   |   |   | 10 |   |   |   | 1,094 |   |   |   | 6 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Non-performing      loans:                          |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                                  |   |                       | 403,777 |   |   |   | 77 |   |   |   | 179,679 |   |   |   | 89 |   |   |   | 18,474 |   |   |   | 94 |   |   |   | 3,569 |   |   |   | 72 |   |   |   | 4,590 |   |   |   | 92 |   |
| Multi-family                                        |   |                       | 41      |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |   |   |   |   |   |   |   |   | 391 |   |   |   | 8 |   |
| Commercial      and industrial                      |   |                       | — |   |   |   | — |   |   |   | 720 |   |   |   | 1 |   |   |   | 12 |   |   |   | — |   |   |   | 1,364 |   |   |   | 27 |   |   |   | — |   |   |   | — |   |
| Other                                               |   |                       | — |   |   |   | — |   |   |   | 14 |   |   |   | — |   |   |   | 11 |   |   |   | — |   |   |   | 33 |   |   |   | 1 |   |   |   | 4 |   |   |   | — |   |
| Total      non-performing loans                     |   |                       | 403,818 |   |   |   | 77 |   |   |   | 180,413 |   |   |   | 90 |   |   |   | 18,497 |   |   |   | 94 |   |   |   | 4,966 |   |   |   | 100 |   |   |   | 4,985 |   |   |   | 100 |   |
| Total                                               |   | $                          | 521,482 |   |   |   | 100 | % |   | $ | 201,503 |   |   |   | 100 | % |   | $ | 19,591 |   |   |   | 100 | % |   | $ | 4,966 |   |   |   | 100 | % |   | $ | 4,985 |   |   |   | 100 | % |
| Ratio      of non-performing assets to total assets |   |                       |    |   |   |   | 7.00 | % |   |   |   |   |   |   | 2.79 | % |   |   |   |   |   |   | 0.21 | % |   |   |   |   |   |   | 0.05 | % |   |   |   |   |   |   | 0.07 | % |

----

----

|                               |   | Payments      due by period |      |
|------------------------------------|--------|-----------------------------|-----------|
|                               |   | Total                       |      |   | 1      year |   |   | 1      – 3 years |   |   | 3      – 5 years |   |   | 5      years |   |
|                               |   | (In      thousands)         |      |
|                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      term certificates  |   | $                           | 3,500,693 |   |   | $ | 3,466,016 |   |   | $ | 31,084 |   |   | $ | 3,593 |   |   | $ | — |   |
| FHLB      advances                 |   |                        | 2,060,000 |   |   |   | 1,030,000 |   |   |   | 1,030,000 |   |   |   | — |   |   |   | — |   |
| FRB      advances                  |   |                        | 25,000    |   |   |   | 25,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Reverse      repurchase agreements |   |                        | —   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Senior      debentures             |   |                        | 150,000   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |
| Operating      lease obligations   |   |                        | 64,676    |   |   |   | 7,763 |   |   |   | 14,614 |   |   |   | 13,298 |   |   |   | 29,001 |   |
| Total                              |   | $                           | 5,800,369 |   |   | $ | 4,528,779 |   |   | $ | 1,075,698 |   |   | $ | 16,891 |   |   | $ | 179,001 |   |

----

|                                       |   | December      31, 2008      |    |
|--------------------------------------------|--------|-----------------------------|---------|
|                                       |   | Amount                      |    |   | % |   |
|                                       |   | (Dollars      in thousands) |    |
| Bank’s      core capital             |   | $                           | 398,523 |   |   |   | 5.35 | % |
| Core      capital requirement              |   |                        | 372,288 |   |   |   | 5.00 | % |
|    Excess      capital      |   | $                           | 26,235  |   |   |   | 0.35 | % |
|                                       |   |                        |    |   |   |   |   |   |
| Bank's      tier 1 risk-based capital      |   | $                           | 398,523 |   |   |   | 9.93 | % |
| Tier      1 risk-based capital requirement |   |                        | 240,963 |   |   |   | 6.00 | % |
|    Excess      capital      |   | $                           | 157,560 |   |   |   | 3.92 | % |
|                                       |   |                        |    |   |   |   |   |   |
| Risk-based      capital                    |   | $                           | 452,120 |   |   |   | 11.26 | % |
| Risk-based      capital requirement        |   |                        | 401,604 |   |   |   | 10.00 | % |
|    Excess      capital      |   | $                           | 50,516  |   |   |   | 1.26 | % |

           In December 2007, the FASB issued two new statements: (a) SFAS No. 141 (R)(revised 2007), BusinessCombinations, and (b) SFAS No. 160, Non-controlling Interests inConsolidated Financial Statements. These statements are effective forfiscal years beginning after December 15, 2008 and the application of thesestandards will improve, simplify, and converge internationally the accountingfor business combinations and the reporting of non-controlling interests infinancial statements. We are in the process of evaluating the impact, if any, onSFAS No. 141 (R) and SFAS No. 160 and do not anticipate that the adoption ofthese standards will have any impact on our financialstatements.

----

----

|                                                                     |   | INTEREST-SENSITIVITY      GAP |      |
|--------------------------------------------------------------------------|--------|-------------------------------|-----------|
|                                                                     |   |  Total      Balance      |      |   | Balances      Repricing Within 1 Year |   |   | Balances      Repricing Within 1-3 Years |   |   | Balances      Repricing Within 4-10 Years |   |   | Balances      Repricing After10      Years |   |
|                                                                     |   | (Dollars      in thousands)   |      |
| Interest-earning      assets:                                            |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |
|   FHLB      and FRB  interest-earning deposits       |   | $                             | 337,340   |   |   | $ | 337,340 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   Investment      securities, at fair value                    |   |                          | 323,048   |   |   |   | 211,310 |   |   |   | 56,548 |   |   |   | 55,190 |   |   |   | — |   |
|   Mortgage-backed      securities, at fair value               |   |                          | 40,504    |   |   |   | 40,504 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   FHLB      stock                                              |   |                          | 115,150   |   |   |   | 115,150 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   Loans      receivable                                        |   |                          | 6,584,405 |   |   |   | 4,588,245 |   |   |   | 324,499 |   |   |   | 1,668,727 |   |   |   | 2,934 |   |
| Total      interest-earning assets                                       |   | $                             | 7,400,447 |   |   | $ | 5,292,549 |   |   | $ | 381,047 |   |   | $ | 1,723,917 |   |   | $ | 2,934 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                       |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand      accounts                                         |   | $                             | 1,406,663 |   |   | $ | 1,406,663 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   Fixed      rate term certificates                            |   |                          | 3,500,693 |   |   |   | 3,228,928 |   |   |   | 268,171 |   |   |   | 3,318 |   |   |   | 276 |   |
|    Borrowings                                             |   |                          | 2,085,000 |   |   |   | 1,055,000 |   |   |   | 1,030,000 |   |   |   | — |   |   |   | — |   |
|   Senior      debt                                             |   |                          | 150,000   |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |   |   | — |   |
| Total      interest-bearing liabilities                                  |   | $                             | 7,142,356 |   |   | $ | 5,690,591 |   |   | $ | 1,298,171 |   |   | $ | 153,318 |   |   | $ | 276 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-sensitivity      GAP                                            |   | $                             | 258,091   |   |   | $ | (398,042 | ) |   | $ | (917,124 | ) |   | $ | 1,570,599 |   |   | $ | 2,658 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-sensitivity      GAP as a percentage of total assets            |   |                          |      |   |   |   | (5.34 | )% |   |   | (12.31 | )% |   |   | 21.08 | % |   |   | 0.04 | % |
| Cumulative      interest-sensitivity GAP                                 |   |                          |      |   |   |   |   |   |   | $ | (1,316,259 | ) |   | $ | 254,340 |   |   | $ | 256,998 |   |
| Cumulative      interest-sensitivity GAP as a percentage of total assets |   |                          |      |   |   |   |   |   |   |   | (17.65 | )% |   |   | 3.43 | % |   |   | 3.46 | % |

----

|                         |   | Percentage                                |
|------------------------------|--------|-------------------------------------------|
| Change      in Interest Rate |   | Change      in Net Portfolio Value(1)     |
| (In      Basis Points)       |   | 2008                                      |   | 2007 |
| +300                         |   |            (28)% |   |             (21)% |
| +200                         |   |            (17)% |   |             (11)% |
| +100                         |   |            (7)%  |   |            (4)% |
| -      100                   |   |          16%               |   |           5% |
| -      200                   |   |          N/A (2)           |   |          9% |
| -      300                   |   |          N/A (2)           |   |           14% |

|   | (1) | The      percentage change represents the projected change in the net portfolio      value of the Bank in a stable interest rate environment versus the net      portfolio value in the various rate scenarios. The OTS defines net      portfolio value as the present value of expected cash flows from existing      assets minus the present value of expected cash flows from existing      liabilities. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Starting      with the quarter ended March 31, 2008, the OTS Quarterly Interest Rate      Risk Exposure Report will not display results for the minus 200 and 300      basis point scenarios. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                 |   | Expected      Maturity Date as of December 31, (1) |           |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------------|
|                                                                                                                                 |   | 2009                                               |           |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | Thereafter |   |   | Total      Balance |   |   | Fair      Value |   |
|   Interest-earning      assets:                                                                                            |   | (Dollars      in thousands)                        |           |
|   Loans      receivable:                                                                                                   |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Adjustable      rate loans:                                                                                  |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Single      family                                                                                     |   | $                                                  | 903,324        |   |   | $ | 453,504 |   |   | $ | 396,619 |   |   | $ | 346,724 |   |   | $ | 302,968 |   |   | $ | 1,970,418 |   |   | $ | 4,373,557 |   |   | $ | 4,140,822 |   |
|       Average      interest rate                                                                       |   |                                               | 6.14           | % |   |   | 6.14 | % |   |   | 6.14 | % |   |   | 6.14 | % |   |   | 6.14 | % |   |   | 6.16 | % |   |   | 6.15 | % |   |   |   |   |
|      Multi-family                                                                                           |   |                                               | 368,380        |   |   |   | 376,426 |   |   |   | 316,328 |   |   |   | 248,612 |   |   |   | 239,749 |   |   |   | 385,204 |   |   |   | 1,934,699 |   |   |   | 1,973,811 |   |
|       Average      interest rate                                                                       |   |                                               | 5.53           | % |   |   | 5.61 | % |   |   | 5.42 | % |   |   | 5.64 | % |   |   | 5.70 | % |   |   | 5.27 | % |   |   | 5.51 | % |   |   |   |   |
|      Commercial      and industrial                                                                         |   |                                               |  33,538   |   |   |   |  21,919 |   |   |   |  15,928 |   |   |   |  14,938 |   |   |   |  14,369 |   |   |   |  36,800 |   |   |   |  137,492 |   |   |   | 139,417 |   |
|       Average      interest rate                                                                       |   |                                               | 6.21           | % |   |   | 5.45 | % |   |   | 5.42 | % |   |   | 5.58 | % |   |   | 5.76 | % |   |   | 5.38 | % |   |   | 5.67 | % |   |   |   |   |
|     Fixed      rate loans:                                                                                       |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Single      family                                                                                     |   |                                               | 743            |   |   |   | 641 |   |   |   | 558 |   |   |   | 485 |   |   |   | 422 |   |   |   | 2,325 |   |   |   | 5,174 |   |   |   | 5,662 |   |
|       Average      interest rate                                                                       |   |                                               | 6.71           | % |   |   | 6.69 | % |   |   | 6.69 | % |   |   | 6.68 | % |   |   | 6.68 | % |   |   | 6.55 | % |   |   | 6.63 | % |   |   |   |   |
|      Multi-family                                                                                           |   |                                               | 569            |   |   |   | 535 |   |   |   | 108 |   |   |   | 86 |   |   |   | 285 |   |   |   | 4 |   |   |   | 1,587 |   |   |   | 1,618 |   |
|       Average      interest rate                                                                       |   |                                               | 6.54           | % |   |   | 6.19 | % |   |   | 4.29 | % |   |   | 4.48 | % |   |   | 6.39 | % |   |   | 6.31 | % |   |   | 6.11 | % |   |   |   |   |
|      Commercial      and industrial                                                                         |   |                                               |  5,469    |   |   |   | 1,434 |   |   |   |  1,188 |   |   |   |  983 |   |   |   |  1,303 |   |   |   | 2,924 |   |   |   |  13,301 |   |   |   | 14,154 |   |
|       Average      interest rate                                                                       |   |                                               | 8.22           | % |   |   | 7.55 | % |   |   | 7.54 | % |   |   | 7.54 | % |   |   | 7337 | % |   |   | 7.51 | % |   |   | 7.79 | % |   |   |   |   |
|      Land      loans                                                                                        |   |                                               | 1,014          |   |   |   | 1,070 |   |   |   | 1,129 |   |   |   | 988 |   |   |   | — |   |   |   | — |   |   |   | 4,201 |   |   |   | 4,099 |   |
|       Average      interest rate                                                                       |   |                                               | 5.39           | % |   |   | 5.39 | % |   |   | 5.39 | % |   |   | 5.39 | % |   |   | — |   |   |   | — |   |   |   | 5.39 | % |   |   |   |   |
|     Non-mortgage      loans:                                                                                     |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Commercial      business loans                                                                         |   |                                               |  20,620   |   |   |   |  20,670 |   |   |   | 20,738 |   |   |   |  17,349 |   |   |   | — |   |   |   | — |   |   |   |  79,377 |   |   |   | 80,538 |   |
|       Average      interest rate                                                                       |   |                                               | 4.83           | % |   |   | 4.85 | % |   |   | 4.86 | % |   |   | 4.87 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 4.85 | % |   |   |   |   |
|      Consumer      loans                                                                                    |   |                                               | 8,987          |   |   |   | 9,025 |   |   |   | 9,195 |   |   |   | 7,808 |   |   |   | — |   |   |   | — |   |   |   | 35,015 |   |   |   | 34,287 |   |
|       Average      interest rate                                                                       |   |                                               | 5.43           | % |   |   | 5.52 | % |   |   | 5.62 | % |   |   | 5.73 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 5.57 | % |   |   |   |   |
|   Mortgage-backed      securities:                                                                                         |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Adjustable:                                                                                                  |   |                                               | 2,970          |   |   |   | 2,795 |   |   |   | 2,774 |   |   |   | 2,753 |   |   |   | 2,734 |   |   |   | 26,478 |   |   |   | 40,504 |   |   |   | 40,504 |   |
|       Average      interest rate                                                                       |   |                                               | 3.69           | % |   |   | 3.69 | % |   |   | 3.69 | % |   |   | 3.69 | % |   |   | 3.69 | % |   |   | 3.69 | % |   |   | 3.69 | % |   |   |   |   |
|     FHLB      stock                                                                                              |   |                                               | 115,150        |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 115,150 |   |   |   | 115,150 |   |
|       Average      interest rate                                                                       |   |                                               | 4.96           | % |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 4.96 | % |   |   |   |   |
|      FHLB,      FRB and other        interest-earning      deposits |   |                                               |   337,340 |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   337,340 |   |   |   |   337,340 |   |
|       Average      interest rate                                                                       |   |                                               | 0.89           | % |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 0.89 | % |   |   |   |   |
|   Investment      securities:                                                                                              |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Collateralized      mortgage obligations                                                               |   |                                               |  10,356   |   |   |   | 10,891 |   |   |   |  11,455 |   |   |   | 12,050 |   |   |   |  12,677 |   |   |   |  265,619 |   |   |   |  323,048 |   |   |   |  323,048 |   |
|       Average      interest rate                                                                       |   |                                               | 5.05           | % |   |   | 5.06 | % |   |   | 5.07 | % |   |   | 5.08 | % |   |   | 5.09 | % |   |   | 5.03 | % |   |   | 5.04 | % |   |   |   |   |
|    Total      interest-earning assets                                                                                 |   | $                                                  | 1,808,460      |   |   | $ | 898,910 |   |   | $ | 776,020 |   |   | $ | 652,776 |   |   | $ | 574,507 |   |   | $ | 2,689,772 |   |   | $ | 7,400,445 |   |   | $ | 7,210,450 |   |
|                                                                                                                                 |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing      liabilities:                                                                                       |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits:                                                                                                                |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Checking      accounts                                                                                 |   | $                                                  | 481,393        |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 481,393 |   |   | $ | 481,393 |   |
|       Average      interest rate                                                                       |   |                                               | 0.31           | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.31 | % |   |   |   |   |
|      Savings      accounts                                                                                  |   |                                               | 925,270        |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 925,270 |   |   |   | 925,270 |   |
|       Average      interest rate                                                                       |   |                                               | 2.23           | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 2.23 | % |   |   |   |   |
|      Certificate      accounts                                                                              |   |                                               | 3,466,016      |   |   |   | 23,684 |   |   |   | 7,400 |   |   |   | 2,032 |   |   |   | 1,086 |   |   |   | 475 |   |   |   | 3,500,693 |   |   |   | 3,537,029 |   |
|       Average      interest rate                                                                       |   |                                               | 3.62           | % |   |   | 4.13 | % |   |   | 3.74 | % |   |   | 3.77 | % |   |   | 3.74 | % |   |   | 3.74 | % |   |   | 3.677 | % |   |   |   |   |
|   Borrowings:                                                                                                              |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      FHLB      advances                                                                                     |   |                                               | 1,030,000      |   |   |   | 850,000 |   |   |   | 180,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,060,000 |   |   |   | 2,097,978 |   |
|       Average      interest rate                                                                       |   |                                               | 2.07           | % |   |   | 2.95 | % |   |   | 3.35 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 2.55 | % |   |   |   |   |
|      FRB      Borrowing                                                                                     |   |                                               | 25,000         |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 25,000 |   |   |   | 25,000 |   |
|      Average      interest rate                                                                             |   |                                               | 0.60           | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.60 | % |   |   |   |   |
|     Senior      debentures                                                                                       |   |                                               | —        |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |   |   | 150,000 |   |   |   | 150,000 |   |
|       Average      interest rate                                                                       |   |                                               | 0.00           | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 6.15 | % |   |   | 6.15 | % |   |   |   |   |
|   Total      interest-bearing liabilities                                                                                  |   | $                                                  | 5,927,679      |   |   | $ | 873,684 |   |   | $ | 187,400 |   |   | $ | 2,032 |   |   | $ | 1,086 |   |   | $ | 150,475 |   |   | $ | 7,142,356 |   |   | $ | 7,217,763 |   |
|                                                                                                                                 |   |                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1) | Expected      maturities are contractual maturities adjusted for prepayments of      principal. The Bank uses certain assumptions to estimate fair values and      expected maturities. For assets,  expected maturities are based upon      contractual maturity, projected repayments and prepayments of principal.      The prepayment experience used is based on the Bank’s historical      experience. The Bank’s average CPR (Constant Prepayment Rate) is 12% for      the adjustable single-family portfolio and 16% for its adjustable      multi-family and commercial real estate portfolios. For fixed rate loans,      the Bank’s average CPR for these loan types is 12% and 16%, respectively.      The Bank used estimated deposit runoff based on available industry      information. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | December      31,2008 |          |   | December      31,2007 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|---------------|--------|-----------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                  |          |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |
| Cash      and cash      equivalents                                                                                                           |   | $                     | 391,469       |   |                  | $      | 53,974 |   |
| Investment      securities, available-for-sale (at fair value) (Notes      3 and 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                  | 323,048       |   |                  |   | 316,788 |   |
| Mortgage-backed      securities, available-for-sale (at fair value) (Notes 4  and      11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  | 40,504        |   |                  |   | 46,435 |   |
| Loans      receivable, net of allowance for loan losses of $326,920 and $128,058      (Notes 5, 10, and 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                  | 6,254,686     |   |                  |   | 6,518,214 |   |
| Accrued      interest and dividends      receivable                                                                                           |   |                  | 30,061        |   |                  |   | 45,492 |   |
| Real      estate owned (Note      6)                                                                                                          |   |                  | 117,664       |   |                  |   | 21,090 |   |
| Office      properties and equipment, net (Note      7)                                                                                       |   |                  | 24,102        |   |                  |   | 17,785 |   |
| Investment      in Federal Home Loan Bank (FHLB) stock, at cost (Notes 8, 10, and      11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  | 115,150       |   |                  |   | 104,387 |   |
| Other      assets                                                                                                                             |   |                  | 153,902       |   |                  |   | 98,816 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                     | 7,450,586     |   |                  | $      | 7,222,981 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                  |          |   |                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| Deposits      (Note      9)                                                                                                                   |   | $                     | 4,907,356     |   |                  | $      | 4,156,692 |   |
| Borrowings      (Notes 8 and      10)                                                                                                         |   |                  | 2,085,000     |   |                  |   | 2,084,000 |   |
| Securities      sold under agreements to repurchase (Note 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                  | —       |   |                  |   | 120,000 |   |
| Senior      debentures (Note 12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                  | 150,000       |   |                  |   | 150,000 |   |
| Accrued      expenses and other      liabilities                                                                                              |   |                  | 49,488        |   |                  |   | 57,790 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  | 7,191,844     |   |                  |   | 6,568,482 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| COMMITMENTS      AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                  |          |   |                  |   |   |   |
|  (Notes      1, 5, 7 and 15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                  |          |   |                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| STOCKHOLDERS'      EQUITY (Notes      1, 3, 4, 14 and 15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                  |          |   |                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| Common      stock, par value $0.01 per share;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                  |          |   |                  |   |   |   |
| Authorized      100,000,000 shares; issued 24,002,093 and 23,970,227    shares,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                  |          |   |                  |   |   |   |
|          outstanding 13,684,553 and 13,640,997 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                  |  240     |   |                  |   |  240 |   |
| Additional      paid-in      capital                                                                                                          |   |                  | 57,880        |   |                  |   | 55,232 |   |
| Retained      earnings                                                                                                                        |   |                  | 463,759       |   |                  |   | 865,411 |   |
| Unreleased      shares to employee stock ownership plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                  |  — |   |                  |   |  (339 | )  |
| Treasury      stock, at cost, 10,317,540 and 10,329,230 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                  | (266,040      | )      |                  |   | (266,040 | ) |
| Accumulated      other comprehensive income (loss), net of taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                  | 2,903         |   |                  |   | (5 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  | 258,742       |   |                  |   | 654,499 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                     | 7,450,586     |   |                  | $      | 7,222,981 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  |          |   |                  |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Interest      and dividend income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |       |   |   |
| Interest      on      loans                                                                                                                        |   | $      | 387,328    |   |   | $      | 571,727    |   |   | $ | 682,716 |   |
| Interest      on mortgage-backed      securities                                                                                                   |   |   | 1,920      |   |   |   | 2,642      |   |   |   | 2,899 |   |
| Interest      and dividends on      investments                                                                                                    |   |   | 23,583     |   |   |   | 23,344     |   |   |   | 27,007 |   |
| Total      interest      income                                                                                                                                        |   |   | 412,831    |   |   |   | 597,713    |   |   |   | 712,622 |   |
| Interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest      on deposits (Note      9)                                                                                                            |   |   | 142,891    |   |   |   | 212,310    |   |   |   | 220,932 |   |
| Interest      on borrowings (Notes 10 and      11)                                                                                                 |   |   | 90,554     |   |   |   | 121,294    |   |   |   | 194,118 |   |
| Total      interest      expense                                                                                                                                       |   |   | 233,445    |   |   |   | 333,604    |   |   |   | 415,050 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      interest      income                                                                                             |   |   | 179,386    |   |   |   | 264,109    |   |   |   | 297,572 |   |
| Provision      for loan losses (Note      5)                                                                                                       |   |   | 570,800    |   |   |   | 32,400     |   |   |   | 12,400 |   |
| Net      interest (loss) income after provision for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | (391,414   | )      |   |   | 231,709    |   |   |   | 285,172 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Non-interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Loan      servicing and other      fees                                                                                                            |   |   | 3,701      |   |   |   | 2,797      |   |   |   | 2,589 |   |
| Retail      office      fees                                                                                                                       |   |   | 7,304      |   |   |   | 6,802      |   |   |   | 6,596 |   |
| Gain      on sale of      loans                                                                                                                    |   |   | 20         |   |   |   | 4,692      |   |   |   | 6,223 |   |
| Gain      (loss) on sale of real estate owned, net (Note 6)                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 8,308      |   |   |   | (3,193     | )      |   |   | 266 |   |
| Other      operating      income                                                                                                                   |   |   | 6,885      |   |   |   | 1,966      |   |   |   | 842 |   |
| Total      non-interest      income                                                                                                                                    |   |   | 26,218     |   |   |   | 13,064     |   |   |   | 16,515 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Non-interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Salaries      and employee      benefits                                                                                                           |   |   | 45,105     |   |   |   | 49,179     |   |   |   | 45,969 |   |
| Occupancy                                                                                                                                          |   |   | 14,775     |   |   |   | 13,370     |   |   |   | 10,687 |   |
| Advertising                                                                                                                                        |   |   | 977        |   |   |   | 1,043      |   |   |   | 1,248 |   |
| Amortization      of core deposit      intangible                                                                                                  |   |   | 464        |   |   |   | 879        |   |   |   | 1,995 |   |
| Federal      deposit      insurance                                                                                                                |   |   | 4,166      |   |   |   | 2,845      |   |   |   | 1,393 |   |
| Data      processing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 2,225      |   |   |   | 2,303      |   |   |   | 2,743 |   |
| OTS      assessment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 1,786      |   |   |   | 2,153      |   |   |   | 2,260 |   |
| Legal                                                                                                                                              |   |   | 2,608      |   |   |   | 566        |   |   |   | 1,718 |   |
| Real      estate owned operations (Note      6)                                                                                                    |   |   | 14,217     |   |   |   | 1,526      |   |   |   | 28 |   |
| Other      operating      expense                                                                                                                  |   |   | 12,247     |   |   |   | 9,592      |   |   |   | 9,686 |   |
| Total      non-interest      expense                                                                                                                                   |   |   | 98,570     |   |   |   | 83,456     |   |   |   | 77,727 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| (Loss)      income before income      taxes                                                                               |   |   | (463,766   | )      |   |   | 161,317    |   |   |   | 223,960 |   |
| Income      tax (benefit) expense (Note      13)                                                                          |   |   | (62,114    | )      |   |   | 68,443     |   |   |   | 94,870 |   |
| Net      (loss)      income                                                                                               |   | $      | (401,652   | )      |   | $      | 92,874     |   |   | $ | 129,090 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| (Loss)      earnings per share: (Notes 1, 15 and 17)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                              |   | $      | (29.39     | )      |   | $      | 6.07       |   |   | $ | 7.79 |   |
| Diluted                                                                                                                                            |   | $      | (29.39     | )      |   | $      | 6.00       |   |   | $ | 7.65 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Weighted      average shares outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                              |   |   | 13,666,032 |   |   |   | 15,308,048 |   |   |   | 16,571,488 |   |
| Diluted                                                                                                                                            |   |   | 13,666,032 |   |   |   | 15,489,439 |   |   |   | 16,865,105 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                      |   |

----

|                                                                                               |   |    CommonStock |                  |   |   AdditionalPaid-InCapital |   |                  |  Retained      Earnings (Substantially Restricted) |   |   |   Unreleased      Shares toESOP |   |   |    TreasuryStock |                  |   | Accumulated      Other Comprehensive Income, Net of Taxes |   |                  |     Total |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------------------|--------|--------------------------------------|--------|-----------------------|---------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|---------------------------------|-----------------------|--------|-----------------------------------------------------------|--------|-----------------------|-------------------------------|--------|
| Balance,      December 31, 2005                                                                    |   |                          | 238                   |   |                                 | $      | 44,147                |                                                    |   | $      | 640,900                                   |   |   | $                               | (1,104                | )      |                                                      | $      | (113,776              | )                             |   | $ | 434 |   |   | $ | 570,839 |   |
| Adjustments      pursuant to SAB No. 108,           net of tax effect:    |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
|       FHLB      stock dividends                                      |   |                          | —               |   |                                 |   | —               |                                                    |   |   | (1,288                                    | )      |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | (1,288 | ) |
|       SERP      adjustment, net of tax                               |   |                          | —               |   |                                 |   | —               |                                                    |   |   | 160                                       |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 160 |   |
|       Tax      liabilities                                           |   |                          | —               |   |                                 |   | —               |                                                    |   |   | 3,675                                     |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 3,675 |   |
| Comprehensive      income:                                                                         |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Net      income                                                                                    |   |                          | —               |   |                                 |   | —               |                                                    |   |   | 129,090                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 129,090 |   |
|        Change in net unrealized gain on securities available-for-sale, net of tax      effect |   |                          |     — |   |                                 |   |     — |                                                    |   |   |     —                     |   |   |                            |     — |   |                                                      |   |     — |                          |   |   | (129 | ) |   |   | (129 | ) |
| SERP      adjustment, net of tax                                                              |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | (2,149 | ) |   |   | (2,149 | ) |
| Total      comprehensive income                                                                    |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 126,812 |   |
| Exercise      of employee stock options                                                            |   |                          | —               |   |                                 |   | 3,233                 |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 3,233 |   |
| Stock      option expense                                                                          |   |                          | —               |   |                                 |   | 1,880                 |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 1,880 |   |
| Net      increase in unreleased shares to the ESOP                                                 |   |                          | —               |   |                                 |   | 350                   |                                                    |   |   | —                                   |   |   |                            | (946                  | )      |                                                      |   | —               |                          |   |   | — |   |   |   | (596 | ) |
| Balance,      December 31, 2006                                                                    |   |                          | 238                   |   |                                 |   | 49,610                |                                                    |   |   | 772,537                                   |   |   |                            | (2,050                | )      |                                                      |   | (113,776              | )                             |   |   | (1,844 | ) |   |   | 704,715 |   |
|                                                                                               |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                         |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Net      income                                                                                    |   |                          | —               |   |                                 |   | —               |                                                    |   |   | 92,874                                    |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 92,874 |   |
|        Change in net unrealized gain on securities available-for-sale, net of tax      effect |   |                          |     — |   |                                 |   |     — |                                                    |   |   |     —                     |   |   |                            |     — |   |                                                      |   |     — |                          |   |   |     1,765 |   |   |   |     1,765 |   |
| SERP      adjustment, net of tax                                                              |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | 74 |   |   |   | 74 |   |
| Total      comprehensive income                                                                    |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 94,713 |   |
| Exercise      of employee stock options                                                            |   |                          | 2                     |   |                                 |   | 4,027                 |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 4,029 |   |
| Stock      option expense                                                                          |   |                          | —               |   |                                 |   | 2,059                 |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 2,059 |   |
| Net      decrease in unreleased shares to the ESOP                                                 |   |                          | —               |   |                                 |   | (464                  | )                                                       |   |   | —                                   |   |   |                            | 1,711                 |   |                                                      |   | —               |                          |   |   | — |   |   |   | 1,247 |   |
| Common      stock repurchased                                                                      |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | (152,264              | )                             |   |   | — |   |   |   | (152,264 | ) |
| Balance,      December 31, 2007                                                                    |   |                          | 240                   |   |                                 |   | 55,232                |                                                    |   |   | 865,411                                   |   |   |                            | (339                  | )      |                                                      |   | (266,040              | )                             |   |   | (5 | ) |   |   | 654,499 |   |
|                                                                                               |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Comprehensive      loss:                                                                           |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Net      loss                                                                                      |   |                          | —               |   |                                 |   | —               |                                                    |   |   | (401,652                                  | )      |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | (401,652 | ) |
|        Change in net unrealized gain on securities available-for-sale, net of tax      effect |   |                          |     — |   |                                 |   |     — |                                                    |   |   |     —                     |   |   |                            |     — |   |                                                      |   |     — |                          |   |   |     680 |   |   |   |     680 |   |
| SERP      adjustment, net of tax                                                              |   |                          | —               |   |                                 |   | —               |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | 2,228 |   |   |   | 2,228 |   |
| Total      comprehensive loss                                                                      |   |                          |                  |   |                                 |   |                  |                                                    |   |   |                                      |   |   |                            |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   | (398,744 | ) |
| Exercise      of employee stock options                                                            |   |                          | —               |   |                                 |   | 529                   |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 529 |   |
| Stock      option expense                                                                          |   |                          | —               |   |                                 |   | 2,044                 |                                                    |   |   | —                                   |   |   |                            | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 2,044 |   |
| Net      decrease in unreleased shares to the ESOP                                                 |   |                          | —               |   |                                 |   | 75                    |                                                    |   |   | —                                   |   |   |                            | 339                   |   |                                                      |   | —               |                          |   |   | — |   |   |   | 414 |   |
| Balance,      December 31, 2008                                                                    |   | $                             | 240                   |   |                                 | $      | 57,880                |                                                    |   | $      | 463,759                                   |   |   | $                               | —               |   |                                                      | $      | (266,040              | )                             |   | $ | 2,903 |   |   | $ | 258,742 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |    |   |   |   |          |    |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|---------|--------|--------|--------|---------------|---------|--------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2008   |          |    |   | 2007   |   |          |    | 2006   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| Net      (loss)      income                                                                                  |   | $      | (401,652      | )       |   |   | $      | 92,874        |    |   |   | $ | 129,090 |   |
| Adjustments      to reconcile net (loss) income to                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| net      cash provided by (used in) operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| Net      change in loans      held-for-sale                                                                                                          |   |   | —       |    |   |   |   | 136,860       |    |   |   |   | (137,987 | ) |
| Stock      option      compensation                                                                                                                  |   |   | 2,044         |    |   |   |   | 2,059         |    |   |   |   | 1,880 |   |
| Excess      tax benefits related to stock      options                                                                                               |   |   | (29           | )       |   |   |   | (1,486        | )       |   |   |   | (1,590 | ) |
| Depreciation      and      amortization                                                                                                              |   |   | 2,740         |    |   |   |   | 2,782         |    |   |   |   | 2,252 |   |
| Provision      for loan      losses                                                                                                                  |   |   | 570,800       |    |   |   |   | 32,400        |    |   |   |   | 12,400 |   |
| Amortization      of fees and premiums/discounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 12,143        |    |   |   |   | 33,222        |    |   |   |   | 51,228 |   |
| Decrease      (increase) in interest income accrued in excess                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
|                      of borrower payments                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |  38,792  |    |   |   |   |  (85,886 | )  |   |   |   |  (153,177 | )  |
| Gain      on sale of real estate      owned                                                                                                          |   |   | (32,061       | )       |   |   |   | (1,047        | )       |   |   |   | (325 | ) |
| Write-down      of real estate      owned                                                                                                            |   |   | 23,753        |    |   |   |   | 4,241         |    |   |   |   | — |   |
| Gain      on sale of      loans                                                                                                                      |   |   | (20           | )       |   |   |   | (4,692        | )       |   |   |   | (6,223 | ) |
| FHLB      stock      dividends                                                                                                                       |   |   | (5,758        | )       |   |   |   | (4,994        | )       |   |   |   | (9,542 | ) |
| Valuation      allowance for deferred taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 149,503       |    |   |   |   | —       |    |   |   |   | — |   |
| Change      in deferred      taxes                                                                                                                   |   |   | (109,614      | )       |   |   |   | (23,188       | )       |   |   |   | (16,217 | ) |
| Change      in current taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (95,316       | )       |   |   |   | 853           |    |   |   |   | (2,763 | ) |
| Decrease      (increase) in interest and dividends receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 15,431        |    |   |   |   | 9,320         |    |   |   |   | (5,839 | ) |
| (Decrease)      increase in interest      payable                                                                                                    |   |   | (4,499        | )       |   |   |   | (67,574       | )       |   |   |   | 35,824 |   |
| Amortization      of core deposit intangible asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 464           |    |   |   |   | 879           |    |   |   |   | 1,995 |   |
| Increase      in other      assets                                                                                                                   |   |   | (616)         |    |   |   |   | (11,298       | )       |   |   |   | (5,142 | ) |
| (Decrease)      increase in accrued expenses and other      liabilities                                                                         |   |   | (1,575        | )       |   |   |   | (7,904        | )       |   |   |   | 2,911 |   |
| Total      adjustments                                                                                                                                         |   |   | 566,182       |    |   |   |   | 14,125        |    |   |   |   | (230,315 | ) |
| Net      cash provided by (used in) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 164,530       |    |   |   |   | 106,999       |    |   |   |   | (101,225 | ) |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| Loans      made to clients and principal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| collections      on loans,      net                                                                                                                            |   |   | (690,448      | )       |   |   |   | 1,846,840     |    |   |   |   | 1,396,431 |   |
| Loans      purchased                                                                                                                                 |   |   | (6,601        | )       |   |   |   | (4,651        | )       |   |   |   | (366 | ) |
| Proceeds      from sales of real      estate                                                                                                         |   |   | 250,420       |    |   |   |   | 22,495        |    |   |   |   | 695 |   |
| Proceeds      from maturities and principal reductions on investment      securities,                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
|                 available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |  46,315  |    |   |   |   |  63,094  |    |   |   |   |  86,630 |   |
| Principal      reductions on mortgage-backed securities,    available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 6,025         |    |   |   |   | 10,677        |    |   |   |   | 17,014 |   |
| Purchases      of investment securities, available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |  (51,320 | )  |   |   |   |  (65,019 | )  |   |   |   |  (104,791 | )  |
| (Purchase)      redemptions of FHLB stock,      net                                                                                                  |   |   | (5,005        | )       |   |   |   | 19,586        |    |   |   |   | 96,259 |   |
| Purchases      of premises and      equipment                                                                                                        |   |   | (9,057        | )       |   |   |   | (3,998        | )       |   |   |   | (3,062 | ) |
| Net      cash (used in) provided by investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | (459,671      | )       |   |   |   | 1,889,025     |    |   |   |   | 1,488,810 |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| Net      (decrease) increase in retail      deposits                                                                                                 |   |   | (74,306       | )       |   |   |   | 223,494       |    |   |   |   | 411,110 |   |
| Net      increase (decrease) in wholesale deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 824,970       |    |   |   |   | (1,956,683    | )       |   |   |   | 1,107,114 |   |
| Net      decrease in short term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (1,024,000    | )       |   |   |   | (354,448      | )       |   |   |   | (2,765,736 | ) |
| Net      increase (decrease) in long term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 905,000       |    |   |   |   | 140,000       |    |   |   |   | (85,000 | ) |
| Proceeds      from stock options      exercised                                                                                                      |   |   | 529           |    |   |   |   | 2,543         |    |   |   |   | 1,644 |   |
| Purchases      of treasury      stock                                                                                                                |   |   | —       |    |   |   |   | (152,264      | )       |   |   |   | — |   |
| Excess      tax benefit related to stock option                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 29            |    |   |   |   | 1,486         |    |   |   |   | 1,590 |   |
| Other                                                                                                                                                |   |   | 414           |    |   |   |   | 2,733         |    |   |   |   | (409 | ) |
| Net      cash provided by (used in) financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 632,636       |    |   |   |   | (2,093,139    | )       |   |   |   | (1,329,687 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| Net  increase      (decrease) in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 337,495       |    |   |   |   | (97,116       | )       |   |   |   | 57,898 |   |
| Cash      and cash equivalents at beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 53,974        |    |   |   |   | 151,090       |    |   |   |   | 93,192 |   |
| Cash      and cash equivalents at end of      period                                                                                                 |   | $      | 391,469       |    |   |   | $      | 53,974        |    |   |   | $ | 151,090 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |    |   |   |   |          |    |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                                            |   |

----

----

----

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Year      Ended December 31,           |              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008                                   |              |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | (In      thousands, except share data) |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                   |              |   |   |   |   |   |   |
|   Net      (loss)      income                                                                        |   | $                                      | (401,652          | ) |   | $ | 92,874 |   |   | $ | 129,090 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                   |              |   |   |   |   |   |   |   |   |   |
|   Average      number of common shares outstanding                                                                                                                                                                                                                                                                                                                                                                         |   |                                   | 13,666,032        |   |   |   | 15,308,048 |   |   |   | 16,571,488 |   |
|   Effect      of dilutive      options                                                               |   |                                   | —           |   |   |   | 181,391 |   |   |   | 293,617 |   |
|   Average      number of common shares outstanding used to calculate diluted (loss)      earnings per common share                                                                                                                                                                                                                                                                                                         |   |                                   |   13,666,032 |   |   |   |   15,489,439 |   |   |   |   16,865,105 |   |

----

----

----

----

|                                     |   | At      December 31, 2008 |    |
|------------------------------------------|--------|---------------------------|---------|
|                                     |   | HistoricalCost            |    |   | GrossUnrealizedGains |   |   | GrossUnrealized Losses |   |   | FairValue |   |
|                                     |   | (In      thousands)       |    |
|                                     |   |                      |    |   |   |   |   |   |   |   |   |   |
| Collateralized      Mortgage Obligations |   | $                         | 318,454 |   |   | $ | 4,594 |   |   | $ | — |   |   | $ | 323,048 |   |

|                                     |   | At      December 31, 2007 |    |
|------------------------------------------|--------|---------------------------|---------|
|                                     |   | HistoricalCost            |    |   | GrossUnrealizedGains |   |   | GrossUnrealized Losses |   |   | FairValue |   |
|                                     |   | (In      thousands)       |    |
|                                     |   |                      |    |   |   |   |   |   |   |   |   |   |
| Collateralized      Mortgage Obligations |   | $                         | 313,274 |   |   | $ | 3,514 |   |   | $ | — |   |   | $ | 316,788 |   |

|   |   | At      December 31, 2008 |   |
|--------|--------|---------------------------|--------|
|   |   | HistoricalCost            |   |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|   |   | (In      thousands)       |   |
|   |   |                      |   |   |   |   |   |   |   |   |   |   |
| FNMA   |   | $                         | 2,441  |   |   | $ | 9 |   |   | $ | — |   |   | $ | 2,450 |   |
| FHLMC  |   |                      | 37,912 |   |   |   | 142 |   |   |   | — |   |   |   | 38,054 |   |
|   |   | $                         | 40,353 |   |   | $ | 151 |   |   | $ | — |   |   | $ | 40,504 |   |

|   |   | At      December 31, 2007 |   |
|--------|--------|---------------------------|--------|
|   |   | HistoricalCost            |   |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|   |   | (In      thousands)       |   |
|   |   |                      |   |   |   |   |   |   |   |   |   |   |
| FNMA   |   | $                         | 3,021  |   |   | $ | 4 |   |   | $ | — |   |   | $ | 3,025 |   |
| FHLMC  |   |                      | 43,356 |   |   |   | 54 |   |   |   | — |   |   |   | 43,410 |   |
|   |   | $                         | 46,377 |   |   | $ | 58 |   |   | $ | — |   |   | $ | 46,435 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | At      December 31, |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2008                 |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (In      thousands)  |      |
| Real      estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                 |      |   |   |   |
|   First      trust deed residential loans:                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |
|      One-to-four      units                                                                            |   | $                    | 4,378,731 |   |   | $ | 4,652,876 |   |
|      Five      or more units                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                 | 1,936,286 |   |   |   | 1,709,815 |   |
|      Residential      loans                                                                            |   |                 | 6,315,017 |   |   |   | 6,362,691 |   |
|   Other      real estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                 |      |   |   |   |   |   |
|      Commercial      and      industrial                                                                                                                                                              |   |                 | 148,841   |   |   |   | 159,052 |   |
|      Land                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                 | 4,201     |   |   |   | 4,242 |   |
|      Second      trust      deeds                                                                      |   |                 | 1,953     |   |   |   | 2,159 |   |
| Real      estate      loans                                                                                                     |   |                 | 6,470,012 |   |   |   | 6,528,144 |   |
| Non-real      estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                 |      |   |   |   |   |   |
|   Deposit      accounts                                                                                               |   |                 | 1,354     |   |   |   | 2,061 |   |
|   Commercial      business      loans                                                                                 |   |                 | 79,378    |   |   |   | 75,848 |   |
|   Consumer                                                                                                            |   |                 | 33,661    |   |   |   | 33,136 |   |
| Loans      receivable                                                                                                           |   |                 | 6,584,405 |   |   |   | 6,639,189 |   |
| Less:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                 |      |   |   |   |   |   |
|   General      loan valuation      allowance                                                                          |   |                 | 280,185   |   |   |   | 127,503 |   |
|   Valuation      allowances for impaired      loans                                                                                                                                                             |   |                 | 46,735    |   |   |   | 555 |   |
|   Deferred      loan origination fees      (costs)                                                                                                                                                                                                 |   |                 | 2,799     |   |   |   | (7,083 | ) |
| Loans      receivable,      net                                                                                                 |   | $                    | 6,254,686 |   |   | $ | 6,518,214 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  GeneralValuationAllowance |     |   | Valuation      AllowancesforImpairedLoans |   |    |    Total |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|----------|--------|-------------------------------------------|--------|---------|-------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)             |     |
| Balance      at December 31,      2005                                                                                                                                                                                                                                                                                 |   |                            | 97,558   |   |                                      |   | — |                    |   |   | 97,558 |   |
|   Provision      for loan      losses                                                                          |   |                            | 12,400   |   |                                      |   | — |                    |   |   | 12,400 |   |
|   Charge-offs                                                                                                  |   |                            | (203     | )      |                                      |   | — |                    |   |   | (203 | ) |
|   Recoveries                                                                                                   |   |                            | 13       |   |                                      |   | — |                    |   |   | 13 |   |
| Balance      at December 31,      2006                                                                                                                                                                                                                                                                                                |   |                            | 109,768  |   |                                      |   | — |                    |   |   | 109,768 |   |
|   Provision      for loan      losses                                                                          |   |                            | 31,845   |   |                                      |   | 555     |                    |   |   | 32,400 |   |
|   Charge-offs                                                                                                  |   |                            | (14,445  | )      |                                      |   | — |                    |   |   | (14,445 | ) |
|   Recoveries                                                                                                   |   |                            | 335      |   |                                      |   | — |                    |   |   | 335 |   |
| Balance      at December 31,      2007                                                                                             |   |                            | 127,503  |   |                                      |   | 555     |                    |   |   | 128,058 |   |
|   Provision      for loan      losses                                                                          |   |                            | 508,544  |   |                                      |   | 62,256  |                    |   |   | 570,800 |   |
| Yield      adjustment on troubled debt restructurings(1)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                            | —  |   |                                      |   | (4,898  | )                       |   |   | (4,898 | ) |
|   Charge-offs                                                                                                  |   |                            | (358,086 | )      |                                      |   | (11,178 | )                       |   |   | (369,264 | ) |
|   Recoveries                                                                                                   |   |                            | 2,224    |   |                                      |   | — |                    |   |   | 2,224 |   |
| Balance      at December 31,      2008                                                                                   |   | $                               | 280,185  |   |                                      | $      | 46,735  |                    |   | $ | 326,920 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                            |     |   |                                      |   |    |                    |   |   |   |   |

|   | (1) | The      Bank establishes an impaired loan valuation allowance for the difference      between the recorded investment of the original loan at the time of      modification and the expected cash flows of the modified loan (discounted      at the effective interest rate of the original loan during the      modification period). The difference is recorded as a provision for loan      losses during the current period and subsequently amortized over the      expected life of the loan as an adjustment to the loan yield or as      adjustment to the loan loss provision if the loan is    prepaid. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                   |   | At      December 31, |    |
|----------------------------------------|--------|----------------------|---------|
|                                   |   | 2008                 |    |   | 2007 |   |
|                                   |   | (In      thousands)  |    |
| Troubled      debt restructuring loans |   | $                    | 572,307 |   |   | $ | 1,799 |   |
| Non-accrual      loans                 |   |                 | 152,227 |   |   |   | 20,112 |   |
| Other      impaired loans              |   |                 | 1,257   |   |   |   | 1,625 |   |
| Total      impaired loans              |   | $                    | 725,791 |   |   | $ | 23,536 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                 |   | At      December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008                 |    |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   | (In      thousands)  |    |
|      Impaired      loans without a valuation allowance                                                                                                                                                                                                                                                                                                                      |   | $                    | 18,050  |   |   | $ | 16,606 |   |
|      Impaired      loans with a valuation allowance                                                                                                                                                                                                                                                                                                                    |   |                 | 754,476 |   |   |   | 7,485 |   |
|      Valuation      allowance related to impaired loans                                                                                                                                                                                                                                                                                                                     |   |                 | (46,735 | ) |   |   | (555 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   |                 |    |   |   |   |   |   |
|      Non-accrual      loans                                                         |   |                 | 403,818 |   |   |   | 180,413 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   |                 |    |   |   |   |   |   |

|                                                                           |                | Year      Ended December 31, |    |
|--------------------------------------------------------------------------------|---------------------|------------------------------|---------|
|                                                                           |                | 2008                         |    |   | 2007 |   |   | 2006 |   |
|                                                                           | (In      thousands) |                         |
|   Average      investment in impaired loans                          |                | $                            | 363,328 |   |   | $ | 13,278 |   |   | $ | 6,767 |   |
|   Interest      income recognized on impaired loans                  |                |                         | 16,203  |   |   |   | 549 |   |   |   | 689 |   |
|   Interest      income recognized on impaired loans using cash basis |                |                         | 12,773  |   |   |   | 508 |   |   |   | 562 |   |
|                                                                           |                |                         |    |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                          |                | For      the Year Ended December 31, |         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------|--------------|
|                                                                                                                                                                                                          |                | 2008                                 |         |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                          | (In      thousands) |                                 |
| Beginning      Balance                                                                                                                                                                                   |                | $                               |  21,090 |   |   | $ |  1,094 |   |   | $  |  — |   |
| Acquisitions                                                                                                                                                                                                  |                |                                 | 338,686      |   |   |   | 45,685 |   |   |   | 1,523 |   |
| Write-downs                                                                                                                                                                                                   |                |                                 | (23,753      | ) |   |   | (4,241 | ) |   |   | (59 | ) |
|          Sale of real estate      owned                                                                                                 |                |                                 | (218,359     | ) |   |   | (21,448 | ) |   |   | (370 | ) |
| Ending      Balance                                |                | $                                    | 117,664      |   |   | $ | 21,090 |   |   | $ | 1,094 |   |

|                                                                                                                                                                         |                | For      the Year Ended December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------|---------|
|                                                                                                                                                                         |                | 2008                                 |    |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                         | (In      thousands) |                                 |
|   Gain      on sale of REO                                                                                                                                         |                | $                                    | 35,078  |   |   | $ | 1,612 |   |   | $ | 325 |   |
|   Loss      on sale of REO                                                                                                                                         |                |                                 | (3,017  | ) |   |   | (565 | ) |   |   | —     |    |
|   Write      downs on      REO                       |                |                                 | (23,753 | ) |   |   | (4,241 | ) |   |   | (59 | ) |
|                                                                                                                                                                         |                | $                                    | 8,308   |   |   | $ | (3,193 | ) |   | $ | 266 |   |

|                                                                                                                                                                           |                | For      the Year Ended December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------|--------|
|                                                                                                                                                                           |                | 2008                                 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                           | (In      thousands) |                                 |
|   Single      family      expense                                                                   |                | $                                    | 14,318 |   |   | $ | 1,527 |   |   | $ | 28 |   |
|   Single      family      income                       |                |                                 | (101   | ) |   |   | (1 | ) |   |   | —    |   |
|                                                                                                                                                                           |                | $                                    | 14,217 |   |   | $ | 1,526 |   |   | $ | 28 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | At      December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2008                 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (In      thousands)  |   |
| Land                                                                                   |   | $                    | 6,713  |   |   | $ | 6,713 |   |
| Office      buildings                                                                                                                                             |   |                 | 7,124  |   |   |   | 7,051 |   |
| Furniture,      fixtures and      equipment                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                 | 24,507 |   |   |   | 20,791 |   |
| Leasehold      improvements                                                                                                                                                                                                                                                                                             |   |                 | 18,861 |   |   |   | 10,847 |   |
| Other                                                                                  |   |                 | 53     |   |   |   | 2,593 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                 | 57,258 |   |   |   | 47,995 |   |
| Less      accumulated depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                 | 33,156 |   |   |   | 30,210 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                    | 24,102 |   |   | $ | 17,785 |   |

----

|       |   |   |   |
|------------|--------|--------|--------|
| 2009       |   | $      | 7,763  |   |
| 2010       |   |   | 7,395  |   |
| 2011       |   |   | 7,219  |   |
| 2012       |   |   | 6,916  |   |
| 2013       |   |   | 6,382  |   |
| Thereafter |   |   | 29,001 |   |
|       |   | $      | 64,676 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | At      December 31,        |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2008                        |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Amount                      |      |   | % |   |   | Amount |   |   | % |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars      in thousands) |      |
| Variable      rate non-term accounts:                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |
| Money      market deposit accounts (weighted average rate of 2.39%, and      4.05%                                                                                                                                                                                                                                                                                                                                                                           |   | $                           | 864,281   |   |   |   | 18 | % |   | $ | 952,933 |   |   |   | 23 | % |
| Interest-bearing      checking accounts (weighted average rate of 0.33%, and    0.34%)                                                                                                                                                                                                                                                                                                                                                                       |   |                        | 148,504   |   |   |   | 3 |   |   |   | 157,775 |   |   |   | 4 |   |
| Passbook      accounts (weighted average rate of 1.05% and 1.37%)                                                                                                                                                                                                                                                                                                                                                                                            |   |                        | 64,909    |   |   |   | 1 |   |   |   | 75,153 |   |   |   | 2 |   |
| Non-interest      bearing checking      accounts                                                                   |   |                        | 323,969   |   |   |   | 7 |   |   |   | 353,298 |   |   |   | 8 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 1,406,663 |   |   |   | 29 |   |   |   | 1,539,159 |   |   |   | 37 |   |
| Fixed-rate      term certificate accounts:                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Under      six-month term (weighted average rate of 2.66% and 4.99%)                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 280,371   |   |   |   | 6 |   |   |   | 661,055 |   |   |   | 16 |   |
| Six-month      term (weighted average rate of 3.11% and 4.88%)                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 796,222   |   |   |   | 16 |   |   |   | 388,617 |   |   |   | 9 |   |
| Nine-month      term (weighted average rate of 3.62% and 5.10%)                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 654,663   |   |   |   | 13 |   |   |   | 454,130 |   |   |   | 11 |   |
| One      year to 18-month term (weighted average rate of 3.83% and      5.02%)                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 1,662,647 |   |   |   | 34 |   |   |   | 1,057,739 |   |   |   | 26 |   |
| Two      year to 30-month term (weighted average rate of 4.24% and      4.73%)                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 79,141    |   |   |   | 2 |   |   |   | 15,423 |   |   |   | 0 |   |
| Over      30-month term (weighted average rate of 4.17% and    4.09%)                                                                                                                                                                                                                                                                                                                                                                                   |   |                        | 27,649    |   |   |   | 0 |   |   |   | 40,569 |   |   |   | 1 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 3,500,693 |   |   |   | 71 |   |   |   | 2,617,533 |   |   |   | 63 |   |
| Total      deposits (weighted average rate of 2.96% and 4.11%)                                                                                                                                                                                                                                                                                                                                                                                               |   | $                           | 4,907,356 |   |   |   | 100 | % |   | $ | 4,156,692 |   |   |   | 100 | % |

----

|                                                              |   |                        |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------|--------|-----------------------------|-----------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                              |   | Non-Term                    |      |   |   |   |      |   |   |   |   |   |   | There- |   |   |   |   |
|                                                              |   | Accounts                    |      |   | 2009   |   |      | 2010   |   |   | 2011   |   |   | after  |   |   | Total  |   |
|                                                              |   | (Dollars      in thousands) |      |
| Deposits      at     December      31, 2008   |   | $                           | 1,406,663 |   |   | $      | 3,466,016 |   |   | $      | 23,684 |   |   | $      | 7,400  |   |   | $      | 3,593 |   |   | $ | 4,907,356 |   |
| Weighted      average     Interest      rates |   |                        | 1.55      | %      |   |   | 3.54      | %      |   |   | 3.82   | %      |   |   | 3.78   | %      |   |   | 4.23 | % |   |   | 2.96 | % |

| Maturing      in:                                                                                                                                                                                                                                                  |   |   |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|   1      month or      less                                                                                            |   | $      | 91,048  |   |
|   Over      1 month to 3 months                                                                                                                                                                                                                          |   |   | 95,190  |   |
|   Over      3 months to 6      months                                                                                                                     |   |   | 300,172 |   |
|   Over      6 months to 12      months                                    |   |   | 430,527 |   |
|   Over      12      months                                                                    |   |   | 12,101  |   |
| Total                                                           |   | $      | 929,038 |   |

|                                                                                                                                                                                                                                                                                                                                                                                        |                | For      the Year Ended December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                        |                | 2008                                 |    |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                        | (In      thousands) |                                 |
| Passbook      accounts                                                                                                                                                              |                | $                                    | 875     |   |   | $ | 1,244 |   |   | $ | 1,348 |   |
| Money      market deposits and interest-bearing checking accounts                                                                                                                                                                                                                                                                                                                           |                |                                 | 29,081  |   |   |   | 38,879 |   |   |   | 34,164 |   |
| Certificate      accounts                                                            |                |                                 | 112,935 |   |   |   | 172,187 |   |   |   | 185,420 |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |                | $                                    | 142,891 |   |   | $ | 212,310 |   |   | $ | 220,932 |   |

|                                                                                                                                                                                                                                                                                        |                |   |  At December      31,     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------|--------------------------------|--------|
|                                                                                                                                                                                                                                                                                        |                |   | 2008                           |   |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                        | (in      thousands) |   |
| Term      borrowing with the FRB of San Francisco with an interest rate      of 0.60%due      January 29, 2009, secured by mortgage-backed securitieswith      unpaid principal balances of $36.5 million as of December 31,      2008.                                                     |                | $      | 25,000                         |   |   | $  |   ─ |   |
|                                                                                                                                                                                                                                                                                        |                |   |                           |   |   |   |   |
| Advances      from the FHLB of San Francisco with a weighted averageinterest      rate of 2.55% and 4.67%, respectively, secured by FHLB stockand      certain real estate loans with unpaid principal balances of $5.2      billionat      December 31, 2008, advances mature through 2011 |                |   |       2,060,000 |   |   |   |       2,084,000 |   |
|                                                                                                                                                                                                                                                                                        |                | $      | 2,085,000                      |   |   | $ | 2,084,000 |   |

----

|  2009 |   | $      | 1,030,000 |   |
|------------|--------|--------|-----------|--------|
|  2010 |   |   | 850,000   |   |
|  2011 |   |   | 180,000   |   |
|       |   | $      | 2,060,000 |   |

|                                                                                                                                                                                                                                                               |   | For      the Year Ended December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                               |   | 2008                                 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                               |   | (In      thousands)                  |   |
| FHLB      advances                                         |   | $                                    | 75,472 |   |   | $ | 76,109 |   |   | $ | 138,881 |   |
| Term      borrowing with FRB                                                                                                                                                                                                                                       |   |                                 | 44     |   |   | ─ |   |   | ─ |   |
| Reverse      repurchase agreements                                                                                                                                                                                                                  |   |                                 | 5,758  |   |   |   | 37,073 |   |   |   | 49,233 |   |
| Senior      debentures                                                                                                                                                                                                                                             |   |                                 | 9,233  |   |   |   | 8,180 |   |   |   | 5,940 |   |
| Other                                                                     |   |                                 | 47     |   |   |   | (68 | ) |   |   | 64 |   |
|                                                                                                                                                                                                                                                               |   | $                                    | 90,554 |   |   | $ | 121,294 |   |   | $ | 194,118 |   |

----

|                |   | Year      Ended December 31, |    |
|---------------------|--------|------------------------------|---------|
|                |   | 2008                         |    |   | 2007 |   |   | 2006 |   |
|                |   | (In      thousands)          |    |
| Current:            |   |                         |    |   |   |   |   |   |   |
|   Federal |   | $                            | (99,665 | ) |   | $ | 67,504 |   |   | $ | 82,965 |   |
|   State   |   |                         | (228    | ) |   |   | 24,127 |   |   |   | 28,122 |   |
|                |   |                         | (99,893 | ) |   |   | 91,631 |   |   |   | 111,087 |   |
| Deferred:           |   |                         |    |   |   |   |   |   |   |   |   |   |
|   Federal |   |                         | 19,733  |   |   |   | (16,971 | ) |   |   | (12,775 | ) |
|   State   |   |                         | 18,046  |   |   |   | (6,217 | ) |   |   | (3,442 | ) |
|                |   |                         | 37,779  |   |   |   | (23,188 | ) |   |   | (16,217 | ) |
| Total:              |   |                         |    |   |   |   |   |   |   |   |   |   |
|   Federal |   |                         | (79,932 | ) |   |   | 50,533 |   |   |   | 70,190 |   |
|   State   |   |                         | 17,818  |   |   |   | 17,910 |   |   |   | 24,680 |   |
|                |   | $                            | (62,114 | ) |   | $ | 68,443 |   |   | $ | 94,870 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Year      Ended December 31, |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2008                         |   | 2007 |   | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         |   |   |   |   |
| Statutory      federal income tax      rate                                                                                                                   |   |    (35.0)%    |   |      35.0% |   | 35.0% |
| Increase      in taxes resulting from:     Valuation      allowances                                                                 |   |  17.6                   |   |   |   |   |
| Non-deductible      stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |    0.1        |   |    0.4 |   |     0.2 |
| Decrease      in taxes resulting from:                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |   |   |   |   |
| State      franchise tax, net of federal income tax benefit                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   3.9              |   |    7.2 |   | 7.2 |
| Other,      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | ─                      |   |    (0.2) |   | ─ |
| Effective      rate                                                                                                                                           |   |    (13.4)%    |   |      42.4% |   | 42.4% |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | At      December 31, |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008                 |     |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (In      thousands)  |     |
| Components      of the deferred tax asset:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |     |   |   |   |
|   Bad      debts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                    | (151,377 | ) |   | $ | (58,993 | ) |
|   Pension      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                 | (7,850   | ) |   |   | (7,020 | ) |
|   State      taxes                                                                                                                                                                                                                                                                                                                                                         |   |                 | ─  |   |   |   | (3,164 | ) |
|   Core      deposit intangible asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                 | (2,872   | ) |   |   | (3,162 | ) |
|        SERP liability adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                 |  -- |   |   |   |  (1,505 | )  |
|   State      net operating      loss                                                                                                                                                                                                                                                                                                                                                                                              |   |                 | (27,958  | ) |   |   | ─ |   |
|   Loan      fees                                                                                                                                                                                                                                             |   |                 | (22,128  | ) |   |   | (24,875 | ) |
|   Other                                                                                                                              |   |                 | (8,941   | ) |   |   | (3,510 | ) |
|     Total      deferred tax      asset                                                                                                                                                                                                                                                                                                                 |   |                 | (221,126 | ) |   |   | (102,229 | ) |
| Components      of the deferred tax liability:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                 |     |   |   |   |   |   |
|   FHLB      stock      dividends                                                                                                                                                                                                                                                                     |   |                 | 22,049   |   |   |   | 19,632 |   |
|   Tax      effect of unrealized gain on securities      available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 | 1,995    |   |   |   | 1,502 |   |
|   State      taxes                                                                                                                                                                                                                                                     |   |                 | 6,422    |   |   |   | ─ |   |
|   SERP      liability      adjustment                                                                                                                                                                                                                                                                                                                       |   |                 | 111      |   |   |   | ─ |   |
|   Other                                                                                                                              |   |                 | 280      |   |   |   | 441 |   |
|     Total      deferred tax      liability                                                                                 |   |                 | 30,857   |   |   |   | 21,575 |   |
| Net      deferred tax asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                 | (190,269 | ) |   |   | (80,654 | ) |
| Valuation      allowance for deferred tax      asset                                                                                                                                                                                                                                       |   |                 | 149,503  |   |   |   | ─ |   |
| Net      deferred tax asset after valuation      allowance                                                                                                                                                                                                                                                                                                                                          |   | $                    | (40,766  | ) |   | $ | (80,654 | ) |

----

|                                           | December      31, 2008       |                            |
|------------------------------------------------|-----------------------------------|---------------------------------|
|                                           | Tangible      Capital             |                            |   | CoreCapital |   |   | Tier      1Risk-based      Capital |   |   | Risk-based      Capital |   |
| Actual      capital:                           | (Dollars      in thousands)       |                            |
|                                           |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                                 | 398,523                         |   |   | $ | 398,523 |   |   | $ | 398,523 |   |   | $ | 452,120 |   |
| Ratio                                          |                              | 5.35                            | % |   |   | 5.35 | % |   |   | 9.93 | % |   |   | 11.26 | % |
| FDICIA      minimum required capital:          |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                                 | 111,662                         |   |   | $ | 297,766 |   |   | $  | ─ |   |   | $ | 321,154 |   |
| Ratio                                          |                              | 1.50                            | % |   |   | 4.00 | % |   |   | ─     | % |   |   | 8.00 | % |
| FDICIA      well-capitalized required capital: |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                            | ─                         |   |   | $ | 372,208 |   |   | $ | 240,866 |   |   | $ | 401,443 |   |
| Ratio                                          |                              | ─     | %  |   |   | 5.00 | % |   |   | 6.00 | % |   |   | 10.00 | % |
|                                           |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           | December      31, 2007       |                            |
|                                           | Tangible      Capital             |                            |   | CoreCapital |   |   | Tier      1Risk-based      Capital |   |   | Risk-based      Capital |   |
|                                           |  (Dollars      in thousands) |                            |
| Actual      capital:                           |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                                 | 791,699                         |   |   | $ | 791,699 |   |   | $ | 791,699 |   |   | $ | 841,802 |   |
| Ratio                                          |                              | 10.97                           | % |   |   | 10.97 | % |   |   | 20.14 | % |   |   | 21.42 | % |
| FDICIA      minimum required capital:          |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                                 | 108,273                         |   |   | $ | 288,727 |   |   | $  | ─ |   |   | $ | 314,420 |   |
| Ratio                                          |                              | 1.50                            | % |   |   | 4.00 | % |   |   | ─     | %  |   |   | 8.00 | % |
| FDICIA      well-capitalized required capital: |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         | $                            | ─                         |   |   | $ | 360,909 |   |   | $ | 235,815 |   |   | $ | 393,025 |   |
| Ratio                                          |                              | ─     | % |   |   | 5.00 | % |   |   | 6.00 | % |   |   | 10.00 | % |
|                                           |                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                   |   | At      December 31, |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2008                 |    |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                   |   | (In      thousands)  |    |
| Change      in Benefit Obligation                                                                                                                                                                                                                                                                                                                                                                      |   |                 |    |   |   |   |
| Projected      benefit obligation, beginning of the year                                                                                                                                                                                                                                                                                                                                               |   | $                    | 16,288  |   |   | $ | 15,151 |   |
| Service      cost                                                                                                                                                                                                                                                                                  |   |                 | 344     |   |   |   | 305 |   |
| Interest      cost                                                                                                                                                              |   |                 | 1,029   |   |   |   | 863 |   |
| Benefits      paid                                                                                                                                                    |   |                 | (286    | ) |   |   | (287 | ) |
| Actuarial      (gain)      loss                                                                                                                                                                                                                       |   |                 | (3,086  | ) |   |   | 256 |   |
| Projected      benefit obligation, end of the year                                                                                                                                                                                                                                                                                                                                                     |   | $                    | 14,289  |   |   | $ | 16,288 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                   |   |                 |    |   |   |   |   |   |
| Change      in Plan Assets                                                                                                                                                                                                                                                                                                                                                                             |   |                 |    |   |   |   |   |   |
| Benefits      paid                                                               |   | $                    | (287    | ) |   | $ | (287 | ) |
| Employer      contributions                                                                                                                                                          |   |                 | 287     |   |   |   | 287 |   |
| Funded      status                                                                                                                                     |   |                 | (14,289 | ) |   |   | (16,289 | ) |
| Unrecognized      net actuarial      loss                                                                                                                                                                                                                                                          |   |                 | (264    | ) |   |   | 3,580 |   |
| Net      amount      recognized                                                                                                                                                                                                                                           |   | $                    | (14,553 | ) |   | $ | (12,709 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                   |   |                 |    |   |   |   |   |   |
| Components      of Net Periodic Benefit Cost                                                                                                                                                                                                                                                                                                                                                           |   |                 |    |   |   |   |   |   |
| Service      cost                                                                          |   | $                    | 344     |   |   | $ | 305 |   |
| Interest      cost                                                                                                       |   |                 | 1,029   |   |   |   | 863 |   |
| Amortization      of unrecognized net      loss                                                                                                                                                                                                                                                                             |   |                 | 758     |   |   |   | 384 |   |
| Pension      cost                                                                                              |   | $                    | 2,131   |   |   | $ | 1,552 |   |

----

----

|                                                                                                                                                                                                 |   |                                    |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|      Options      Outstanding                                                                                                                                               |   | 2008                                    |    |   | 2007 |   |   | 2006 |   |
|      (Weighted      average option prices)                                                                                                                                  |   | (In      shares except intrinsic value) |    |
|                                                                                                                                                                                                 |   |                                    |    |   |   |   |   |   |   |
| Beginning      of year ($42.67, $36.07, and $29.70)                                                                                                                                                  |   |                                    | 781,787 |   |   |   | 820,380 |   |   |   | 758,081 |   |
|        Granted      ($36.07, $67.20, and      $58.73)                   |   |                                    | 160,800 |   |   |   | 124,984 |   |   |   | 180,115 |   |
|        Exercised      ($16.59, $19.97, and      $20.27)                           |   |                                    | (31,866 | ) |   |   | (127,293 | ) |   |   | (81,109 | ) |
|        Forfeited      ($43.77, $57.71 and      $50.61)                                           |   |                                    | (61,914 | ) |   |   | (36,284 | ) |   |   | (36,707 | ) |
| End      of year ($42.32, $42.67 and      $36.07)                                                                    |   |                                    | 848,807 |   |   |   | 781,787 |   |   |   | 820,380 |   |
|        Shares      exercisable at December 31, ($32.78, $29.38 and $23.54)                                                                                        |   |                                    | 406,066 |   |   |   | 369,841 |   |   |   | 410,247 |   |

|   Non-vested      shares:  |   |   Shares |    |   | WeightedAverageGrant-DateFair      Value |   |
|--------------------------------------|--------|--------------------|---------|--------|------------------------------------------|--------|
|                                 |   |               |    |   |                                     |   |
| Non-vested      at January 1, 2008   |   |               | 411,946 |   |                                     | $      | 21.16 |   |
| Granted                              |   |               | 160,800 |   |                                     |   | 10.91 |   |
| Vested                               |   |               | (68,091 | )      |                                     |   | 17.52 |   |
| Forfeited                            |   |               | (61,914 | )      |                                     |   | 16.12 |   |
| Non-vested      at December 31, 2008 |   |               | 442,741 |   |                                     | $      | 18.70 |   |

|                                                      |   | Price      Ranges |                        |
|-----------------------------------------------------------|--------|-------------------|-----------------------------|
|                                                      |   | $                 | (13.12      –($17.25) |   |   | $ | (26.75 –$31.44) |   |   | $ | (36.07      –$67.26) |   |
|      Options      Outstanding:   |   |              |                        |   |   |   |   |   |   |   |   |   |
| Number      of outstanding options                        |   |              | 101,980                     |   |   |   | 175,364 |   |   |   | 571,463 |   |
| Weighted-average      remaining contractual life in years |   |              | 0.56                        |   |   |   | 3.19 |   |   |   | 7.31 |   |
| Weighted-average      exercise price                      |   | $                 | 14.64                       |   |   | $ | 29.14 |   |   | $ | 51.30 |   |
|                                                      |   |              |                        |   |   |   |   |   |   |   |   |   |
|      Options      Exercisable:   |   |              |                        |   |   |   |   |   |   |   |   |   |
| Number      of outstanding options                        |   |              | 101,980                     |   |   |   | 163,938 |   |   |   | 140,148 |   |
| Weighted-average      remaining contractual life in years |   |              | 0.56                        |   |   |   | 3.05 |   |   |   | 6.06 |   |
| Weighted-average      exercise price                      |   | $                 | 14.64                       |   |   | $ | 28.94 |   |   | $ | 50.48 |   |

----

|   Non-vested      Stock:    |   |  Number      of Shares |   |   | WeightedAverageGrant-DateFair      Value |   |
|---------------------------------------|--------|-----------------------------|--------|--------|------------------------------------------|--------|
| Outstanding      at January 1, 2008   |   |                        | 5,400  |   |                                     | $      | 67.26 |   |
| Granted                               |   |                        | 11,690 |   |                                     | $      | 36.07 |   |
| Vested                                |   |                        | (2,700 | )      |                                     | $      | 67.26 |   |
| Forfeited                             |   | ─                     |   |   | ─                                  |   |
| Outstanding      at December 31, 2008 |   |                        | 14,390 |   |                                     | $      | 41.92 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | At      December 31, |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2008                 |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (In      thousands)  |      |
| Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                 |      |   |   |   |
| Cash                                                                                       |   | $                    | 6,852     |   |   | $ | 11,933 |   |
| Other      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                 | 865       |   |   |   | 337 |   |
| Investment      in      subsidiary                                                                                                                                                                                                                                                                 |   |                 | 401,474   |   |   |   | 792,229 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                    | 409,191   |   |   | $ | 804,499 |   |
| Liabilities      and Stockholders' Equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                 |      |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |
| Other      liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                 |  449 |   |   |   | — |   |
| Senior      notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                 | 150,000   |   |   |   | 150,000 |   |
| Stockholders’      equity                                                                                                                                                                                                                                 |   |                 | 258,742   |   |   |   | 654,499 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                    | 409,191   |   |   | $ | 804,499 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Year      Ended December 31, |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
| CONDENSED      STATEMENTS OF OPERATIONS AND                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2008                         |     |   | 2007 |   |   | 2006 |   |
|                  COMPREHENSIVE      (LOSS) INCOME                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)          |     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |     |   |   |   |   |   |   |
| Equity      in undistributed net (loss) income of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                            | (395,852 | ) |   | $ | 97,970 |   |   | $ | 132,827 |   |
| Other      expense,      net                                                                                     |   |                         | (5,800   | ) |   |   | (5,096 | ) |   |   | (3,737 | ) |
| Net      (loss)      income                                                                                      |   |                         | (401,652 | ) |   |   | 92,874 |   |   |   | 129,090 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |     |   |   |   |   |   |   |   |   |   |
| Change      in other comprehensive income (loss), net of taxes                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         | 2,908    |   |   |   | 1,839 |   |   |   | (2,278 | ) |
| Comprehensive      (loss)      Income                                                                            |   | $                            | (398,744 | ) |   | $ | 94,713 |   |   | $ | 126,812 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Year      Ended December 31, |          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------------|
| CONDENSED STATEMENTS OF CASH      FLOWS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  2008                   |          |   | 2007  |   |   | 2006  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (In      thousands)          |          |
| Net Cash Flows from Operating      Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |          |   |   |   |   |   |   |
|   Net      (loss)      income                                                                                                |   | $                            | (401,652      | ) |   | $ | 92,874 |   |   | $ | 129,090 |   |
|   Adjustments      to reconcile net (loss) income to       net      cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                       |   |                         |          |   |   |   |   |   |   |   |   |   |
|     Equity      in undistributed net      income of      subsidiary                                                                                                                                                                                                                                                                                                                                                  |   |                         | 395,852       |   |   |   | (97,970 | ) |   |   | (132,827 | ) |
| Stock      option compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                         | 2,044         |   |   |   | 2,059 |   |   |   | 1,880 |   |
|     Other                                                                                                          |   |                         | (79           | ) |   |   | 2,022 |   |   |   | (145 | ) |
|     Net      cash used in operating      activities                                                                                                                                           |   |                         | (3,835        | ) |   |   | (1,015 | ) |   |   | (2,002 | ) |
| Cash      Flows from Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |          |   |   |   |   |   |   |   |   |   |
|     Dividends      received from Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                         | —  |          |   |   | 100,000 |   |   |   |                         — |   |
|     Net      cash provided by investing      activities                                                                                                                                                                               |   |                         | —  |   |   |   | 100,000 |   |   |   |                         — |   |
| Cash      Flows from Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |          |   |   |   |   |   |   |   |   |   |
|          Purchase of treasury stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                         | —  |   |   |   | (152,264 | )  |   |   |                         — |   |
|     Proceeds      from issuance of senior debt                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                         | —  |   |   |   | 50,000 |   |   |   |                         — |   |
|     Decrease      (increase) in unreleased      shares                                                                                                                                                                      |   |                         | 339           |   |   |   | 1,711 |   |   |   | (946 | ) |
|     Exercise      of stock      options                                                                            |   |                         | 529           |   |   |   | 4,027 |   |   |   | 3,233 |   |
|     Other                                                                                                          |   |                         | (2,114        | ) |   |   | (2,516 | ) |   |   | (1,530 | ) |
| Net      cash (used in) provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         | (1,246        | ) |   |   | (99,042 | ) |   |   | 757 |   |
| Net      decrease in      cash                                                                                                         |   |                         | (5,081        | ) |   |   | (57 | ) |   |   | (1,245 | ) |
| Cash      at beginning of      period                                                                                                  |   |                         | 11,933        |   |   |   | 11,990 |   |   |   | 13,235 |   |
| Cash      at end of      period                                                                                                        |   | $                            | 6,852         |   |   | $ | 11,933 |   |   | $ | 11,990 |   |

----

|                                       |   |  InterestIncome |    |   | InterestExpense |   |    | Provisionfor LoanLosses |   |   |        Non-InterestIncome |   |   |        Non-InterestExpense |   |   |        Net (Loss)Income |   |   |        Basic(Loss)EarningsperShare |   |   |        Diluted(Loss)EarningsperShare |   |
|--------------------------------------------|--------|----------------------|---------|--------|-----------------|--------|---------|-------------------------|--------|--------|--------------------------------|--------|--------|---------------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------------------------|--------|
| (In      thousands, except per share data) |   |
| First      quarter                    |   |                 |    |   |            |   |    |                    |   |   |                           |   |   |                            |   |   |                         |   |   |                                    |   |   |                                      |   |   |   |   |   |   |   |   |   |
| 2008                                       |   | $                    | 115,588 |   |            | $      | 66,247  |                    |   | $      | 150,300                        |   |   | $                               | 3,026  |   |                         | $      | 22,118 |                                    |   | $      | (69,781                                   | )      |   | $ | (5.11 | ) |   | $ | (5.11 | ) |
| 2007                                       |   |                 | 170,417 |   |            |   | 95,199  |                    |   |   | 3,800                          |   |   |                            | 5,852  |   |                         |   | 20,847 |                                    |   |   | 32,384                                    |   |   |   | 1.95 |   |   |   | 1.92 |   |
| 2006                                       |   |                 | 169,493 |   |            |   | 94,982  |                    |   |   | 3,900                          |   |   |                            | 2,483  |   |                         |   | 19,916 |                                    |   |   | 30,774                                    |   |   |   | 1.86 |   |   |   | 1.82 |   |
| Second      quarter                        |   |                 |    |   |            |   |    |                    |   |   |                           |   |   |                            |   |   |                         |   |   |                                    |   |   |                                      |   |   |   |   |   |   |   |   |   |
| 2008                                       |   | $                    | 101,592 |   |            | $      | 56,888  |                    |   | $      | 90,200                         |   |   | $                               | 9,621  |   |                         | $      | 25,074 |                                    |   | $      | (35,512                                   | )      |   | $ | (2.60 | ) |   | $ | (2.60 | ) |
| 2007                                       |   |                 | 154,736 |   |            |   | 85,044  |                    |   |   | 3,100                          |   |   |                            | 4,342  |   |                         |   | 20,940 |                                    |   |   | 29,071                                    |   |   |   | 1.77 |   |   |   | 1.74 |   |
| 2006                                       |   |                 | 178,513 |   |            |   | 104,649 |                    |   |   | 2,500                          |   |   |                            | 4,622  |   |                         |   | 19,416 |                                    |   |   | 32,479                                    |   |   |   | 1.96 |   |   |   | 1.92 |   |
| Third      quarter                         |   |                 |    |   |            |   |    |                    |   |   |                           |   |   |                            |   |   |                         |   |   |                                    |   |   |                                      |   |   |   |   |   |   |   |   |   |
| 2008                                       |   | $                    | 99,924  |   |            | $      | 54,114  |                    |   | $      | 110,300                        |   |   | $                               | 8,541  |   |                         | $      | 23,167 |                                    |   | $      | (51,586                                   | )      |   | $ | (3.77 | ) |   | $ | (3.77 | ) |
| 2007                                       |   |                 | 140,413 |   |            |   | 78,234  |                    |   |   | 4,500                          |   |   |                            | 1,506  |   |                         |   | 19,114 |                                    |   |   | 23,001                                    |   |   |   | 1.58 |   |   |   | 1.57 |   |
| 2006                                       |   |                 | 183,473 |   |            |   | 109,855 |                    |   |   | 3,000                          |   |   |                            | 4,046  |   |                         |   | 18,343 |                                    |   |   | 32,462                                    |   |   |   | 1.96 |   |   |   | 1.93 |   |
| Fourth      quarter                        |   |                 |    |   |            |   |    |                    |   |   |                           |   |   |                            |   |   |                         |   |   |                                    |   |   |                                      |   |   |   |   |   |   |   |   |   |
| 2008                                       |   | $                    | 95,727  |   |            | $      | 56,166  |                    |   | $      | 220,000                        |   |   | $                               | 5,030  |   |                         | $      | 28,211 |                                    |   | $      | (244,773                                  | )      |   | $ | (17.91 | ) |   | $ | (17.91 | ) |
| 2007                                       |   |                 | 132,147 |   |            |   | 75,127  |                    |   |   | 21,000                         |   |   |                            | 1,364  |   |                         |   | 22,555 |                                    |   |   | 8,418                                     |   |   |   | 0.62 |   |   |   | 0.61 |   |
| 2006                                       |   |                 | 181,143 |   |            |   | 105,564 |                    |   |   | 3,000                          |   |   |                            | 5,364  |   |                         |   | 20,052 |                                    |   |   | 33,375                                    |   |   |   | 2.01 |   |   |   | 1.98 |   |
| Total      year                            |   |                 |    |   |            |   |    |                    |   |   |                           |   |   |                            |   |   |                         |   |   |                                    |   |   |                                      |   |   |   |   |   |   |   |   |   |
| 2008                                       |   | $                    | 412,831 |   |            | $      | 233,445 |                    |   | $      | 570,800                        |   |   | $                               | 26,218 |   |                         | $      | 98,570 |                                    |   | $      | (401,652                                  | )      |   | $ | (29.39 | ) |   | $ | (29.39 | ) |
| 2007                                       |   |                 | 597,713 |   |            |   | 333,604 |                    |   |   | 32,400                         |   |   |                            | 13,064 |   |                         |   | 83,456 |                                    |   |   | 92,874                                    |   |   |   | 6.07 |   |   |   | 6.00 |   |
| 2006                                       |   |                 | 712,622 |   |            |   | 415,050 |                    |   |   | 12,400                         |   |   |                            | 16,515 |   |                         |   | 77,727 |                                    |   |   | 129,090                                   |   |   |   | 7.79 |   |   |   | 7.65 |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                     |   | 2008                 |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                     |   | Carrying      Amount |      |   | Fair      Value |   |   | Carrying      Amount |   |   | Fair      Value |   |
|                                                                                                                                                                                                                                                                                                                                                                                     |   | (In      thousands)  |      |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                   |   |                 |      |   |   |   |   |   |   |   |   |   |
| Cash      and cash      equivalent                                                          |   | $                    | 391,469   |   |   | $ | 391,469 |   |   | $ | 53,974 |   |   | $ | 53,974 |   |
| Mortgage-backed      securities                                                             |   |                 | 40,504    |   |   |   | 40,504 |   |   |   | 46,435 |   |   |   | 46,435 |   |
| Collateralized      mortgage obligations                                                                                                                                                                                                                                                                                                                                                 |   |                 | 323,048   |   |   |   | 323,048 |   |   |   | 316,788 |   |   |   | 316,788 |   |
| Loan      receivable                                                                        |   |                 | 5,528,895 |   |   |   | 5,341,697 |   |   |   | 6,494,678 |   |   |   | 6,391,056 |   |
| Impaired      loans                                                                         |   |                 | 725,791   |   |   |   | 725,791 |   |   |   | 23,536 |   |   |   | 23,536 |   |
| Real      estate      owned                                                                 |   |                 | 117,664   |   |   |   | 117,664 |   |   |   | 21,090 |   |   |   | 21,090 |   |
| FHLB      stocks                                                                            |   |                 | 115,150   |   |   |   | 115,150 |   |   |   | 104,387 |   |   |   | 104,387 |   |
|                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                              |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                    |   | $                    | 4,907,356 |   |   | $ | 4,943,691 |   |   | $ | 4,156,692 |   |   | $ | 4,156,961 |   |
| Short-term      borrowings                                                                  |   |                 | 1,055,000 |   |   |   | 1,055,000 |   |   |   | 2,079,000 |   |   |   | 2,079,000 |   |
| Long-term      borrowings                                                                   |   |                 | 1,180,000 |   |   |   | 1,217,978 |   |   |   | 275,000 |   |   |   | 305,522 |   |
|                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

           SFASNo. 157, Fair ValueMeasurements, defines fair value, establishes a framework for measuringfair value, establishes a three-level valuation hierarchy for disclosure of fairvalue measurement, and enhances disclosure requirements for fair valuemeasurements. The valuation hierarchy is based upon the transparency of inputsto the valuation of an asset or liability as of the measurement date. The threelevels are defined as follow:

|                |   |         |         |                                                                                                                                                                                                                                                                                       |
|---------------------|--------|--------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •   |   | Level 1 |    | inputs      to the valuation methodology are quoted prices (unadjusted) for identical      assets or liabilities in active markets.                                                                                                                                                        |
|                |   |         |
| •             |   | Level 2 |    | inputs      to the valuation methodology include quoted prices for similar assets and      liabilities in active markets, and inputs that are observable for the      asset or liability, either directly or indirectly, for substantially the      full term of the financial instrument. |
|                |   |         |
| •             |   | Level 3 |    | inputs      to the valuation methodology are unobservable and significant to the fair      valuemeasurement.                                                                                                                                                                               |

|                                                        |   |   |        |   |   | Fair Value Measurements at Reporting Date      Using |                                                        |
|-------------------------------------------------------------|--------|--------|-------------|--------|--------|------------------------------------------------------|-------------------------------------------------------------|
| Description                                            |   |   |  Total |   |   |                                                 | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   |   | Significant      OtherObservableInputs(Level 2)  |   |   |   | Significant      UnobservableInputs(Level 3)  |   |
|                                                        |   |   |        |   |   |                                                 |                                                        |   |   |   |   |   |   |   |   |   |
| Recurring Items:                                       |   |   |        |   |   |                                                 |                                                        |   |   |   |   |   |   |   |   |   |
| Collateralized mortgage      obligations               |   | $      | 323,048     |   |   |                                                 | —                                                     |   |   | $ | 323,048 |   |   | $ | — |   |
| Mortgage-backed securities                             |   |   | 40,504      |   |   |                                                 | —                                                     |   |   |   | 40,504 |   |   |   | — |   |
|          Total |   | $      | 363,552     |   |   |                                                 | —                                                     |   |   | $ | 363,552 |   |   |   | — |   |

----

|                                                             |   |   |          |   |   | Fair Value Measurements at Reporting Date      Using |                                                        |
|-------------------------------------------------------------|--------|--------|---------------|--------|--------|------------------------------------------------------|-------------------------------------------------------------|
| Description                                            |   |   |  Total   |   |   |                                                 | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   |   | Significant      OtherObservableInputs(Level 2)  |   |   |   | Significant      UnobservableInputs(Level 3)  |   |
|                                                        |   |   |          |   |   |                                                 |                                                        |   |   |   |   |   |   |   |   |   |
| Non-Recurring Items:                                   |   |   |          |   |   |                                                 |                                                        |   |   |   |   |   |   |   |   |   |
| Troubled      debt restructuring loans                      |   | $      | 572,307       |   |   |                                                 | —                                                     |   |   | $ | — |   |   | $ | 572,307 |   |
| Non-accrual      loans                                 |   |   |  152,227 |   |   |                                                 |  —                                               |   |   |   | 152,227  |   |   |   |  — |   |
| Other      impaired loans                              |   |   |  1,257   |   |   |                                                 |  —                                               |   |   |   | 1,257  |   |   |   |  — |   |
| Real      estate owned                                      |   |   | 117,664       |   |   |                                                 | —                                                     |   |   |   | 117,664 |   |   |   | — |   |
|          Total |   | $      | 843,455       |   |   |                                                 | —                                                     |   |   | $ | 271,148 |   |   |   | 572,307 |   |

----

----

----

----

----

|   | (a) | The      following documents are filed as a part of this Annual Report on Form      10-K: |
|--------|-----|-------------------------------------------------------------------------------------------|

|   | (1)      Financial Statements (included in this Annual Report on Form 10-K under      Item 8) |
|--------|-----------------------------------------------------------------------------------------------|

|   | (2)      Exhibits as shown below |
|--------|----------------------------------|

| (3.1) |  Restated      Certificate of Incorporation filed as Exhibit 3.1 to Form 10-K for the      fiscal year ended December 31, 1999 and incorporated      by reference. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3.2) |  Amended      and Restated Bylaws filed as Exhibit 3(ii) to Form 8-K dated June 27, 2008      and incorporated byreference. |
|-------|----------------------------------------------------------------------------------------------------------------------------------|

| (4.1) |  Second      Amended and Restated Rights Agreement dated as of October 23, 2008, filed      on October 28, 2008 as Exhibit 4.1 to Form 8-K and incorporated      by reference. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.1)* |  Amended      and Restated Supplemental Executive Retirement Plan dated October 23, 2008      filed as Exhibit 10.1 to Form 8-K dated October      23, 2008 and incorporated byreference. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.2)* |  Change      of Control Agreement effective September 26, 1996 filed as Exhibit 10.4 to      Form 10-Q for the quarter ended September 30, 1996 and      Amendment filed as Exhibit 10.4 for quarter      ended September 30, 2000 and incorporated by  reference. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.3) |  1997      Non-employee Directors Stock Incentive Plan filed on August 12, 1997 as      Exhibit 4.1 to Form S-8 dated August 12, 1997and Amendment      filed as Exhibit 10.5 to Form 10-Q for the quarter ended September 30,      2000 and incorporated byreference. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.4) |  2007      Non-employee Directors Restricted Stock Plan filed as Appendix A to      Schedule 14A, Proxy Statement for the Annual Stockholders’ Meeting      held on April 26, 2006 and incorporated by  reference. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.5) |  Order      to Cease and Desist with the Company dated January 26, 2009 filed as      Exhibit 10.1 to Form 8-K dated January 26, 2009 and incorporated      by reference. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.6) |  Stipulation      and Consent to Issuance of Order to Cease and Desist with the Company      dated January 26, 2009 filed as Exhibit 10.2 to Form      8-K dated January 26, 2009 and incorporated by  reference. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.7) |  Order      to Cease and Desist with the Bank dated January 26, 2009 filed as Exhibit      10.3 to Form 8-K dated January 26, 2009 and incorporated      by reference. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10.8) |  Stipulation      and Consent to Issuance of Order to Cease and Desist with the Bank dated      January 26, 2009 filed as Exhibit 10.4 to Form      8-K dated January 26, 2009 and incorporated  by      reference. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    (21) |  Registrant's      sole subsidiary is First Federal Bank of California, a federal savings      bank. |
|------------------------|-----------------------------------------------------------------------------------------------------------|

|    (23)  |  Independent      Auditors’ consent. |
|------------------------------|-------------------------------------------------|

| (31.1) |  Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002. |
|--------|---------------------------------------------------------------------------------------------------------------------|

| (31.2) |  Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002. |
|--------|---------------------------------------------------------------------------------------------------------------------|

| (32.1) |  Certification      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley      Act of 2002. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (32.2) |  Certification      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley      Act of 2002. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Corporate      Secretary             |
|-------------------------------------------|
| FirstFed Financial      Corp.        |
| 12555 West Jefferson      Boulevard  |
| Los Angeles,      California 90066   |

----

| FIRSTFED FINANCIAL      CORP.,                                                                       |
|-----------------------------------------------------------------------------------------------------------|
|             a      Delaware corporation  |

| Dated this 30th day      of March, 2009  |    |                               |
|-----------------------------------------------|---------|------------------------------------|
|                                          | By: /s/ | Babette E.      Heimbuch      |
|                                          |    | Babette E. Heimbuch           |
|                                          |    | Chief Executive      Officer  |

| SIGNATURE                                                     |   | TITLE                                                               |
|---------------------------------------------------------------|--------|---------------------------------------------------------------------|
|                                                          |   |                                                                |
| /s/      Babette E. Heimbuch                                  |   | Chairman      of the Board and                                      |
|            Babette E. Heimbuch  |   | Chief      Executive Officer (Principal Executive    Officer)  |
|                                                          |   |                                                                |
| /s/      James P. Giraldin                                    |   | Director,      President and Chief Operating Officer                |
|            James P. Giraldin    |   |                                                                |
|                                                          |   |                                                                |
| /s/      Douglas J. Goddard                                   |   | Executive      Vice President and Chief Financial Officer           |
|            Douglas J. Goddard   |   | (Principal      Financial Officer)                             |
|                                                          |   |                                                                |
| /s/      Brenda J. Battey                                     |   | Senior      Vice President and Controller                           |
|            Brenda J. Battey          |   | (Principal      Accounting Officer)                            |
|                                                          |   |                                                                |
| /s/      Gisselle Acevedo                                     |   | Director                                                            |
|            Gisselle Acevedo          |   |                                                                |
|                                                          |   |                                                                |
| /s/      Brian E. Argrett                                     |   | Director                                                            |
|            Brian E. Argrett          |   |                                                                |
|                                                          |   |                                                                |
| /s/      Nicholas C. Biase                                    |   | Director                                                            |
|            Nicholas C. Biase         |   |                                                                |
|                                                          |   |                                                                |
| /s/      Jesse Casso, Jr.                                     |   | Director                                                            |
|            Jesse Casso, Jr.          |   |                                                                |
|                                                          |   |                                                                |
| /s/      Christopher M. Harding                               |   | Director                                                            |
|            Christopher M. Harding    |   |                                                                |
|                                                          |   |                                                                |
| /s/      William G. Ouchi                                     |   | Director                                                            |
|            William G. Ouchi          |   |                                                                |
|                                                          |   |                                                                |
| /s/      William P. Rutledge                                  |   | Director                                                            |
|            William P. Rutledge       |   |                                                                |
|                                                          |   |                                                                |
| /s/      Steven L. Soboroff                                   |   | Director                                                            |
|            Steven L. Soboroff        |   |                                                                |

----

| (1)  | I      have reviewed this annual report on Form 10-K of FirstFed Financial      Corp.; |
|-----------|----------------------------------------------------------------------------------------|

| (2) | Based      on my knowledge, this annual report does not contain any untrue statement      of a material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the period covered by this      report; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Based      on my knowledge, the financial statements, and other financial information      included in this annual report, fairly present in all material respects      the financial condition, results of operations and cash flows of the      registrant as of, and for, the periods presented in this      report; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)  | The      registrant’s other certifying officer and I are responsible for      establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal      control over financial reporting (as defined in Exchange Act Rules      13a-15(f) and 15d-15(f)) for the registrant and  have: |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a)  | Designed      such disclosure controls and procedures, or caused such disclosure      controls and procedures to be designed under our supervision, to ensure      that material information relating to the registrant, including its      consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this annual report is      being prepared; |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b)  | Designed      such internal control over financial reporting, or caused such internal      control over financial reporting to be designed under our supervision, to      provide reasonable assurance regarding the reliability of financial      reporting and the preparation of financial statements for external      purposes in accordance with generally accepted accounting      principles; |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c)  | Evaluated      the effectiveness of the registrant’s disclosure controls and procedures      and presented in this report our conclusions about the effectiveness of      the disclosure controls and procedures, as of the end of the period      covered by this report based on such evaluation;  and |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d)  | Disclosed      in this report any change in the registrant’s internal control over      financial reporting that occurred during the registrant’s fourth fiscal      quarter that has materially affected, or is reasonably likely to      materially affect, the registrant’s internal control over financial      reporting; and |
|--------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (5) | The      registrant’s other certifying officer and I have disclosed, based on our      most recent evaluation of internal control over financial reporting, to      the registrant’s auditors and the audit committee of the registrant’s      board of directors: |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (a)  | All      significant deficiencies and material weaknesses in the design or      operation of internal control over financial reporting which are      reasonably likely to adversely affect the registrant’s ability to record,      process, summarize and report financial information;  and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)  | Any      fraud, whether or not material, that involves management or other      employees who have a significant role in the registrant’s internal control      over financial reporting. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated this 30th day      of March, 2009  |    |                           |
|-----------------------------------------------|---------|--------------------------------|
|                                          | By: /s/ | Babette E.      Heimbuch  |
|                                          |    | Babette E. Heimbuch       |
|                                          |    | Chief Executive      Officer   |

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| (1)  | I      have reviewed this annual report on Form 10-K of FirstFed Financial      Corp.; |
|-----------|----------------------------------------------------------------------------------------|

| (2) | Based      on my knowledge, this annual report does not contain any untrue statement      of a material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the period covered by this      report; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (3) | Based      on my knowledge, the financial statements, and other financial information      included in this annual report, fairly present in all material respects      the financial condition, results of operations and cash flows of the      registrant as of, and for, the periods presented in this      report; |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)  | The      registrant’s other certifying officer and I are responsible for      establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal      control over financial reporting (as defined in Exchange Act Rules      13a-15(f) and 15d-15(f)) for the registrant and  have: |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a)  | Designed      such disclosure controls and procedures or caused such disclosure controls      and procedures to be designed under our supervision, to ensure that      material information relating to the registrant, including its      consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this annual report is      being prepared; |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b)  | Designed      such internal control over financial reporting, or caused such internal      control over financial reporting to be designed under our supervision, to      provide reasonable assurance regarding the reliability of financial      reporting and the preparation of financial statements for external      purposes in accordance with generally accepted accounting      principles; |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c)  | Evaluated      the effectiveness of the registrant’s disclosure controls and procedures      and presented in this report our conclusions about the effectiveness of      the disclosure controls and procedures, as of the end of the period      covered by this report based on such evaluation;  and |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d)  | Disclosed      in this report any change in the registrant’s internal control over      financial reporting that occurred during the registrant’s fourth fiscal      quarter that has materially affected, or is reasonably likely to      materially affect, the registrant’s internal control over financial      reporting; and |
|--------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)  | The      registrant’s other certifying officer and I have disclosed, based on our      most recent evaluation of internal control over financial reporting, to      the registrant’s auditors and the audit committee of the registrant’s      board of directors: |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)  | All      significant deficiencies and material weaknesses in the design or      operation of internal control over financial reporting which are      reasonably likely to adversely affect the registrant’s ability to record,      process, summarize and report financial information;  and |
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| (b)  | Any      fraud, whether or not material, that involves management or other      employees who have a significant role in the registrant’s internal control      over financial reporting. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated this 30th day      of March, 2009  |    |                               |
|-----------------------------------------------|---------|------------------------------------|
|                                          | By: /s/ | Douglas J. Goddard  |
|                                          |    | Douglas J. Goddard            |
|                                          |    | Chief Financial      Officer  |

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|   | (1) | the      Annual Report on Form 10-K of FirstFed Financial Corp. (the "Company") for      the fiscal year ended December 31, 2008 (the "Report ") accompanying this      certification fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or      78o(d)); and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the      information contained in the Report fairly presents, in all material      respects, the financial condition and results of operations of the Company      for such period. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| FIRSTFED FINANCIAL      CORP.                                                             |
|------------------------------------------------------------------------------------------------|
|              Registrant  |

| Dated this 30th day      of March, 2009  |    |                           |
|-----------------------------------------------|---------|--------------------------------|
|                                          | By: /s/ | Babette E.      Heimbuch  |
|                                          |    | Babette E. Heimbuch       |
|                                          |    | Chief Executive      Officer   |

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|   | (1) | the      Annual Report on Form 10-K of FirstFed Financial Corp. (the "Company") for      the fiscal year ended December 31, 2008 (the "Report ") accompanying this      certification fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or      78o(d)); and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the      information contained in the Report fairly presents, in all material      respects, the financial condition and results of operations of the Company      for such period. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| FIRSTFED FINANCIAL      CORP.                                                             |
|------------------------------------------------------------------------------------------------|
|              Registrant  |

| Dated this 30th day      of March, 2009  |    |                                  |
|-----------------------------------------------|---------|---------------------------------------|
|                                          | By: /s/ | Douglas J.    Goddard            |
|                                          |    | Douglas J. Goddard               |
|                                          |    | Chief Financial      Officer and |
|                                          |    | Executive Vice      President    |

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