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|   | Part      I    |                                                                                                       | Item    1.   |                                                                                 | Business              | 4   |
|--------|---------------------|------------------------------------------------------------------------------------------------------------|-------------------|--------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|----------|
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item 1A.                                                                                         |              | Risk      Factors                                                               | 24                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    1B.                                                                                           |              | Unresolved Staff      Comments                                                  | 26                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    2.                                                                                            |              | Properties                                                                      | 26                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item      3.                                                                                          |              | Legal      Proceedings                                                          | 26                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    4.                                                                                            |              | Submission of      Matters to a Vote of Security Holders                        | 26                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   | Part      II   |                                                                                                       | Item    5.   |                                                                                 | Market for      Registrant's Common Equity, Related Stockholder Mattersand        |     |
|   |                |                                                                                                       |              | Issuer Purchasers of      Equity Securities                                     | 27                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    6.                                                                                            |              | Selected Financial      Data                                                    | 29                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    7.                                                                                            |              | Management's      Discussion and Analysis of Financial Condition and            |                                                                                   |
|   |                |                                                                                                       |              | Results of      Operations                                                      | 30                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    7A.                                                                                           |              | Quantitative and      Qualitative Disclosures About Market Risk                 | 48                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    8.                                                                                            |              | Financial Statements      and Supplementary Data                                | 52                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                |                                                                                                       |              | Notes to      Consolidated Financial Statements                                 | 56                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                |                                                                                                       |              | Report of      Independent Registered Public Accounting Firm                    | 83                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    9.                                                                                            |              | Changes in and      Disagreements with Accountants on Accounting and Financial  |                                                                                   |
|   |                |                                                                                                       |              | Disclosure                                                                      | 84                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    9A.                                                                                           |              | Controls and      Procedures                                                    | 84                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    9B.                                                                                           |              | Other      Information                                                          | 84                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   | Part III  |                                                                                                       | Item    10.  |                                                                                 | Directors and      Executive Officers of the Registrant                           | 86  |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item 11.                                                                                         |              | Executive      Compensation                                                     | 86                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    12.                                                                                           |              | Security Ownership      of Certain Beneficial Owners and                        |                                                                                   |
|   |                |                                                                                                       |              | Management and      Related Stockholder Matters                                 | 86                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    13.                                                                                           |              | Certain      Relationships and Related Transactions                             | 86                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                | Item    14.                                                                                           |              | Principal Accounting      Fees and Services                                     | 86                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   | Part IV   |                                                                                                       | Item    15.  |                                                                                 | Exhibits, Financial      Statement Schedule                                       | 87  |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                |                                                                                                       |              | Signatures                                                                      | 88                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   |                |                                                                                                       |              | Power of      Attorney                                                          | 88                                                                                |
|   |                |                                                                                                       |              |                                                                                 |                                                                                   |
|   | Exhibits       |                                                                                                       |              |                                                                                 |                                                                                   |     |
|   | 31.1                | Certification of      Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act  |              |
|   |                | of    2002                                                                                            | 89           |
|   | 31.2           | Certification of      Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act  |              |
|   |                | of    2002                                                                                            | 90           |
|   | 32.1           | Certification of      Chief Executive Officer pursuant to 18 USC Section 1350, as      adopted        |              |
|   |                | pursuant to Section      906 of the Sarbanes-Oxley Act of 2002                                        | 91           |
|   | 32.2           | Certification of      Chief Financial Officer pursuant to 18 USC Section 1350, as      adopted   |              |
|   |                | pursuant to Section      906 of the Sarbanes-Oxley Act of 2002                                        | 92           |

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|                                                                    |   | Loan      Maturity Analysis |      |
|-------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                    |   | Total      Balance          |      |   | 1      Yearor      Less |   |   | >      1 Yearto      5 Years |   |   | >      5-10 Years |   |   | >      10-20 Years |   |   | >      20-30 Years |   |   | >      30 Years |   |
|                                                                    |   | (Dollars      in thousands) |      |
| Interest      rate sensitive loans:                                     |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AMLs                                                                    |   | $                           | 5,855,045 |   |   | $ | 78,992 |   |   | $ | 685,244 |   |   | $ | 488,802 |   |   | $ | 1,300,139 |   |   | $ | 1,803,740 |   |   | $ | 1,498,128 |   |
| Fixed/Adjustable      loans                                             |   |                        | 644,244   |   |   |   | 11,723 |   |   |   | 219,038 |   |   |   | 78,705 |   |   |   | 128,057 |   |   |   | 164,697 |   |   |   | 42,024 |   |
| Fixed      rate loans                                                   |   |                        | 24,613    |   |   |   | 6,197 |   |   |   | 7,598 |   |   |   | 5,131 |   |   |   | 3,579 |   |   |   | 1,912 |   |   |   | 196 |   |
| Commercial      business loans                                          |   |                        | 75,848    |   |   |   | 18,965 |   |   |   | 56,883 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Land      loans…………………… |   |                        | 4,242     |   |   |   | 972 |   |   |   | 3,270 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Consumer      and other loans                                           |   |                        | 35,197    |   |   |   | 8,551 |   |   |   | 26,646 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total                                                                   |   | $                           | 6,639,189 |   |   | $ | 125,400 |   |   | $ | 998,679 |   |   | $ | 572,638 |   |   | $ | 1,431,775 |   |   | $ | 1,970,349 |   |   | $ | 1,540,348 |   |
|                                                                    |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                              |   |                        |          |   |           |   |          |   |   |   |           |   |   |   |    |   |           |   |    |   |   |   |           |   |   |   |    |   |           |   |
|---------------------------------------------------|--------|-----------------------------|---------------|--------|----------------|--------|---------------|--------|--------|--------|----------------|--------|--------|--------|---------|--------|----------------|--------|---------|--------|--------|--------|----------------|--------|--------|--------|---------|--------|----------------|--------|
|                                              |   | 2007                        |          |   | %      ofTotal |   |          | 2006   |   |   | %      ofTotal |   |   | 2005   |    |   | %      ofTotal |   |    | 2004   |   |   | %      ofTotal |   |   | 2003   |    |   | %      ofTotal |   |
|                                              |   | (Dollars      in thousands) |          |
| Non-accrual      loans:                           |   |                        |          |   |           |   |          |   |   |   |           |   |   |   |    |   |           |   |    |   |   |   |           |   |   |   |    |   |           |   |
|   Single      family                    |   | $                           | 179,679       |   |           |   | 99.6          | %      |   | $      | 18,474         |   |   |   | 99.9    | %      |           | $      | 3,569   |   |   |   | 71.9           | %      |   | $      | 4,590   |   |           |   | 92.1 | % |   | $ | 3,326 |   |   |   | 99.5 | % |
|   Multi-family                          |   |                        |  — |   |           |   | —       |   |   |   | —        |   |   |   | — |   |           |   | — |   |   |   | —        |   |   |   | 391     |   |           |   | 7.8 |   |   |   | — |   |   |   | — |   |
|   Commercial                            |   |                        | 720           |   |           |   | 0.4           |   |   |   | 12             |   |   |   | 0.1     |   |           |   | 1,364   |   |   |   | 27.5           |   |   |   | — |   |           |   | — |   |   |   | — |   |   |   | — |   |
|   Consumer                              |   |                        | 14            |   |           |   |  — |   |   |   | 11             |   |   |   | — |   |           |   | 13      |   |   |   | 0.2            |   |   |   | 4       |   |           |   | 0.1 |   |   |   | 16 |   |   |   | 0.5 |   |
|   Business…………. |   |                        | —       |   |           |   |  — |   |   |   | —        |   |   |   | — |   |           |   | 20      |   |   |   | 0.4            |   |   |   | — |   |           |   |  — |   |   |   | — |   |   |   | — |   |
|  Total      non-accrual loans                |   | $                           | 180,413       |   |           |   | 100.0         | %      |   | $      | 18,497         |   |   |   | 100.0   | %      |           | $      | 4,966   |   |   |   | 100.0          | %      |   | $      | 4,985   |   |           |   | 100.0 | % |   | $ | 3,342 |   |   |   | 100.0 | % |
|                                              |   |                        |          |   |           |   |          |   |   |   |           |   |   |   |    |   |           |   |    |   |   |   |           |   |   |   |    |   |           |   |   |   |   |   |   |   |   |   |   |   |

----

|                      |   | At      December 31, |   |
|---------------------------|--------|----------------------|--------|
|                      |   | 2007                 |   |   | 2006 |   |   | 2005 |   |
|                      |   | (In      thousands)  |   |
|                      |   |                 |   |   |   |   |   |   |   |
| Restructured      loans   |   | $                    | 1,799  |   |   | $ | — |   |   | $ | — |   |
| Non-accrual      loans    |   |                 | 20,112 |   |   |   | 2,544 |   |   |   | 3,027 |   |
| Other      impaired loans |   |                 | 1,625  |   |   |   | 2,894 |   |   |   | — |   |
|                      |   | $                    | 23,536 |   |   | $ | 5,438 |   |   | $ | 3,027 |   |

|                                                                                                                                                                                                                                                                                                                                                                                 |   | At      December 31, |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                 |   | 2007                 |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                 |   | (In      thousands)  |    |
|                                                                                                                                                                                                                                                                                                                                                                                 |   |                 |    |   |   |   |   |   |   |
| Single      family                                                                                                                                                                                                                                                                                                                                                                   |   | $                    | 23,536  |   |   | $ | 5,438 |   |   | $ | 1,663 |   |
| Commercial                                                                              |   |                 | — |   |   |   | — |   |   | $ | 1,364 |   |
| Total      impaired      loans                                                          |   | $                    | 23,536  |   |   | $ | 5,438 |   |   | $ | 3,027 |   |

----

|                                                                               |                | December      31,            |    |
|------------------------------------------------------------------------------------|---------------------|------------------------------|---------|
|                                                                               |                | 2007                         |    |   | 2006 |   |   | 2005 |   |
|                                                                               | (In      thousands) |                         |
|                                                                               |                |                         |    |   |   |   |   |   |   |
|      Impaired      loans without a valuation allowance    |                | $                            | 16,606  |   |   | $ | 5,438 |   |   | $ | 3,027 |   |
|      Impaired      loans with a valuation allowance  |                | $                            | 7,485   |   |   | $ | — |   |   | $ | — |   |
|      Valuation      allowances related to impaired loans  |                | $                            | (555    | )  |   | $ | — |   |   | $ | — |   |
|                                                                               |                |                         |    |   |   |   |   |   |   |   |   |   |
|      Non-accrual      loans                               |                | $                            | 180,413 |   |   | $ | 18,497 |   |   | $ | 4,966 |   |
|                                                                               |                |                         |    |   |   |   |   |   |   |   |   |   |
|                                                                               |                |                         |    |
|                                                                               |                | Year      Ended December 31, |    |
|                                                                               |                | 2007                         |    |   | 2006 |   |   | 2005 |   |
|                                                                               | (In      thousands) |                         |
|                                                                               |                |                         |    |   |   |   |   |   |   |   |   |   |
|   Average      investment in impaired loans                              |                | $                            | 13,278  |   |   | $ | 6,767 |   |   | $ | 2,649 |   |
|   Total      interest income recognized on impaired loans                |                | $                            | 549     |   |   | $ | 689 |   |   | $ | 174 |   |
|   Interest      income recognized on a cash basis on impaired loans      |                | $                            | 508     |   |   | $ | 562 |   |   | $ | 166 |   |

----

|                                            |   | Year      Ended December 31, |    |
|-------------------------------------------------|--------|------------------------------|---------|
|                                            |   | 2007                         |    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                            |   | (In      thousands)          |    |
|                                            |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      general loan valuation allowance |   | $                            | 109,768 |   |   | $ | 97,558 |   |   | $ | 78,675 |   |   | $ | 75,238 |   |   | $ | 75,223 |   |
| Provision      for loan losses                  |   |                         | 31,845  |   |   |   | 12,400 |   |   |   | 18,650 |   |   |   | 3,000 |   |   |   | — |   |
| Charge-offs,      net of recoveries:            |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                              |   |                         | (13,977 | ) |   |   |  (35 | ) |   |   | 11 |   |   |   | 120 |   |   |   | (52 | ) |
| Multi-family                                    |   |                         | — |   |   |   | 2 |   |   |   | 189 |   |   |   | 237 |   |   |   | 14 |   |
| Commercial                                      |   |                         | (52     | ) |   |   | (53 | ) |   |   | 85 |   |   |   | (7 | ) |   |   |        — |   |
| Non-real      estate                            |   |                         | (81     | ) |   |   | (104 | ) |   |   | (52 | ) |   |   | 87 |   |   |   | 53 |   |
| Total      net (charge-offs) recoveries         |   |                         | (14,110 | ) |   |   | (190 | ) |   |   | 233 |   |   |   | 437 |   |   |   | 15 |   |
| Ending      general loan valuation allowance    |   | $                            | 127,503 |   |   | $ | 109,768 |   |   | $ | 97,558 |   |   | $ | 78,675 |   |   | $ | 75,238 |   |
|                                            |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                             |   | December      31,           |    |
|----------------------------------|--------|-----------------------------|---------|
|                             |   | 2007                        |    |   | %      ofTotal |   |   | 2006 |   |   | %      ofTotal |   |   | 2005 |   |   | %      ofTotal |   |   | 2004 |   |   | %      ofTotal |   |   | 2003 |   |   | %      ofTotal |   |
|                             |   | (Dollars      in thousands) |    |
| Real      estate loans:          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Single      family   |   | $                           | 116,191 |   |   |   | 91.1 | % |   | $ | 83,934 |   |   |   | 76.5 | % |   | $ | 68,329 |   |   |   | 70.0 | % |   | $ | 48,271 |   |   |   | 61.4 | % |   | $ | 28,775 |   |   |   | 38.2 | % |
|   Multi-family         |   |                        | 6,352   |   |   |   | 5.0 |   |   |   |  17,686 |   |   |   | 16.1 |   |   |   | 20,486 |   |   |   | 21.0 |   |   |   | 19,570 |   |   |   | 24.9 |   |   |   | 24,789 |   |   |   | 32.9 |   |
|   Commercial           |   |                        | 1,760   |   |   |   |  1.4 |   |   |   | 2,395 |   |   |   | 2.2 |   |   |   | 3,221 |   |   |   | 3.3 |   |   |   | 5,053 |   |   |   | 6.4 |   |   |   | 6,185 |   |   |   | 8.2 |   |
|   Land                 |   |                        | 85      |   |   |   |  0.1 |   |   |   | — |   |   |   | — |   |   |   | 148 |   |   |   | 0.2 |   |   |   | 508 |   |   |   | 0.6 |   |   |   | 2,266 |   |   |   | 3.1 |   |
| Total      real estate loans     |   |                        | 124,388 |   |   |   | 97.6 |   |   |   | 104,015 |   |   |   | 94.8 |   |   |   | 92,184 |   |   |   | 94.5 |   |   |   | 73,402 |   |   |   | 93.3 |   |   |   | 62,015 |   |   |   | 82.4 |   |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-real      estate loans:      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Commercial           |   |                        | 2,439   |   |   |   | 1.9 |   |   |   | 3,626 |   |   |   | 3.3 |   |   |   | 2,855 |   |   |   | 2.9 |   |   |   | 2,618 |   |   |   | 3.3 |   |   |   | 5,595 |   |   |   | 7.5 |   |
|   Consumer             |   |                        | 674     |   |   |   | 0.5 |   |   |   | 2,127 |   |   |   | 1.9 |   |   |   | 2,519 |   |   |   | 2.6 |   |   |   | 2,655 |   |   |   | 3.4 |   |   |   | 7,624 |   |   |   | 10.1 |   |
|   Other                |   |                        | 2       |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 4 |   |   |   | — |   |
| Total      non-real estate loans |   |                        | 3,115   |   |   |   | 2.4 |   |   |   | 5,753 |   |   |   | 5.2 |   |   |   | 5,374 |   |   |   | 5.5 |   |   |   | 5,273 |   |   |   | 6.7 |   |   |   | 13,223 |   |   |   | 17.6 |   |
| Total                            |   | $                           | 127,503 |   |   |   | 100.0 | % |   | $ | 109,768 |   |   |   | 100.0 | % |   | $ | 97,558 |   |   |   | 100.0 | % |   | $ | 78,675 |   |   |   | 100.0 | % |   | $ | 75,238 |   |   |   | 100.0 | % |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                |   | Year      Ended December 31, |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2007                         |   |   | 2006 |   |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   | (In      thousands)          |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                         |   |   |   |   |   |   |
| Beginning      balance                                                                                                 |   | $                            | 1,094 |   |   | $                                       ─ |   |   | $                          ─ |
|   Additions                                                                                                                                                                                                                                                                                                                                                                                               |   |                         | 36,572 |   |   |   | 1,461 |   |   |                             ─ |
|       Sales      and      other                                                          |   |                         | (16,576 | ) |   |   | (367 | )  |   |                             ─ |
| Ending      balance                                                                                                    |   | $                            | 21,090 |   |   | $ | 1,094 |   |   | $                          ─ |

|                                                                                                                                                                                                                                                                                                                                                                                                                |   | Year      Ended December 31,                                                                                                                                                    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2007                                                                                                                                                                            |   |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   | (In      thousands)                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                            |   |   |   |   |   |   |   |
| Beginning      balance                                                                                                 |   | $                               ─            |   |   | $                               ─ |   |   | $ | 986 |   |
|   Additions                                                                                                                                                                                                                                                                                                                                                                                               |   |                                       ─ |   |   |                                  ─ |   |   |   | 1,869 |   |
|       Sales      and      other                                                          |   |                                       ─ |   |   |                                  ─ |   |   |   | (2,855 | ) |
| Ending      balance                                                                                                    |   | $                               ─            |   |   |  $                              ─ |   |   | $                                 ─ |   |

----

|                                                                           |   | At      December 31,        |        |
|--------------------------------------------------------------------------------|--------|-----------------------------|-------------|
|                                                                           |   | 2007                        |        |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                           |   | (Dollars      in thousands) |        |
|                                                                           |   |                        |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Collateralized      mortgage obligations (“CMO’s”)           |   | $                           | 313,274     |   |   | $ | 311,467 |   |   | $ | 293,453 |   |   | $ | 249,781 |   |   | $ | 115,992 |   |
| Unrealized      gain on securities available-for-sale                          |   |                        |  3,514 |   |   |   |  383 |   |   |   |  564 |   |   |   |  805 |   |   |   |  219 |   |
|                                                                           |   | $                           | 316,788     |   |   | $ | 311,850 |   |   | $ | 294,017 |   |   | $ | 250,586 |   |   | $ | 116,211 |   |
| Weighted      average yield on interest-earning investments end      of period |   |                        | 5.56        | % |   |   | 5.51 | % |   |   | 4.15 | % |   |   | 2.82 | % |   |   | 2.92 | % |

|                                                            |   | December      31,   |   |
|-----------------------------------------------------------------|--------|---------------------|--------|
|                                                            |   | 2007                |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                            |   | (In      thousands) |   |
| FHLMC      and FNMA mortgage-backed securities (at fair value): |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Secured      by single family dwellings       |   | $                   | 43,411 |   |   | $ | 53,290 |   |   | $ | 69,581 |   |   | $ | 91,308 |   |   | $ | 128,465 |   |
|    Secured      by multi-family dwellings        |   |                | 3,024  |   |   |   | 3,907 |   |   |   | 4,673 |   |   |   | 5,751 |   |   |   | 6,711 |   |
| Total      mortgage-backed securities                           |   | $                   | 46,435 |   |   | $ | 57,197 |   |   | $ | 74,254 |   |   | $ | 97,059 |   |   | $ | 135,176 |   |
|                                                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                              |   | During      the Year Ended December 31, |                  |
|---------------------------------------------------|--------|-----------------------------------------|-----------------------|
|                                              |   | 2007                                    |                  |   | 2006 |   |   | 2005 |   |
|                                              |   | Average      Balance                    |                  |   | Average      Rate |   |   | Average      Balance |   |   | Average      Rate |   |   | Average      Balance |   |   | Average      Rate |   |
|                                              |   | (Dollars      in thousands)             |                  |
|                                              |   |                                    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Passbook      accounts                            |   | $                                       | 86,185                |   |   |   | 1.44 | % |   | $ | 107,296 |   |   |   | 1.26 | % |   | $ | 119,421 |   |   |   | 1.01 | % |
|  Money      market deposit accounts          |   |                                    |        918,367   |   |   |   |        4.17 |   |   |   |        884,007 |   |   |   |  3.79 |   |   |   |        1,069,070 |   |   |   | 2.05 |   |
|  Interest-bearing      checking accounts     |   |                                    |        167,300   |   |   |   |        0.37 |   |   |   |        196,818 |   |   |   | 0.32 |   |   |   |        212,054 |   |   |   | 0.31 |   |
|  Non      interest-bearing checking accounts |   |                                    |  405,369         |   |   |   | — |   |   |   |        387,091 |   |   |   | — |   |   |   |        401,998 |   |   |   | — |   |
|  Fixed-term      certificate accounts        |   |                                    |        3,268,331 |   |   |   | 5.27 |   |   |   |        3,850,539 |   |   |   | 4.82 |   |   |   |        2,276,242 |   |   |   | 3.25 |   |
|                                              |   | $                                       | 4,845,552             |   |   |   | 4.38 | % |   | $ | 5,425,751 |   |   |   | 4.07 | % |   | $ | 4,078,785 |   |   |   | 2.40 | % |

|                                                                                                                |   | At      December 31,        |                  |
|---------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------------------|
|                                                                                                                |   | 2007                        |                  |   | 2006 |   |   | 2005 |   |
|                                                                                                                |   | Amount                      |                  |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |
|                                                                                                                |   | (Dollars      in thousands) |                  |
| Variable      rate non-term accounts:                                                                               |   |                        |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money      market deposit accounts (weighted average rate of 4.05%, 4.12%,      and        2.80%)         |   | $                           | 952,933               |   |   |   | 23 | % |   | $ | 887,933 |   |   |   | 15 | % |   | $ | 886,592 |   |   |   | 20 | % |
| Interest-bearing      checking accounts (weighted average rate of 0.34%, 0.34%,        and 0.34%)         |   |                        |        157,775   |   |   |   | 4 |   |   |   |  172,297 |   |   |   | 3 |   |   |   |        196,741 |   |   |   | 5 |   |
|  Passbook      accounts (weighted average rate of 1.37%, 1.31%, and    1.00%,)                                 |   |                        |        75,153    |   |   |   | 2 |   |   |   |        93,155 |   |   |   | 2 |   |   |   |        115,380 |   |   |   | 3 |   |
| Non-interest      bearing checking accounts                                                                         |   |                        | 353,298               |   |   |   | 8 |   |   |   | 361,973 |   |   |   | 6 |   |   |   | 393,980 |   |   |   | 9 |   |
|                                                                                                                |   |                        | 1,539,159             |   |   |   | 37 |   |   |   | 1,515,358 |   |   |   | 26 |   |   |   | 1,592,693 |   |   |   | 37 |   |
| Fixed-rate      term certificate accounts:                                                                          |   |                        |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Under      six-month term (weighted average rate of 4.99%, 5.29%, and      3.73%)                             |   |                        |        661,055   |   |   |   | 16 |   |   |   |        659,843 |   |   |   |        11 |   |   |   |        374,660 |   |   |   | 9 |   |
|  Six-month      term (weighted average rate of 4.88%, 5.11%, and 3.74%)                                        |   |                        |        388,617   |   |   |   | 9 |   |   |   |        724,280 |   |   |   |        12 |   |   |   |        766,527 |   |   |   | 17 |   |
|  Nine-month      term (weighted average rate of 5.10%, 5.16%, and 3.84%)                                       |   |                        |        454,130   |   |   |   | 11 |   |   |   |  623,038 |   |   |   |        11 |   |   |   |        519,956 |   |   |   | 12 |   |
| One      year to 18-month term (weighted average rate of 5.02%, 5.05%, and      3.82%)…………. |   |                        |        1,057,739 |   |   |   | 26 |   |   |   |        2,289,550 |   |   |   |        39 |   |   |   |        986,068 |   |   |   | 22 |   |
| Two      year to 30-month term (weighted average rate of 4.73%, 4.24%, and      2.85%)                              |   |                        |        15,423    |   |   |   | - |   |   |   |        19,904 |   |   |   |        - |   |   |   |        43,285 |   |   |   | 1 |   |
|  Over      30-month term (weighted average rate of 4.09%, 3.80%, and      3.42%)                               |   |                        |        40,569    |   |   |   | 1 |   |   |   |        57,908 |   |   |   |        1 |   |   |   |        88,468 |   |   |   | 2 |   |
|                                                                                                                |   |                        | 2,617,533             |   |   |   | 63 |   |   |   | 4,374,523 |   |   |   | 74 |   |   |   | 2,778,964 |   |   |   | 63 |   |
|  Total      deposits (weighted average rate of 4.11%, 4.44% and 3.00%)                                         |   | $                           | 4,156,692             |   |   |   | 100 | % |   | $ | 5,889,881 |   |   |   | 100 | % |   | $ | 4,371,657 |   |   |   | 100 | % |

----

| Maturing      in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|          1 month or      less                                                                                        |   | $      | 146,472 |   |
| Over      1 month to 3 months                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 251,837 |   |
|          Over 3 months to 6      months                                                                              |   |   | 296,238 |   |
|          Over 6 months to 12      months                                                                             |   |   | 240,418 |   |
|          Over 12      months                                                                                         |   |   | 15,506  |   |
| Total                                                                                                                                                   |   | $      | 950,471 |   |

----

|                                                      |   |     End      of Period |      |   | Maximum      Month-End Outstanding Balance During the Period |   |       |     Average |   |
|-----------------------------------------------------------|--------|--------------------------------------------|-----------|--------|--------------------------------------------------------------|--------|------------|---------------------------------|--------|
|                                                      |   | Outstanding                                |      |   | Rate                                                         |   |       |                            |   |   | Outstanding |   |   | Rate |   |
|                                                      |   | (Dollars      in thousands)                |      |
| 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 | % |
|                                                      |   |                                       |      |   |                                                         |   |       |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005                                                      |   |                                       |      |   |                                                         |   |       |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term      FHLB advances                             |   | $                                          | 4,035,500 |   |                                                         |   |  4.17 | %                               |   | $ | 4,035,500 |   |   | $ | 3,288,391 |   |   |   | 3.31 | % |
|  Securities      sold under agreements to repurchase |   | $                                          | 1,163,684 |   |                                                         |   | 4.04       | %                               |   | $ | 1,231,978 |   |   | $ | 1,048,524 |   |   |   | 3.34 | % |

----

----

----

----

----

----

----

----

----

| ITEM      5. — MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS      AND ISSUER PURCHASERS OF EQUITYSECURITIES. |
|-----------------------------------------------------------------------------------------------------------------------------------------|

----

|                          | 12/31/2002 |         12/31/2003   |  12/31/2004               |  12/31/2005 |  12/31/2006 | 12/31/2007  |
|-------------------------------|------------|--------------------------------|--------------------------------|------------------|------------------|------------------|
| FirstFed      Financial Corp. | 100.00     |     150.26 | 179.17                         | 188.32           | 231.33           | 123.73           |
| Savings      & Loan Index | 100.00     |     139.09 | 154.04                         | 157.37           | 179.84           | 101.13           |
| NYSE      Market Index        | 100.00     |     129.55 |     146.29 | 158.37           | 185.55           | 191.46           |

----

|                                                                                                 |   | 2007                                               |               |   | 2006   |   |         | 2005   |   |   | 2004                     |   |   | 2003   |               |
|------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------------------|--------|--------|--------|--------------|--------|--------|--------|--------------------------|--------|--------|--------|--------------------|
|                                                                                                 |   | (Dollars      in thousands, except per share data) |               |
| For      the Year Ended December 31:                                                                 |   |                                               |               |   |   |   |         |   |   |   |                     |   |   |   |               |
|         Interest income                                                                    |   | $                                                  | 597,713            |   |   | $      | 712,622      |   |   | $      | 491,106                  |   |   | $      | 271,427            |   |   | $ | 242,894 |   |
|         Interest expense                                                                   |   |                                               | 333,604            |   |   |   | 415,050      |   |   |   | 249,190                  |   |   |   | 101,190            |   |   |   | 88,342 |   |
|         Net interest income                                                                |   |                                               | 264,109            |   |   |   | 297,572      |   |   |   | 241,916                  |   |   |   | 170,237            |   |   |   | 154,552 |   |
|         Provision for loan losses                                                          |   |                                               | 32,400             |   |   |   | 12,400       |   |   |   | 19,750                   |   |   |   | 3,000              |   |   |   | — |   |
|         Non-interest income                                                                |   |                                               | 11,183             |   |   |   | 16,236       |   |   |   | 9,766                    |   |   |   | 12,591             |   |   |   | 9,728 |   |
|         Non-interest expense                                                               |   |                                               | 81,575             |   |   |   | 77,448       |   |   |   | 73,481                   |   |   |   | 66,372             |   |   |   | 55,589 |   |
|         Income before income taxes                                                         |   |                                               | 161,317            |   |   |   | 223,960      |   |   |   |  158,451            |   |   |   | 113,456            |   |   |   | 108,691 |   |
|         Income taxes                                                                       |   |                                               | 68,443             |   |   |   | 94,870       |   |   |   | 66,753                   |   |   |   | 47,614             |   |   |   | 44,216 |   |
|         Net income                                                                         |   |                                               | 92,874             |   |   |   | 129,090      |   |   |   | 91,698                   |   |   |   | 65,842             |   |   |   | 64,475 |   |
|         Basic earnings per share                                                           |   |                                               | 6.07               |   |   |   | 7.79         |   |   |   | 5.55                     |   |   |   | 3.95               |   |   |   | 3.80 |   |
|         Dilutive earnings per share                                                        |   |                                               | 6.00               |   |   |   | 7.65         |   |   |   | 5.43                     |   |   |   | 3.85               |   |   |   | 3.70 |   |
| End      of Year:                                                                                    |   |                                               |               |   |   |   |         |   |   |   |                     |   |   |   |               |   |   |   |   |   |
|         Loans receivable, net (1).                                                         |   |                                               | 6,518,214          |   |   |   | 8,517,452    |   |   |   | 9,681,133                |   |   |   | 6,837,945          |   |   |   | 4,374,112 |   |
|         Mortgage-backed securities,           at fair value       |   |                                               |        46,435 |   |   |   |  57,197 |   |   |   |         74,254 |   |   |   |        97,059 |   |   |   |        135,176 |   |
|         Investment securities, at fair value                                               |   |                                               | 316,788            |   |   |   | 311,850      |   |   |   |  294,017            |   |   |   | 250,586            |   |   |   | 116,411 |   |
|         Total assets                                                                       |   |                                               | 7,222,981          |   |   |   | 9,295,587    |   |   |   | 10,456,949               |   |   |   | 7,468,983          |   |   |   | 4,825,022 |   |
|         Deposits                                                                           |   |                                               | 4,156,692          |   |   |   | 5,889,881    |   |   |   | 4,371,657                |   |   |   | 3,761,165          |   |   |   | 2,538,398 |   |
|         Borrowings                                                                         |   |                                               | 2,354,000          |   |   |   | 2,568,448    |   |   |   | 5,419,184                |   |   |   | 3,191,600          |   |   |   | 1,816,622 |   |
|         Liabilities                                                                        |   |                                               | 6,568,482          |   |   |   | 8,590,872    |   |   |   | 9,886,110                |   |   |   | 6,991,509          |   |   |   | 4,388,455 |   |
|         Stockholders' equity                                                               |   |                                               | 654,499            |   |   |   | 704,715      |   |   |   | 570,839                  |   |   |   | 477,474            |   |   |   | 436,567 |   |
|         Book value per share                                                               |   |                                               | 47.98              |   |   |   | 42.33        |   |   |   | 34.46                    |   |   |   | 28.94              |   |   |   | 25.61 |   |
|         Tangible book value per share                                                      |   |                                               | 47.95              |   |   |   | 42.25        |   |   |   | 34.25                    |   |   |   | 28.62              |   |   |   | 25.18 |   |
| Selected      Ratios:                                                                                |   |                                               |               |   |   |   |         |   |   |   |                     |   |   |   |               |   |   |   |   |   |
|         Return on average assets                                                           |   |                                               | 1.16               | %      |   |   | 1.27         | %      |   |   | 1.01                     | %      |   |   | 1.12               | % |   |   | 1.43 | % |
|         Return on average equity                                                           |   |                                               | 13.43              | %      |   |   | 20.28        | %      |   |   | 17.64                    | %      |   |   | 14.54              | % |   |   | 15.97 | % |
|         Ratio of non-performing           assets to total assets  |   |                                               | 2.79               | %      |   |   | 0.21         | %      |   |   | 0.05                     | %      |   |   | 0.07               | % |   |   | 0.10 | % |
|         Effective net spread                                                               |   |                                               | 3.42               | %      |   |   | 2.97         | %      |   |   | 2.69                     | %      |   |   | 2.99               | % |   |   | 3.52 | % |
|         Ratio of non-interest expense to           average assets |   |                                               | 1.02               | %      |   |   | 0.76         | %      |   |   | 0.81                     | %      |   |   | 1.13               | % |   |   | 1.24 | % |
| Other      Data:                                                                                     |   |                                               |               |   |   |   |         |   |   |   |                     |   |   |   |               |   |   |   |   |   |
|         Number of retail banking offices                                                   |   |                                               | 33                 |   |   |   | 32           |   |   |   | 30                       |   |   |   | 29                 |   |   |   | 29 |   |
|         Number of lending only offices                                                     |   |                                               | 2                  |   |   |   | 6            |   |   |   | 6                        |   |   |   | 4                  |   |   |   | 2 |   |

----

|   | ITEM      7. — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND      RESULTS OF OPERATIONS |
|--------|-----------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Year      Ended December 31,  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Return      on Average Assets |   |   | Return      on Average Equity |   |   | AverageEquity      to AverageAssets |   |
|                      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 |   |
|                  2003                                                                                                                                                                                                                                                                                                                                                                                                 |   |                          | 1.43   |   |   |   | 15.97 |   |   |   | 8.98 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Year      Ended December 31, |            |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2007                         |            |   |   | 2006 |   |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (Dollars      in thousands)  |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |            |   |   |   |   |   |   |   |   |
| Average      loans (1)                                                                                                               |   | $                            | 7,246,523       |   |   |   | $ | 9,427,915 |   |   |   | $ | 8,509,250 |   |
| Average      investment securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |  479,668   |   |   |   |   |  576,878 |   |   |   |   |  483,565 |   |
| Average      interest-earning assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         |  7,726,191 |   |   |   |   |  10,004,793 |   |   |   |   |  8,992,815 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |            |   |   |   |   |   |   |   |   |   |   |   |
| Average      deposits                                                                                                                |   |                         | 4,845,552       |   |   |   |   | 5,425,751 |   |   |   |   | 4,078,785 |   |
| Average      borrowings                                                                                                              |   |                         | 2,278,539       |   |   |   |   | 3,988,806 |   |   |   |   | 4,452,325 |   |
| Average      interes-bearing liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |  7,124,091 |   |   |   |   |  9,414,557 |   |   |   |   |  8,531,110 |   |
| Excess      of interest-earning assets over interest-bearing    liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                            | 602,100         |   |   |   | $ | 590,236 |   |   |   | $ | 461,705 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |            |   |   |   |   |   |   |   |   |   |   |   |
| Yields      earned on average interest-earning assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         |  7.74      |   | %  |   |   |  7.12 |   | %  |   |   |  5.46 | %  |
| Rates      paid on average interest-bearing liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         |  4.68      |   |   |   |   |  4.41 |   |   |   |   |  2.92 |   |
| Interest      rate      spread                                                                                                       |   |                         | 3.06            |   |   |   |   | 2.71 |   |   |   |   | 2.54 |   |
| Effective      net spread (2)                                                                                                        |   |                         | 3.42            |   |   |   |   | 2.97 |   |   |   |   | 2.69 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |            |   |   |   |   |   |   |   |   |   |   |   |
| Interest      on      loans                                                                                                          |   | $                            | 571,727         |   |   |   | $ | 682,716 |   |   |   | $ | 471,725 |   |
| Interest      and dividends on investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                         | 25,986          |   |   |   |   | 29,906 |   |   |   |   | 19,381 |   |
|    Total      interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         | 597,713         |   |   |   |   | 712,622 |   |   |   |   | 491,106 |   |
| Interest      on deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         | 212,310         |   |   |   |   | 220,932 |   |   |   |   | 97,857 |   |
| Interest      on borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         | 121,294         |   |   |   |   | 194,118 |   |   |   |   | 151,333 |   |
|    Total      interest      expense                                                                                   |   |                         | 333,604         |   |   |   |   | 415,050 |   |   |   |   | 249,190 |   |
| Net      interest      income                                                                                                        |   | $                            | 264,109         |   |   |   | $ | 297,572 |   |   |   | $ | 241,916 |   |

| (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-accrualstatus. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (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, 2007Versus |                            |   | Year      Ended December 31, 2006Versus |   |
|-------------------------------------------------------|--------|-----------------------------------------|---------------------------------|--------|-----------------------------------------|--------|
|                                                  |   | Year      Ended December 31, 2006       |                            |   | Year      Ended December 31, 2005       |   |
|                                                  |   | Change      Due To                      |                            |   | Change      Due To                      |   |
|                                                  |   |                                    | Volume                     |   |                                    |   | Rate  |   |   |   | Total  |   |   |   | Volume  |   |   |   | Rate  |   |   |   | Total  |   |
|                                                  |   |                                    |  (In      thousands)  |   |
| Interest      Income:                                 |   |                                    |                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                 |   | $                                       | (168,262                        | )      |                                    | $      | 57,273 |   |   | $ | (110,989 | ) |   | $ | 54,912 |   |   | $ | 156,079 |   |   | $ | 210,991 |   |
| Investments                                           |   |                                    | (5,247                          | )      |                                    |   | 1,327 |   |   |   | (3,920 | ) |   |   |  4,190 |   |   |   | 6,335 |   |   |   | 10,525 |   |
|          Total interest income         |   |                                    | (173,509                        | )      |                                    |   | 58,600 |   |   |   | (114,909 | ) |   |   | 59,102 |   |   |   | 162,414 |   |   |   | 221,516 |   |
| Interest      expense:                           |   |                                    |                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Deposits                                        |   |                                    | (24,682                         | )      |                                    |   | 16,060 |   |   |   | (8,622 | ) |   |   | 39,588 |   |   |   | 83,487 |   |   |   | 123,075 |   |
|  Borrowings                                      |   |                                    | (89,447                         | )      |                                    |   | 16,623 |   |   |   | (72,824 | ) |   |   | (17,104 | ) |   |   | 59,889 |   |   |   | 42,785 |   |
|     Total      interest expense   |   |                                    | (114,129                        | )      |                                    |   | 32,683 |   |   |   | (81,446 | ) |   |   | 22,484 |   |   |   | 143,376 |   |   |   | 165,860 |   |
|          Change in net interest income |   | $                                       | (59,380                         | )      |                                    | $      | 25,917 |   |   | $ | (33,463 | ) |   | $ | 36,618 |   |   | $ | 19,038 |   |   | $ | 55,656 |   |

|                                                                      |   | Interest      Rate Spreads and Effective Net Spreads |                    |
|---------------------------------------------------------------------------|--------|------------------------------------------------------|-------------------------|
|                                                                      |   | Year      Ended December 31,                         |                    |
|                                                                      |   | 2007                                                 |                    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                      |   | 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                                      |   |                                                 | 7.89                    | % |   |   | 7.53 | % |   |   | 7.24 | % |   |   | 8.13 | % |   |   | 5.54 | % |   |   | 6.60 | % |   |   | 4.92 | % |   |   | 5.02 | % |   |   | 5.76 | % |   |   | 5.14 | % |
| Weighted      average yield on         investments         |   |                                                 | 5.42                    |   |   |   | 5.42 |   |   |   | 5.18 |   |   |   | 4.77 |   |   |   |            4.01 |   |   |   |            4.28 |   |   |   |            3.12 |   |   |   |            3.07 |   |   |   |            3.09 |   |   |   |      3.18 |   |
|  Weighted      average yield on all interest-earning assets          |   |                                                 |          7.74 |   |   |   |          7.38 |   |   |   |          7.12 |   |   |   |          7.91 |   |   |   |          5.46 |   |   |   |          6.46 |   |   |   |          4.77 |   |   |   |          4.88 |   |   |   |          5.54 |   |   |   |          4.99 |   |
|  Weighted      average rate paid on deposits                         |   |                                                 |          4.38 |   |   |   |    4.17 |   |   |   |          4.07 |   |   |   |          4.44 |   |   |   |          2.40 |   |   |   |          3.00 |   |   |   |          1.42 |   |   |   |          1.65 |   |   |   |          1.56 |   |   |   |          1.29 |   |
|  Weighted      average rate paid on borrowings and FHLB advances     |   |                                                 |          5.32 |   |   |   |          4.80 |   |   |   |          4.87 |   |   |   |          5.37 |   |   |   |          3.40 |   |   |   |          4.19 |   |   |   |          2.55 |   |   |   |          2.57 |   |   |   |          3.22 |   |   |   |          2.76 |   |
|  Weighted      average rate paid on all interest-bearing liabilities |   |                                                 |          4.68 |   |   |   |          4.39 |   |   |   |          4.41 |   |   |   |          4.72 |   |   |   |          2.92 |   |   |   |          3.65 |   |   |   |          1.91 |   |   |   |          2.06 |   |   |   |          2.19 |   |   |   |          1.90 |   |
|  Interest      rate spread (1)                                       |   |                                                 |        3.06        |   |   |   |        2.99 |   |   |   |        2.71 |   |   |   |        3.19 |   |   |   |        2.54 |   |   |   |        2.81 |   |   |   |        2.86 |   |   |   |        2.82 |   |   |   |        3.35 |   |   |   |        3.09 |   |
|  Effective      net spread (2)                                       |   |                                                 |        3.42        |   |   |   |   |   |   |   |        2.97 |   |   |   |   |   |   |   |        2.69 |   |   |   |   |   |   |   |        2.99 |   |   |   |   |   |   |   |        3.52 |   |   |   |   |   |
|                                                                      |   |                                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | (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, |   |
|------------------------------------------------------------|-------------------------------------------------------|--------|
|                                                       | 2007                                                  |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                       | (Dollars      in thousands)                           |   |
| Salaries      and Employee Benefits:                       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                                   | $                                                     | 32,900 |   |   | $ | 28,890 |   |   | $ | 27,850 |   |   | $ | 25,992 |   |   | $ | 21,565 |   |
| Incentive      compensation                                |                                                  | 2,702  |   |   |   | 4,137 |   |   |   | 6,719 |   |   |   | 4,217 |   |   |   | 3,480 |   |
| Payroll      taxes                                         |                                                  | 2,660  |   |   |   | 2,598 |   |   |   | 2,660 |   |   |   | 2,334 |   |   |   | 1,883 |   |
| Stock      option expense                                  |                                                  | 1,725  |   |   |   | 1,880 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Employee      benefit insurance                            |                                                  | 2,003  |   |   |   | 1,798 |   |   |   | 1,817 |   |   |   | 1,629 |   |   |   | 1,016 |   |
| Bonus      compensation                                    |                                                  | 2,919  |   |   |   | 2,296 |   |   |   | 2,057 |   |   |   | 1,500 |   |   |   | 1,275 |   |
| Profit      sharing                                        |                                                  | 1,539  |   |   |   | 1,548 |   |   |   | 1,545 |   |   |   | 2,530 |   |   |   | 2,030 |   |
| SERP                                                       |                                                  | 1,559  |   |   |   | 1,526 |   |   |   | 1,476 |   |   |   | 1,381 |   |   |   | 1,287 |   |
| 401(k)                                                |                                                  | 535    |   |   |   | 652 |   |   |   | 416 |   |   |   | 500 |   |   |   | 540 |   |
| Other      salaries and benefits                           |                                                  | 637    |   |   |   | 644 |   |   |   | 521 |   |   |   | 824 |   |   |   | 408 |   |
|                                                       |                                                  | 49,179 |   |   |   | 45,969 |   |   |   | 45,061 |   |   |   | 40,907 |   |   |   | 33,484 |   |
| Occupancy:                                                 |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rent...                                                    |                                                  | 7,205  |   |   |   | 5,303 |   |   |   | 5,148 |   |   |   | 4,836 |   |   |   | 4,690 |   |
| Equipment                                                  |                                                  | 2,263  |   |   |   | 2,230 |   |   |   | 2,184 |   |   |   | 1,826 |   |   |   | 1,378 |   |
| Maintenance      costs                                     |                                                  | 1,531  |   |   |   | 1,163 |   |   |   | 912 |   |   |   | 861 |   |   |   | 904 |   |
| Other      occupancy                                       |                                                  | 2,371  |   |   |   | 1,991 |   |   |   | 1,482 |   |   |   | 1,168 |   |   |   | 1,199 |   |
|                                                       |                                                  | 13,370 |   |   |   | 10,687 |   |   |   | 9,726 |   |   |   | 8,691 |   |   |   | 8,171 |   |
| Other      Operating Expense:                              |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Insurance                                                  |                                                  | 692    |   |   |   | 803 |   |   |   | 896 |   |   |   | 746 |   |   |   | 648 |   |
| Amortization      of core deposit intangible               |                                                  | 879    |   |   |   | 1,995 |   |   |   | 1,995 |   |   |   | 1,995 |   |   |   | 1,995 |   |
| Data      processing                                       |                                                  | 2,303  |   |   |   | 2,743 |   |   |   | 2,596 |   |   |   | 2,587 |   |   |   | 2,905 |   |
| Contributions                                              |                                                  | 376    |   |   |   | 494 |   |   |   | 492 |   |   |   | 502 |   |   |   | 409 |   |
| Professional      services                                 |                                                  | 600    |   |   |   | 524 |   |   |   | 660 |   |   |   | 292 |   |   |   | 201 |   |
| Legal      expenses                                        |                                                  | 211    |   |   |   | 1,467 |   |   |   | 1,381 |   |   |   | 1,686 |   |   |   | 1,103 |   |
| OTS      assessments                                       |                                                  | 2,153  |   |   |   | 2,260 |   |   |   | 1,125 |   |   |   | 751 |   |   |   | 667 |   |
| Federal      deposit insurance premiums                    |                                                  | 2,845  |   |   |   | 1,393 |   |   |   | 504 |   |   |   | 388 |   |   |   | 394 |   |
| Telephone                                                  |                                                  | 663    |   |   |   | 563 |   |   |   | 844 |   |   |   | 775 |   |   |   | 569 |   |
| Office      supplies                                       |                                                  | 687    |   |   |   | 1,139 |   |   |   | 936 |   |   |   | 833 |   |   |   | 839 |   |
| Postage                                                    |                                                  | 951    |   |   |   | 988 |   |   |   | 965 |   |   |   | 677 |   |   |   | 335 |   |
| Subscriptions                                              |                                                  | 203    |   |   |   | 236 |   |   |   | 281 |   |   |   | 229 |   |   |   | 194 |   |
| Delivery                                                   |                                                  | 604    |   |   |   | 598 |   |   |   | 638 |   |   |   | 565 |   |   |   | 480 |   |
| Other      contracted services                             |                                                  | 1,083  |   |   |   | 991 |   |   |   | 1,052 |   |   |   | 820 |   |   |   | 583 |   |
| Uninsured      losses                                      |                                                  | 389    |   |   |   | 628 |   |   |   | 1,111 |   |   |   | 651 |   |   |   | 185 |   |
| Other      operating costs                                 |                                                  | 3,344  |   |   |   | 2,722 |   |   |   | 2,464 |   |   |   | 2,572 |   |   |   | 2,112 |   |
|                                                       |                                                  | 17,983 |   |   |   | 19,544 |   |   |   | 17,940 |   |   |   | 16,069 |   |   |   | 13,619 |   |
|                                                       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Advertising                                                |                                                  | 1,043  |   |   |   | 1,248 |   |   |   | 754 |   |   |   | 705 |   |   |   | 315 |   |
| Total                                                      | $                                                     | 81,575 |   |   | $ | 77,448 |   |   | $ | 73,481 |   |   | $ | 66,372 |   |   | $ | 55,589 |   |
|                                                       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      expense as %      of average assets |                                                  | 1.02   | % |   |   | 0.76 | % |   |   | 0.81 | % |   |   | 1.13 | % |   |   | 1.24 | % |

----

----

|                                   |   | Loan      Originations and Purchases by Property Type |      |
|----------------------------------------|--------|-------------------------------------------------------|-----------|
|                                   |   | Year      Ended December 31,                          |      |
|                                   |   | 2007                                                  |      |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                   |   | (In      thousands)                                   |      |
|                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family (one-to-four units) |   | $                                                     | 652,932   |   |   | $ | 1,929,686 |   |   | $ | 4,329,439 |   |   | $ | 3,095,010 |   |   | $ | 1,712,584 |   |
| Multi-family                           |   |                                                  | 366,236   |   |   |   | 229,332 |   |   |   | 409,201 |   |   |   | 647,326 |   |   |   | 470,426 |   |
| Commercial      real estate            |   |                                                  | 28,460    |   |   |   | 11,757 |   |   |   | 45,001 |   |   |   | 66,010 |   |   |   | 35,237 |   |
| Commercial      business loans         |   |                                                  | 26,146    |   |   |   | 32,275 |   |   |   | 36,197 |   |   |   | 43,226 |   |   |   | 31,581 |   |
| Other                                  |   |                                                  | —   |   |   |   | 2,220 |   |   |   | 4,145 |   |   |   | 29,237 |   |   |   | 25,702 |   |
| Total                                  |   | $                                                     | 1,073,774 |   |   | $ | 2,205,270 |   |   | $ | 4,823,983 |   |   | $ | 3,880,809 |   |   | $ | 2,275,530 |   |
|                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Loan      Originations and         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Purchases      by Loan Type        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  Year      Ended December 31, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                               | 2007  |   |   |   | 2006  |   |   |   | 2005  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  (In      thousands)          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                               |   |   |   |   |   |   |   |   |   |
| 12MAT                                                                              | $                                  | 93,524 |   |   | $ | 502,990 |   |   | $ | 672,230 |
| CODI                                                                               |                               | 4,275 |   |   |   | 130,553 |   |   |   | 3,666,643 |
| COFI                                                                               |                               | 408,235 |   |   |   | 1,259,875 |   |   |   | 443,259 |
| LIBOR                                                                              |                               | 2,165 |   |   |   | — |   |   |   | — |
| Prime                                                                              |                               | 33,983 |   |   |   | 39,332 |   |   |   | 40,341 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                               | 542,182 |   |   |   | 1,932,750 |   |   |   | 4,822,473 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                               |   |   |   |   |   |   |   |   |   |
| Fixed                                                                              |                               | 16,295 |   |   |   | 5,016 |   |   |   | 1,510 |
| Hybrid                                                                             |                               | 515,297 |   |   |   | 267,504 |   |   |   | — |
| Total                                                                                                       | $                                  | 1,073,774 |   |   | $ | 2,205,270 |   |   | $ | 4,823,983 |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  Single      Family Loan Originations by |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  Borrower      Documentation Type        |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  Year      Ended December 31,            |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                          | 2007  |   |   |   | 2006  |   |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  (In    thousands)                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                          |       |   |   |   |   |   |   |   |   |   |
| Verified      Income/ Verified      Asset                                                                             |   | $                                             | 240,322    |   |   | $ | 356,758 |   |   | $ | 664,807 |   |
| Stated      Income/ Verified      Asset                                                                               |   |                                          | 269,129    |   |   |   | 639,756 |   |   |   | 1,462,935 |   |
| Stated      Income/ Stated      Asset                                                                                 |   |                                          | 68,709     |   |   |   | 568,723 |   |   |   | 1,634,148 |   |
| No      Income/ No      Asset                                                                                         |   |                                          | 74,772     |   |   |   | 364,449 |   |   |   | 567,549 |   |
| Total                                                                                                                 |   | $                                             | 652,932    |   |   | $ | 1,929,686 |   |   | $ | 4,329,439 |   |

----

|                                                          |   | December      31,   |      |
|---------------------------------------------------------------|--------|---------------------|-----------|
|                                                          |   | 2007                |      |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                          |   | (In      thousands) |      |
| REAL      ESTATE LOANS                                        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |
|  First      trust deed residential loans:                |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |
|    One-to-four      units                      |   | $                   | 4,652,876 |   |   | $ | 6,444,225 |   |   | $ | 7,361,476 |   |   | $ | 4,585,962 |   |   | $ | 2,456,971 |   |
|    Five      or more units                     |   |                | 1,709,815 |   |   |   | 1,811,966 |   |   |   | 1,942,021 |   |   |   | 1,825,564 |   |   |   | 1,547,771 |   |
|    Residential      loans                      |   |                | 6,362,691 |   |   |   | 8,256,191 |   |   |   | 9,303,497 |   |   |   | 6,411,526 |   |   |   | 4,004,742 |   |
|                                                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      REAL ESTATE LOANS                                  |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial      and industrial              |   |                | 159,052   |   |   |   | 196,569 |   |   |   | 257,560 |   |   |   | 324,805 |   |   |   | 345,273 |   |
|    Construction                                |   |                | —   |   |   |   | — |   |   |   | 4,910 |   |   |   | 20,902 |   |   |   | 9,053 |   |
|    Land                                        |   |                | 4,242     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|    Second      trust deeds                     |   |                | 2,159     |   |   |   | 3,392 |   |   |   | 6,505 |   |   |   | 5,466 |   |   |   | 7,281 |   |
| Real      estate loans                                        |   |                | 6,528,144 |   |   |   | 8,456,152 |   |   |   | 9,572,472 |   |   |   | 6,762,699 |   |   |   | 4,366,349 |   |
|                                                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NON-REAL      ESTATE LOANS                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposit      accounts                       |   |                | 2,061     |   |   |   | 825 |   |   |   | 595 |   |   |   | 491 |   |   |   | 649 |   |
|    Commercial      business loans              |   |                | 75,848    |   |   |   | 83,759 |   |   |   | 80,186 |   |   |   | 58,869 |   |   |   | 34,424 |   |
|    Consumer      loans                         |   |                | 33,136    |   |   |   | 44,528 |   |   |   | 57,399 |   |   |   | 60,677 |   |   |   | 49,738 |   |
| Loans      receivable                                         |   |                | 6,639,189 |   |   |   | 8,585,264 |   |   |   | 9,710,652 |   |   |   | 6,882,736 |   |   |   | 4,451,160 |   |
|                                                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LESS:                                                         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    General      valuation allowance            |   |                | 127,503   |   |   |   | 109,768 |   |   |   | 97,558 |   |   |   | 78,675 |   |   |   | 75,238 |   |
|    Impaired      loan valuation allowances     |   |                | 555       |   |   |   | — |   |   |   | — |   |   |   | 496 |   |   |   | 496 |   |
|    Deferred      loan origination (costs) fees |   |                | (7,083    | ) |   |   | (41,956 | ) |   |   | (68,039 | ) |   |   | (34,380 | ) |   |   | 1,314 |   |
| Net      loans receivable (1)                                 |   | $                   | 6,518,214 |   |   | $ | 8,517,452 |   |   | $ | 9,681,133 |   |   | $ | 6,837,945 |   |   | $ | 4,374,112 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Single      Family Loan Portfolio by   |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  Borrower      Documentation Type |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  Year      Ended December 31,     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                   | 2007  |   |   |   | 2006  |   |   |   | 2005  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (In      thousands)                    |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                   |       |   |   |   |   |   |   |   |   |   |
| Verified      Income/ Verified      Asset                                                                             |   | $                                      | 1,135,358  |   |   |  $ | 1,322,883 |   |   | $ | 1,444,640 |   |
| Stated      Income/ Verified      Asset                                                                               |   |                                   | 1,468,686  |   |   |   | 2,120,962 |   |   |   | 2,361,778 |   |
| Stated      Income/ Stated      Asset                                                                                 |   |                                   | 1,506,627  |   |   |   | 2,251,179 |   |   |   | 2,777,116 |   |
| No      Income/ No      Asset                                                                                         |   |                                   | 542,205    |   |   |   | 749,201 |   |   |   | 777,942 |   |
| Total                                                                                                                 |   | $                                      | 4,652,876  |   |   |  $ | 6,444,225 |   |   | $ | 7,361,476 |   |

----

|                     |   | December      31,   |      |
|--------------------------|--------|---------------------|-----------|
| Original      LTV Ratio: |   | 2007                |      |   | 2006 |   |   | 2005 |   |
|                     |   | (In      thousands) |      |
| <65%                  |   | $                   | 817,580   |   |   | $ | 1,230,750 |   |   | $ | 1,416,329 |   |
| 65-70%              |   |                | 505,320   |   |   |   | 722,380 |   |   |   | 837,964 |   |
| 70-75%              |   |                | 593,386   |   |   |   | 802,885 |   |   |   | 931,461 |   |
| 75-80%              |   |                | 2,348,772 |   |   |   | 3,104,381 |   |   |   | 3,349,640 |   |
| 80-85%              |   |                | 73,564    |   |   |   | 111,678 |   |   |   | 162,115 |   |
| 85-90%              |   |                | 262,719   |   |   |   | 391,128 |   |   |   | 544,825 |   |
| >90%                  |   |                | 51,535    |   |   |   | 81,023 |   |   |   | 119,142 |   |
| Total                    |   | $                   | 4,652,876 |   |   | $ | 6,444,225 |   |   | $ | 7,361,476 |   |

|                           |   | December      31,   |      |
|--------------------------------|--------|---------------------|-----------|
| FICO      Score at Origination |   | 2007                |      |   | 2006 |   |   | 2005 |   |
|                           |   | (In      thousands) |      |
| <620                        |   | $                   | 27,667    |   |   | $ | 36,428 |   |   | $ | 53,059 |   |
| 620-659                   |   |                | 431,307   |   |   |   | 576,947 |   |   |   | 644,412 |   |
| 660-719                        |   |                | 2,162,687 |   |   |   | 2,957,784 |   |   |   | 3,430,230 |   |
| >720                        |   |                | 1,982,220 |   |   |   | 2,824,692 |   |   |   | 3,171,315 |   |
| Not      Available             |   |                | 48,995    |   |   |   | 48,374 |   |   |   | 62,460 |   |
| Total                          |   | $                   | 4,652,876 |   |   | $ | 6,444,225 |   |   | $ | 7,361,476 |   |

----

|                                 |   | December      31,           |      |
|--------------------------------------|--------|-----------------------------|-----------|
|                                 |   | 2007                        |      |   | 2006 |   |   | 2005 |   |
|                                 |   | (Dollars      in thousands) |      |
|                                 |   |  Loan Balance          |      |   | LTV Ratio |   |   | FICO Score |   |   |  Loan Balance |   |   | LTV Ratio |   |   | FICO Score |   |   |  Loan Balance |   |   | LTV Ratio |   |   | FICO Score |   |
| Verified      Income/ Verified Asset |   | $                           | 1,135,358 |   |   |   | 73.3 | % |   |   | 709 |   |   | $ | 1,322,883 |   |   |   | 73.7 | % |   |   | 706 |   |   | $ | 1,444,640 |   |   |   | 73.93 | % |   |   | 703 |   |
| Stated      Income/ Verified Asset   |   |                        | 1,468,686 |   |   |   | 74.0 |   |   |   | 715 |   |   |   | 2,120,962 |   |   |   | 73.7 |   |   |   | 717 |   |   |   | 2,361,778 |   |   |   | 73.83 |   |   |   | 717 |   |
| Stated      Income/ Stated Asset     |   |                        | 1,506,627 |   |   |   | 74.6 |   |   |   | 714 |   |   |   | 2,251,179 |   |   |   | 73.8 |   |   |   | 716 |   |   |   | 2,777,116 |   |   |   | 73.76 |   |   |   | 715 |   |
| No      Income/No      Asset         |   |                        | 542,205   |   |   |   | 70.8 |   |   |   | 728 |   |   |   | 749,201 |   |   |   | 69.8 |   |   |   | 729 |   |   |   | 777,942 |   |   |   | 70.47 |   |   |   | 728 |   |
| Total      Weighted Average          |   | $                           | 4,652,876 |   |   |   | 73.6 | % |   |   | 715 |   |   | $ | 6,444,225 |   |   |   | 73.3 | % |   |   | 716 |   |   | $ | 7,361,476 |   |   |   | 73.48 | % |   |   | 714 |   |

|                                         |   | December      31,           |      |
|----------------------------------------------|--------|-----------------------------|-----------|
|                                         |   | 2007                        |      |   | 2006 |   |   | 2005 |   |
|                                         |   | (Dollars      in thousands) |      |
| Los      Angeles County                      |   | $                           | 1,148,942 |   |   |   | 24.8 | % |   | $ | 1,589,318 |   |   |   | 24.7 | % |   | $ | 1,876,593 |   |   |   | 25.5 | % |
| San      Francisco Bay Area                  |   |                        | 775,303   |   |   |   | 16.7 |   |   |   | 1,124,541 |   |   |   | 17.5 |   |   |   | 1,298,676 |   |   |   | 17.6 |   |
| Central      California Coast                |   |                        | 592,547   |   |   |   | 12.7 |   |   |   | 856,949 |   |   |   | 13.3 |   |   |   | 965,268 |   |   |   | 13.1 |   |
| San      Diego Area                          |   |                        | 558,452   |   |   |   | 12.0 |   |   |   | 739,995 |   |   |   | 11.5 |   |   |   | 813,755 |   |   |   | 11.1 |   |
| Orange      County                           |   |                        | 428,667   |   |   |   | 9.2 |   |   |   | 580,226 |   |   |   | 9.0 |   |   |   | 692,511 |   |   |   | 9.4 |   |
| San      Bernardino/Riverside Counties  |   |                        | 374,303   |   |   |   | 8.0 |   |   |   | 541,412 |   |   |   | 8.4 |   |   |   |  598,055 |   |   |   |  8.1 |   |
| San      Joaquin Valley                      |   |                        | 298,788   |   |   |   | 6.4 |   |   |   | 390,155 |   |   |   | 6.1 |   |   |   | 433,897 |   |   |   | 5.9 |   |
| Sacramento      Valley                       |   |                        | 275,313   |   |   |   | 5.9 |   |   |   | 349,829 |   |   |   | 5.4 |   |   |   | 373,909 |   |   |   | 5.1 |   |
| Other                                        |   |                        | 200,561   |   |   |   | 4.3 |   |   |   | 271,800 |   |   |   | 4.1 |   |   |   | 308,812 |   |   |   | 4.2 |   |
|     Total                |   | $                           | 4,652,876 |   |   |   | 100.0 | % |   | $ | 6,444,225 |   |   |   | 100.0 | % |   | $ | 7,361,476 |   |   |   | 100.0 | % |

| 2003      and Prior           |   | $      | 395,506   |   |   |   | 8.5   | %      |
|-------------------------------|--------|--------|-----------|--------|--------|--------|-------|--------|
| 2004                          |   |   | 725,904   |   |   |   | 15.6  |   |
| 2005                          |   |   | 2,106,973 |   |   |   | 45.3  |   |
| 2006                          |   |   | 1,066,660 |   |   |   | 22.9  |   |
| 2007                          |   |   | 357,833   |   |   |   | 7.7   |   |
|     Total |   | $      | 4,652,876 |   |   |   | 100.0 | %      |

----

|                     |   | 2008                |    |   | 2009                 |   |   | Thereafter                  |   |
|--------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------|--------|
| Loan-to-value      Ratio |   | Recast      Balance |    |   | Number      of Loans |   |   | Recast      Balance         |   |   | Number      of Loans |   |   | Recast      Balance |   |   | Number      of Loans |   |
|                     |   |                |    |   |                 |   |   | (Dollars      in thousands) |   |   |   |   |   |   |   |
| <      70%            |   | $                   | 158,286 |   |                 |   | 387    |                        |   | $ | 210,545 |   |   |   | 532 |   |   | $ | 288,310 |   |   |   | 706 |   |
| 70-80%              |   |                | 108,030 |   |                 |   | 214    |                        |   |   | 122,520 |   |   |   | 259 |   |   |   | 224,922 |   |   |   | 455 |   |
| 80-90%              |   |                | 161,272 |   |                 |   | 323    |                        |   |   | 147,191 |   |   |   | 310 |   |   |   | 284,616 |   |   |   | 519 |   |
| 90-100%             |   |                | 169,746 |   |                 |   | 351    |                        |   |   | 132,623 |   |   |   | 275 |   |   |   | 339,199 |   |   |   | 632 |   |
| 100-110%            |   |                | 139,492 |   |                 |   | 303    |                        |   |   | 79,997 |   |   |   | 165 |   |   |   | 281,347 |   |   |   | 551 |   |
| >110%                 |   |                | 170,523 |   |                 |   | 382    |                        |   |   | 59,938 |   |   |   | 136 |   |   |   | 312,258 |   |   |   | 656 |   |
| Grand      total         |   | $                   | 907,349 |   |                 |   | 1,960  |                        |   | $ | 752,814 |   |   |   | 1,677 |   |   | $ | 1,730,652 |   |   |   | 3,519 |   |
|                     |   |                |    |   |                 |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                            |   | 2008                |    |   | 2009                 |   |   | Thereafter                  |   |
|---------------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------|--------|
| Projected      Payment Increase |   | Recast      Balance |    |   | Number      of Loans |   |   | Recast      Balance         |   |   | Number      of Loans |   |   | Recast      Balance |   |   | Number      of Loans |   |
|                            |   |                |    |   |                 |   |   | (Dollars      in thousands) |   |   |   |   |   |   |   |
| <      50%                   |   | $                   | 69,794  |   |                 |   | 157    |                        |   | $ | 103,938 |   |   |   | 267 |   |   | $ | 254,168 |   |   |   | 525 |   |
| 50-100%                    |   |                | 287,766 |   |                 |   | 643    |                        |   |   | 389,644 |   |   |   | 857 |   |   |   | 877,400 |   |   |   | 1,784 |   |
| 100-125%                   |   |                | 290,202 |   |                 |   | 611    |                        |   |   | 187,244 |   |   |   | 421 |   |   |   | 254,956 |   |   |   | 528 |   |
| 125-150%                   |   |                | 171,358 |   |                 |   | 362    |                        |   |   | 54,551 |   |   |   | 102 |   |   |   | 235,399 |   |   |   | 470 |   |
| >150%                        |   |                | 88,229  |   |                 |   | 187    |                        |   |   | 17,437 |   |   |   | 30 |   |   |   | 108,729 |   |   |   | 212 |   |
| Grand      total                |   | $                   | 907,349 |   |                 |   | 1,960  |                        |   | $ | 752,814 |   |   |   | 1,677 |   |   | $ | 1,730,652 |   |   |   | 3,519 |   |
|                            |   |                |    |   |                 |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                    |   | December      31, |   |
|---------------------------------------------------------|--------|-------------------|--------|
|                                                    |   | 2007              |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing      loans to gross loans receivable (1) |   |              | 2.72   | % |   |   | 0.22 | % |   |   | 0.05 | % |   |   | 0.07 | % |   |   | 0.08 | % |
| Non-performing      assets to total assets (2)          |   |              | 2.79   | % |   |   | 0.21 | % |   |   | 0.05 | % |   |   | 0.07 | % |   |   | 0.10 | % |
| Loan      loss allowances to non-performing loans (3)   |   |              | 71     | % |   |   | 593 | % |   |   | 1,965 | % |   |   | 1,588 | % |   |   | 2,266 | % |
| Loan      loss allowances to gross loans receivable (4) |   |              | 1.93   | % |   |   | 1.28 | % |   |   | 1.00 | % |   |   | 1.15 | % |   |   | 1.70 | % |

| (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,           |    |
|                                                |   | 2007                        |    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                |   | (Dollars      in thousands) |    |
|                                                |   |  $                     |    |   |   | % |   |   |  $ |   |   |   | % |   |   |  $ |   |   |   | % |   |   |  $ |   |   |   | % |   |   |  $ |   |   |   | % |   |
|                                                |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate owned:                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                                  |   | $                           | 21,090  |   |   |   | 10 | % |   | $ | 1,094 |   |   |   | 6 | % |   | $ | — |   |   |   | — | % |   | $ | — |   |   |   | — | % |   | $ | 1,324 |   |   |   | 28 | % |
| Less:      general valuation allowance              |   |                        | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total      real estate owned                        |   |                        | 21,090  |   |   |   | 10 |   |   |   | 1,094 |   |   |   | 6 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,324 |   |   |   | 28 |   |
| Non-performing      loans:                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family                                  |   |                        | 179,679 |   |   |   | 89 |   |   |   | 18,474 |   |   |   | 94 |   |   |   | 3,569 |   |   |   | 72 |   |   |   | 4,590 |   |   |   | 92 |   |   |   | 3,326 |   |   |   | 71 |   |
| Multi-family                                        |   |                        | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |   |   |   |   |   |   |   |   | 391 |   |   |   | 8 |   |   |   | — |   |   |   | — |   |
| Commercial      and industrial                      |   |                        | 720     |   |   |   | 1 |   |   |   | 12 |   |   |   | — |   |   |   | 1,364 |   |   |   | 27 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Other                                               |   |                        | 14      |   |   |   | — |   |   |   | 11 |   |   |   | — |   |   |   | 33 |   |   |   | 1 |   |   |   | 4 |   |   |   | — |   |   |   | 16 |   |   |   | 1 |   |
| Total      non-performing loans                     |   |                        | 180,413 |   |   |   | 90 |   |   |   | 18,497 |   |   |   | 94 |   |   |   | 4,966 |   |   |   | 100 |   |   |   | 4,985 |   |   |   | 100 |   |   |   | 3,342 |   |   |   | 72 |   |
| Total                                               |   | $                           | 201,503 |   |   |   | 100 | % |   | $ | 19,591 |   |   |   | 100 | % |   | $ | 4,966 |   |   |   | 100 | % |   | $ | 4,985 |   |   |   | 100 | % |   | $ | 4,666 |   |   |   | 100 | % |
| Ratio      of non-performing assets to total assets |   |                        |    |   |   |   | 2.79 | % |   |   |   |   |   |   | 0.21 | % |   |   |   |   |   |   | 0.05 | % |   |   |   |   |   |   | 0.07 | % |   |   |   |   |   |   | 0.10 | % |

----

----

|                               |   | Payments      due by period |      |
|------------------------------------|--------|-----------------------------|-----------|
|                               |   | Total                       |      |   | 1      year |   |   | 1      – 3 years |   |   | 3      – 5 years |   |   | More      than5      years |   |
|                               |   | (In      thousands)         |      |
|                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      term certificates  |   | $                           | 2,617,533 |   |   | $ | 2,579,307 |   |   | $ | 33,001 |   |   | $ | 4,501 |   |   | $ | 724 |   |
| FHLB      advances                 |   |                        | 2,084,000 |   |   |   | 1,959,000 |   |   |   | 125,000 |   |   |   | — |   |   |   | — |   |
| Reverse      repurchase agreements |   |                        | 120,000   |   |   |   | 120,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Senior      debentures             |   |                        | 150,000   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |
| Operating      lease obligations   |   |                        | 66,101    |   |   |   | 8,211 |   |   |   | 11,925 |   |   |   | 10,803 |   |   |   | 35,162 |   |
| Total                              |   | $                           | 5,037,634 |   |   | $ | 4,666,518 |   |   | $ | 169,926 |   |   | $ | 15,304 |   |   | $ | 185,886 |   |

----

|                                       |   | December      31, 2007      |    |
|--------------------------------------------|--------|-----------------------------|---------|
|                                       |   | Amount                      |    |   | % |   |
|                                       |   | (Dollars      in thousands) |    |
| Bank’s      core capital.            |   | $                           | 791,699 |   |   |   | 10.97 | % |
| Core      capital requirement              |   |                        | 360,909 |   |   |   | 5.00 | % |
|    Excess      capital      |   | $                           | 430,790 |   |   |   | 5.97 | % |
|                                       |   |                        |    |   |   |   |   |   |
| Bank's      tier 1 risk-based capital      |   | $                           | 791,699 |   |   |   | 20.14 | % |
| Tier      1 risk-based capital requirement |   |                        | 235,815 |   |   |   | 6.00 | % |
|    Excess      capital      |   | $                           | 555,884 |   |   |   | 14.14 | % |
|                                       |   |                        |    |   |   |   |   |   |
| Risk-based      capital                    |   | $                           | 841,802 |   |   |   | 21.42 | % |
| Risk-based      capital requirement        |   |                        | 393,025 |   |   |   | 10.00 | % |
|    Excess      capital      |   | $                           | 448,777 |   |   |   | 11.42 | % |

----

----

|                                                                     |   | 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 other interest-earning deposits                |   | $                             | 4,253     |   |   | $ | 4,253 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   Investment      securities, at fair value                    |   |                          | 316,788   |   |   |   | 125,549 |   |   |   | 18,474 |   |   |   | 172,765 |   |   |   | — |   |
|   Mortgage-backed      securities, at fair value               |   |                          | 46,435    |   |   |   | 46,435 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   FHLB      stock                                              |   |                          | 104,387   |   |   |   | 104,387 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   Loans      receivable                                        |   |                          | 6,639,189 |   |   |   | 6,036,137 |   |   |   | 237,506 |   |   |   | 239,167 |   |   |   | 126,379 |   |
| Total      interest-earning assets                                       |   | $                             | 7,111,052 |   |   | $ | 6,316,761 |   |   | $ | 255,980 |   |   | $ | 411,932 |   |   | $ | 126,379 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                       |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand      accounts                                         |   | $                             | 1,539,159 |   |   | $ | 1,539,159 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   Fixed      rate term certificates                            |   |                          | 2,617,533 |   |   |   | 2,579,307 |   |   |   | 33,001 |   |   |   | 4,825 |   |   |   | 400 |   |
|    FHLB      advances                                     |   |                          | 2,084,000 |   |   |   | 1,959,000 |   |   |   | 125,000 |   |   |   | — |   |   |   | — |   |
|   Reverse      repurchase agreements                           |   |                          | 120,000   |   |   |   | 120,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   Senior      debt                                             |   |                          | 150,000   |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |   |   | — |   |
| Total      interest-bearing liabilities                                  |   | $                             | 6,510,692 |   |   | $ | 6,197,466 |   |   | $ | 158,001 |   |   | $ | 154,825 |   |   | $ | 400 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-sensitivity      GAP                                            |   | $                             | 600,360   |   |   | $ | 119,295 |   |   | $ | 97,979 |   |   | $ | 257,107 |   |   | $ | 125,979 |   |
|                                                                     |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-sensitivity      GAP as a percentage of total assets            |   |                          |      |   |   |   | 1.65 | % |   |   | 1.36 | % |   |   | 3.56 | % |   |   | 1.74 | % |
| Cumulative      interest-sensitivity GAP                                 |   |                          |      |   |   |   |   |   |   | $ | 217,274 |   |   | $ | 474,381 |   |   | $ | 600,360 |   |
| Cumulative      interest-sensitivity GAP as a percentage of total assets |   |                          |      |   |   |   |   |   |   |   | 3.01 | % |   |   | 6.57 | % |   |   | 8.31 | % |

----

|   | (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. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                            |   | Expected      Maturity Date as of December 31, (1) |          |
|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|---------------|
|                                                                                                                            |   | 2008                                               |          |   | 2009 |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | Thereafter |   |   | Total      Balance |   |   | Fair      Value |   |
|   Interest-earning      assets:                                                                                       |   | (Dollars      in thousands)                        |          |
|   Loans      receivable:                                                                                              |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Adjustable      rate loans:                                                                             |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Single      family                                                                                |   | $                                                  | 1,739,625     |   |   | $ | 1,009,236 |   |   | $ | 657,487 |   |   | $ | 428,651 |   |   | $ | 279,707 |   |   | $ | 531,257 |   |   | $ | 4,645,963 |   |   | $ | 4,359,108 |   |
|       Average      interest rate                                                                  |   |                                               | 8.40          | % |   |   | 8.39 | % |   |   | 8.38 | % |   |   | 8.37 | % |   |   | 8.36 | % |   |   | 8.30 | % |   |   | 8.38 | % |   |   |   |   |
|      Multi-family                                                                                      |   |                                               | 346,654       |   |   |   | 311,775 |   |   |   | 300,324 |   |   |   | 220,048 |   |   |   | 172,696 |   |   |   | 356,648 |   |   |   | 1,708,145 |   |   |   | 1,754,548 |   |
|       Average      interest rate                                                                  |   |                                               | 6.84          | % |   |   | 6.97 | % |   |   | 6.86 | % |   |   | 6.71 | % |   |   | 6.57 | % |   |   | 6.91 | % |   |   | 6.84 | % |   |   |   |   |
|      Commercial      and industrial                                                                    |   |                                               |  34,014  |   |   |   |  28,348 |   |   |   |  18,418 |   |   |   |  13,348 |   |   |   |  11,889 |   |   |   |  37,005 |   |   |   |  143,022 |   |   |   | 143,482 |   |
|       Average      interest rate                                                                  |   |                                               | 7.37          | % |   |   | 7.38 | % |   |   | 6.98 | % |   |   | 7.32 | % |   |   | 7.18 | % |   |   | 7.38 | % |   |   | 7.35 | % |   |   |   |   |
|     Fixed      rate loans:                                                                                  |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Single      family                                                                                |   |                                               | 1,824         |   |   |   | 1,318 |   |   |   | 981 |   |   |   | 731 |   |   |   | 544 |   |   |   | 1,515 |   |   |   | 6,913 |   |   |   | 6,274 |   |
|       Average      interest rate                                                                  |   |                                               | 6.79          | % |   |   | 6.74 | % |   |   | 6.73 | % |   |   | 6.72 | % |   |   | 6.72 | % |   |   | 6.67 | % |   |   | 6.73 | % |   |   |   |   |
|      Multi-family                                                                                      |   |                                               | 351           |   |   |   | 507 |   |   |   | 437 |   |   |   | 90 |   |   |   | 70 |   |   |   | 215 |   |   |   | 1,670 |   |   |   | 1,670 |   |
|       Average      interest rate                                                                  |   |                                               | 5.49          | % |   |   | 6.60 | % |   |   | 6.19 | % |   |   | 4.45 | % |   |   | 4.65 | % |   |   | 6.31 | % |   |   | 6.02 | % |   |   |   |   |
|      Commercial      and industrial                                                                    |   |                                               |  7,740   |   |   |   | 4,146 |   |   |   |  863 |   |   |   |  695 |   |   |   |  1,006 |   |   |   | 1,580 |   |   |   |  16,030 |   |   |   | 16,442 |   |
|       Average      interest rate                                                                  |   |                                               | 7.64          | % |   |   | 8.36 | % |   |   | 7.87 | % |   |   | 7.87 | % |   |   | 7.97 | % |   |   | 7.71 | % |   |   | 7.88 | % |   |   |   |   |
|      Land      loans                                                                                   |   |                                               | 972           |   |   |   | 1,062 |   |   |   | 1,160 |   |   |   | 1,048 |   |   |   | — |   |   |   | — |   |   |   | 4,242 |   |   |   | 4,301 |   |
|       Average      interest rate                                                                  |   |                                               | 8.87          | % |   |   | 8.87 | % |   |   | 8.87 | % |   |   | 8.87 | % |   |   | — |   |   |   | — |   |   |   | 8.87 | % |   |   |   |   |
|     Non-mortgage      loans:                                                                                |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Commercial      business loans                                                                    |   |                                               |  18,965  |   |   |   |  19,517 |   |   |   | 20,114 |   |   |   |  17,252 |   |   |   | — |   |   |   | — |   |   |   |  75,848 |   |   |   | 76,654 |   |
|       Average      interest rate                                                                  |   |                                               | 7.77          | % |   |   | 7.77 | % |   |   | 7.77 | % |   |   | 7.77 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 7.77 | % |   |   |   |   |
|      Consumer      loans                                                                               |   |                                               | 6,471         |   |   |   | 8,975 |   |   |   | 9,438 |   |   |   | 8,252 |   |   |   | — |   |   |   | — |   |   |   | 33,136 |   |   |   | 33,568 |   |
|       Average      interest rate                                                                  |   |                                               | 8.76          | % |   |   | 8.81 | % |   |   | 8.86 | % |   |   | 8.92 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 8.84 | % |   |   |   |   |
|       Other      Loans                                                                            |   |                                               | 1,883         |   |   |   | 845 |   |   |   | 541 |   |   |   | 346 |   |   |   | 221 |   |   |   | 384 |   |   |   | 4,220 |   |   |   | 4,210 |   |
|       Average      interest rate                                                                  |   |                                               | 4.22          | % |   |   | 6.16 | % |   |   | 6.16 | % |   |   | 6.16 | % |   |   | 6.16 | % |   |   | 6.16 | % |   |   | 5.56 | % |   |   |   |   |
|   Mortgage-backed      securities:                                                                                    |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Adjustable:                                                                                             |   |                                               | 2,860         |   |   |   | 2,807 |   |   |   | 2,812 |   |   |   | 2,820 |   |   |   | 2,829 |   |   |   | 32,307 |   |   |   | 46,435 |   |   |   | 46,435 |   |
|       Average      interest rate                                                                  |   |                                               | 5.17          | % |   |   | 5.17 | % |   |   | 5.17 | % |   |   | 5.17 | % |   |   | 5.17 | % |   |   | 5.17 | % |   |   | 5.17 | % |   |   |   |   |
|     FHLB      stock                                                                                         |   |                                               | 104,387       |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 104,387 |   |   |   | 104,387 |   |
|       Average      interest rate                                                                  |   |                                               | 4.25          | % |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 4.25 | % |   |   |   |   |
|      FHLB      and other        interest-earning      deposits |   |                                               |   4,253  |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   — |   |   |   |   4,253 |   |   |   |   4,253 |   |
|       Average      interest rate                                                                  |   |                                               | 3.71          | % |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 3.71 | % |   |   |   |   |
|   Investment      securities:                                                                                         |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Collateralized      mortgage obligations                                                          |   |                                               |  8,701   |   |   |   | 9,207 |   |   |   |  9,740 |   |   |   | 10,306 |   |   |   |  10,904 |   |   |   |  267,930 |   |   |   |  316,788 |   |   |   |  316,788 |   |
|       Average      interest rate                                                                  |   |                                               | 5.65          | % |   |   | 5.65 | % |   |   | 5.65 | % |   |   | 5.65 | % |   |   | 5.66 | % |   |   | 5.83 | % |   |   | 5.81 | % |   |   |   |   |
|    Total      interest-earning assets                                                                            |   | $                                                  | 2,278,700     |   |   | $ | 1,397,743 |   |   | $ | 1,022,315 |   |   | $ | 703,587 |   |   | $ | 479,866 |   |   | $ | 1,228,841 |   |   | $ | 7,111,052 |   |   | $ | 6,872,120 |   |
|                                                                                                                            |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing      liabilities:                                                                                  |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits:                                                                                                           |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Checking      accounts                                                                            |   | $                                                  | 511,073       |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 511,073 |   |   | $ | 511,073 |   |
|       Average      interest rate                                                                  |   |                                               | 0.10          | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.10 | % |   |   |   |   |
|      Savings      accounts                                                                             |   |                                               | 1,028,086     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,028,086 |   |   |   | 1,028,086 |   |
|       Average      interest rate                                                                  |   |                                               | 3.91          | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 3.86 | % |   |   |   |   |
|      Certificate      accounts                                                                         |   |                                               | 2,579,307     |   |   |   | 24,464 |   |   |   | 8,537 |   |   |   | 2,545 |   |   |   | 1,956 |   |   |   | 724 |   |   |   | 2,617,533 |   |   |   | 2,617,802 |   |
|       Average      interest rate                                                                  |   |                                               | 5.08          | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   | 4.97 | % |   |   |   |   |
|   Borrowings:                                                                                                         |   |                                               |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      FHLB      advances                                                                                |   |                                               | 1,959,000     |   |   |   | 105,000 |   |   |   | 20,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,084,000 |   |   |   | 2,095,897 |   |
|       Average      interest rate                                                                  |   |                                               | 4.69          | % |   |   | 4.07 | % |   |   | 6.20 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 4.67 | % |   |   |   |   |
|      Reverse      repurchase agreements                                                                |   |                                               |  120,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |  120,000 |   |   |   |  120,139 |   |
|       Average      interest rate                                                                  |   |                                               | 5.25          | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 5.25 | % |   |   |   |   |
|      Senior      debentures                                                                            |   |                                               | —       |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 150,000 |   |   |   | 150,000 |   |   |   | 168,486 |   |
|       Average      interest rate                                                                  |   |                                               | 0.00          | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 6.16 | % |   |   | 6.16 | % |   |   |   |   |
|   Total      interest-bearing liabilities                                                                             |   | $                                                  | 6,197,466     |   |   | $ | 129,464 |   |   | $ | 28,537 |   |   | $ | 2,545 |   |   | $ | 1,956 |   |   | $ | 150,724 |   |   | $ | 6,510,692 |   |   | $ | 6,541,483 |   |

----

|  PRICE      RANGE OF COMMON STOCK |   |
|----------------------------------------|--------|
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | First      Quarter |   |   | Second      Quarter |   |   | Third      Quarter |   |   | Fourth Quarter |   |
|                                   |   | High |   |   | Low |   |   | High |   |   | Low |   |   | High |   |   | Low |   |   | High |   |   | Low |   |
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                              |   |   $ | 69.23 |   |   |   $ | 52.04 |   |   |   $ | 66.21 |   |   |   $ | 55.55 |   |   |   $ | 59.32 |   |   |   $ | 40.41 |   |   |   $ | 55.77 |   |   |   $ | 30.18 |   |
| 2006                              |   |   | 64.85 |   |   |   | 55.45 |   |   |   | 65.30 |   |   |   | 51.80 |   |   |   | 60.60 |   |   |   | 50.01 |   |   |   | 68.41 |   |   |   | 55.40 |   |
| 2005                              |   |   | 55.25 |   |   |   | 49.60 |   |   |   | 60.35 |   |   |   | 47.84 |   |   |   | 65.32 |   |   |   | 52.26 |   |   |   | 57.44 |   |   |   | 49.05 |   |
| 2004                                   |   |   | 46.38 |   |   |   | 40.40 |   |   |   | 46.15 |   |   |   | 38.16 |   |   |   | 49.16 |   |   |   | 41.23 |   |   |   | 54.30 |   |   |   | 48.50 |   |
| 2003                                   |   |   | 31.30 |   |   |   | 26.41 |   |   |   | 35.57 |   |   |   | 29.86 |   |   |   | 41.50 |   |   |   | 34.77 |   |   |   | 49.05 |   |   |   | 39.93 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | December      31, 2007 |       |    | December      31, 2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|---------|-----------------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |       |    |                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |
| Cash      and cash      equivalents                                                                                                           |   | $                           | 53,974     |    |                        | $      | 151,090 |   |
| Investment      securities, available for sale (at fair value) (Notes      2 and 10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | 316,788    |    |                        |   | 311,850 |   |
| Mortgage-backed      securities, available for sale (at fair value) (Notes 3  and      10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | 46,435     |    |                        |   | 57,197 |   |
| Loans      receivable, held-for-sale (fair value of $0 and $143,141)  (Note      4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | —    |    |                        |   | 140,860 |   |
| Loans      receivable, net of allowance for loan losses of $128,058 and $109,768      (Notes 4, 9, and 10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                        | 6,518,214  |    |                        |   | 8,376,592 |   |
| Accrued      interest and dividends      receivable                                                                                           |   |                        | 45,492     |    |                        |   | 54,812 |   |
| Real      estate owned (Note      5)                                                                                                          |   |                        | 21,090     |    |                        |   | 1,094 |   |
| Office      properties and equipment, net (Note      6)                                                                                       |   |                        | 17,785     |    |                        |   | 16,569 |   |
| Investment      in Federal Home Loan Bank (FHLB) stock, at cost (Notes 7, 9, and      10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        | 104,387    |    |                        |   | 118,979 |   |
| Other      assets                                                                                                                             |   |                        | 98,816     |    |                        |   | 66,544 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                           | 7,222,981  |    |                        | $      | 9,295,587 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |       |    |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| Deposits      (Note      8)                                                                                                                   |   | $                           | 4,156,692  |    |                        | $      | 5,889,881 |   |
| FHLB      advances (Notes 7 and      9)                                                                                                       |   |                        | 2,084,000  |    |                        |   | 1,490,000 |   |
| Securities      sold under agreements to repurchase (Note 10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 120,000    |    |                        |   | 978,448 |   |
| Senior      debentures (Note 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        | 150,000    |    |                        |   | 100,000 |   |
| Accrued      expenses and other      liabilities                                                                                              |   |                        | 57,790     |    |                        |   | 132,543 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | 6,568,482  |    |                        |   | 8,590,872 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| COMMITMENTS      AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |       |    |                        |   |   |   |
|  (Notes      1, 4, 6 and 14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |       |    |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| STOCKHOLDERS'      EQUITY (Notes      1, 2, 3, 13 and 14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        |       |    |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| Common      stock, par value $0.01 per share;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |       |    |                        |   |   |   |
| Authorized      100,000,000 shares; issued 23,970,227 and 23,842,934 shares, outstanding      13,640,997 and 16,648,338 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 240        |    |                        |   | 238 |   |
| Additional      paid-in      capital                                                                                                          |   |                        | 55,232     |    |                        |   | 49,610 |   |
| Retained      earnings                                                                                                                        |   |                        | 865,411    |    |                        |   | 772,537 |   |
| Unreleased      shares to employee stock ownership plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                        |  (339 | )  |                        |   |  (2,050 | )  |
| Treasury      stock, at cost, 10,329,230 and 7,194,596 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | (266,040   | )       |                        |   | (113,776 | ) |
| Accumulated      other comprehensive (loss), net of taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        | (5         | )       |                        |   | (1,844 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | 654,499    |    |                        |   | 704,715 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                           | 7,222,981  |    |                        | $      | 9,295,587 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |       |    |                        |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2007   |       |   | 2006   |   |       | 2005   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Interest      and dividend income:                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |       |   |   |   |       |   |   |
| Interest      on      loans                                                                                                            |   | $      | 571,727    |   |   | $      | 682,716    |   |   | $ | 471,725 |   |
| Interest      on mortgage-backed      securities                                                                                       |   |   | 2,642      |   |   |   | 2,899      |   |   |   | 2,825 |   |
| Interest      and dividends on      investments                                                                                        |   |   | 23,344     |   |   |   | 27,007     |   |   |   | 16,556 |   |
| Total      interest      income                                                                                                                            |   |   | 597,713    |   |   |   | 712,622    |   |   |   | 491,106 |   |
| Interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest      on deposits (Note      8)                                                                                                |   |   | 212,310    |   |   |   | 220,932    |   |   |   | 97,857 |   |
| Interest      on borrowings (Notes 9 and      10)                                                                                      |   |   | 121,294    |   |   |   | 194,118    |   |   |   | 151,333 |   |
| Total      interest      expense                                                                                                                           |   |   | 333,604    |   |   |   | 415,050    |   |   |   | 249,190 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      interest      income                                                                                 |   |   | 264,109    |   |   |   | 297,572    |   |   |   | 241,916 |   |
| Provision      for loan losses (Note      4)                                                                                           |   |   | 32,400     |   |   |   | 12,400     |   |   |   | 19,750 |   |
| Net      interest income after provision for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 231,709    |   |   |   | 285,172    |   |   |   | 222,166 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Non-interest      income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| Loan      servicing and other      fees                                                                                                |   |   | 2,797      |   |   |   | 2,589      |   |   |   | 1,325 |   |
| Retail      office      fees                                                                                                           |   |   | 6,802      |   |   |   | 6,596      |   |   |   | 5,804 |   |
| Gain      on sale of      loans                                                                                                        |   |   | 4,692      |   |   |   | 6,223      |   |   |   | 125 |   |
| Real      estate operations, net (Note      5)                                                                                         |   |   | (5,074     | )      |   |   | (14        | )      |   |   | 2,013 |   |
| Other      operating      income                                                                                                       |   |   | 1,966      |   |   |   | 842        |   |   |   | 499 |   |
| Total      non-interest      income                                                                                                                        |   |   | 11,183     |   |   |   | 16,236     |   |   |   | 9,766 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Non-interest      expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Salaries      and employee benefits (Note 14)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 49,179     |   |   |   | 45,969     |   |   |   | 45,061 |   |
| Occupancy      (Note      6)                                                                                                           |   |   | 13,370     |   |   |   | 10,687     |   |   |   | 9,726 |   |
| Advertising                                                                                                                            |   |   | 1,043      |   |   |   | 1,248      |   |   |   | 754 |   |
| Amortization      of core deposit      intangible                                                                                      |   |   | 879        |   |   |   | 1,995      |   |   |   | 1,995 |   |
| Federal      deposit      insurance                                                                                                    |   |   | 2,845      |   |   |   | 1,393      |   |   |   | 504 |   |
| Data      processing                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 2,303      |   |   |   | 2,743      |   |   |   | 2,596 |   |
| OTS      assessment                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 2,153      |   |   |   | 2,260      |   |   |   | 1,125 |   |
| Legal                                                                                                                                  |   |   | 211        |   |   |   | 1,467      |   |   |   | 1,381 |   |
| Other      operating      expense                                                                                                      |   |   | 9,592      |   |   |   | 9,686      |   |   |   | 10,339 |   |
| Total      non-interest      expense                                                                                                                       |   |   | 81,575     |   |   |   | 77,448     |   |   |   | 73,481 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Income      before income      taxes                                                                          |   |   | 161,317    |   |   |   | 223,960    |   |   |   | 158,451 |   |
| Income      taxes (Note      12)                                                                              |   |   | 68,443     |   |   |   | 94,870     |   |   |   | 66,753 |   |
| Net      income                                                                                               |   | $      | 92,874     |   |   | $      | 129,090    |   |   | $ | 91,698 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Earnings      per share: (Notes 1, 14 and 16)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                  |   | $      | 6.07       |   |   | $      | 7.79       |   |   | $ | 5.55 |   |
| Diluted                                                                                                                                |   | $      | 6.00       |   |   | $      | 7.65       |   |   | $ | 5.43 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Weighted      average shares outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                  |   |   | 15,308,048 |   |   |   | 16,571,488 |   |   |   | 16,518,300 |   |
| Diluted                                                                                                                                |   |   | 15,489,439 |   |   |   | 16,865,105 |   |   |   | 16,887,951 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                          |   |

----

|                                                                                        |   |    Common      Stock |                  |   |   Additional      Paid-In Capital |   |                  |  Retained      Earnings (Substantially Restricted) |   |   |   Unreleased      Shares to ESOP |   |   |    Treasury      Stock |                  |   | Accumulated      Other Comprehensive Income, Net of Taxes |   |                  |     Total |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------------------|--------|---------------------------------------------|--------|-----------------------|---------------------------------------------------------|--------|--------|--------------------------------------------|--------|--------|---------------------------------------|-----------------------|--------|-----------------------------------------------------------|--------|-----------------------|-------------------------------|--------|
| Balance,      December 31,  2004                                                  |   | $                                   | 237                   |   |                                        | $      | 40,977                |                                                    |   | $      | 549,202                                    |   |   | $                                     | (53                   | )      |                                                      | $      | (113,776              | )                             |   | $ | 887 |   |   | $ | 477,474 |   |
| Comprehensive      income:                                                                  |   |                                |                  |   |                                        |   |                  |                                                    |   |   |                                       |   |   |                                  |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   |   |   |
| Net      income                                                                             |   |                                | —               |   |                                        |   | —               |                                                    |   |   | 91,698                                     |   |   |                                  | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 91,698 |   |
| Change      in net unrealized gain on securities available for sale, net of tax      effect |   |                                |     — |   |                                        |   |     — |                                                    |   |   |     —                      |   |   |                                  |     — |   |                                                      |   |     — |                          |   |   | (453 | ) |   |   | (453 | ) |
| Total      comprehensive income                                                             |   |                                |                  |   |                                        |   |                  |                                                    |   |   |                                       |   |   |                                  |                  |   |                                                      |   |                  |                          |   |   |   |   |   |   | 91,245 |   |
| Exercise      of employee stock options                                                     |   |                                | 1                     |   |                                        |   | 3,024                 |                                                    |   |   | —                                    |   |   |                                  | —               |   |                                                      |   | —               |                          |   |   | — |   |   |   | 3,025 |   |
| Net      increase in unreleased shares to  the ESOP                                    |   |                                | —               |   |                                        |   | 146                   |                                                    |   |   | —                                    |   |   |                                  | (1,051                | )      |                                                      |   | —               |                          |   |   | — |   |   |   | (905 | ) |
| 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 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |            |    |   |   |            |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|---------|--------|--------|-----------------|---------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2007   |            |    | 2006   |   |            | 2005    |   |
| Net      income                                                                                 |   | $      | 92,874          |    |   | $      | 129,090         |    |   | $ | 91,698 |   |
| Adjustments      to reconcile net  income to                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |            |    |   |   |            |    |   |   |   |   |
| net      cash provided by (used in) operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |            |    |   |   |            |    |   |   |   |   |
| Net      change in loans      held-for-sale                                                                                             |   |   | 136,438         |    |   |   | (137,987        | )       |   |   | (2,873 | ) |
| Stock      option      compensation                                                                                                     |   |   | 2,059           |    |   |   | 1,880           |    |   |   | — |   |
| Excess      tax benefits relate to stock      option                                                                                    |   |   | (1,486          | )       |   |   | (1,590          | )       |   |   | (1,831 | ) |
| Depreciation      and      amortization                                                                                                 |   |   | 2,782           |    |   |   | 2,252           |    |   |   | 1,879 |   |
| Provision      for loan      losses                                                                                                     |   |   | 32,400          |    |   |   | 12,400          |    |   |   | 19,750 |   |
| Amortization      of fees and premiums/discounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 33,222          |    |   |   | 51,228          |    |   |   | 46,593 |   |
| Increase      in interest income accrued in excess of borrower payments                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |  (85,886   | )  |   |   |  (153,177  | )  |   |   |  (57,136 | )  |
| Gain      on sale of real estate held for investment                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | —         |    |   |   | —         |    |   |   | (2,245 | ) |
| Gain      on sale of real estate      owned                                                                                             |   |   | (1,047          | )       |   |   | (325            | )       |   |   | — |   |
| Write-down      of real estate      owned                                                                                               |   |   | 4,241           |    |   |   | —         |    |   |   | — |   |
| Gain      on sale of      loans                                                                                                         |   |   | (4,692          | )       |   |   | (6,223          | )       |   |   | (125 | ) |
| FHLB      stock      dividends                                                                                                          |   |   | (4,994          | )       |   |   | (9,542          | )       |   |   | (6,555 | ) |
| Change      in deferred      taxes                                                                                                      |   |   | (23,188         | )       |   |   | (16,217         | )       |   |   | (14,148 | ) |
| Change      in current taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 853             |    |   |   | (2,763          | )       |   |   | 707 |   |
| (Increase)      decrease in interest and dividends receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 9,320           |    |   |   | (5,839          | )       |   |   | (24,858 | ) |
| Increase      (decrease) in interest      payable                                                                                       |   |   | (67,574         | )       |   |   | 35,824          |    |   |   | 45,275 |   |
| Amortization      of core deposit intangible asset                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 879             |    |   |   | 1,995           |    |   |   | 1,995 |   |
| (Increase)      decrease in other      assets                                                                                           |   |   | (11,298         | )       |   |   | (5,142          | )       |   |   | 13,102 |   |
|                  Increase (decrease) in accrued expenses and other liabilities                                                                                                                                                                                                                                                                                                                                                                           |   |   |  (7,904    | )  |   |   |  2,911     |    |   |   |  5,426 |   |
| Total      adjustments                                                                                                                            |   |   | 14,125          |    |   |   | (230,315        | )       |   |   | 24,956 |   |
| Net      cash provided by (used in) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 106,999         |    |   |   | (101,225        | )       |   |   | 116,654 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |            |    |   |   |            |    |   |   |   |   |
| Loans      made to clients and principal collections on loans, net                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |  1,845,071 |    |   |   |  1,421,427 |    |   |   |  (2,780,889 | )  |
| Loans      purchased                                                                                                                    |   |   | (4,651          | )       |   |   | (366            | )       |   |   | (132 | ) |
| Deferred      loan origination costs,      net                                                                                          |   |   | 1,769           |    |   |   | (24,996         | )       |   |   | (79,651 | ) |
| Proceeds      from sales of real      estate                                                                                            |   |   | 22,495          |    |   |   | 695             |    |   |   | 2,887 |   |
| Purchase      of real estate held for investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | —         |    |   |   | —         |    |   |   | (1,869 | ) |
| Proceeds      from maturities and principal reductions on investment securities,      available for sale                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 63,094          |    |   |   | 86,630          |    |   |   | 123,843 |   |
| Principal      reductions on mortgage-backed securities, available for    sale                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 10,677          |    |   |   | 17,014          |    |   |   | 22,266 |   |
| Purchases      of investment securities, available for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |  (65,019   | )  |   |   |  (104,791  | )  |   |   |  (167,930 | )  |
| Redemptions      (purchases) of FHLB stock, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 19,586          |    |   |   | 96,259          |    |   |   | (55,716 | ) |
| Purchases      of premises and      equipment                                                                                           |   |   | (3,998          | )       |   |   | (3,062          | )       |   |   | (1,757 | ) |
| Net      cash provided by (used in) investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 1,889,024       |    |   |   | 1,488,810       |    |   |   | (2,938,948 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |            |    |   |   |            |    |   |   |   |   |
| Net      increase in retail      deposits                                                                                               |   |   | 223,494         |    |   |   | 411,110         |    |   |   | 127,594 |   |
| Net      increase (decrease) in wholesale deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | (1,956,683      | )       |   |   | 1,107,114       |    |   |   | 482,898 |   |
| Net      (decrease) increase in short term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (364,448        | )       |   |   | (2,765,736      | )       |   |   | 2,407,584 |   |
| Net      increase (decrease) in long term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 150,000         |    |   |   | (85,000         | )       |   |   | (180,000 | ) |
| Proceeds      from stock options      exercised                                                                                         |   |   | 2,543           |    |   |   | 1,644           |    |   |   | 1,194 |   |
| Purchases      of treasury      stock                                                                                                   |   |   | (152,264        | )       |   |   | —         |    |   |   | — |   |
| Excess      tax benefit related to stock option                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 1,486           |    |   |   | 1,590           |    |   |   | 1,831 |   |
| Other                                                                                                                                   |   |   | 2,733           |    |   |   | (409            | )       |   |   | 6,042 |   |
| Net      cash (used in) provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | (2,093,139      | )       |   |   | (1,329,687      | )       |   |   | 2,847,143 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |            |    |   |   |            |    |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | (97,116         | )       |   |   | 57,898          |    |   |   | 24,849 |   |
| Cash      and cash equivalents at beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 151,090         |    |   |   | 93,192          |    |   |   | 68,343 |   |
| Cash      and cash equivalents at end of      period                                                                                    |   | $      | 53,974          |    |   | $      | 151,090         |    |   | $ | 93,192 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |            |    |   |   |            |    |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                               |   |

----

----

----

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Year      Ended December 31,           |              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2007                                   |              |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | (In      thousands, except share data) |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                   |              |   |   |   |   |   |   |
|   Net      income                                                                                    |   | $                                      | 92,874            |   |   | $ | 129,090 |   |   | $ | 91,698 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                   |              |   |   |   |   |   |   |   |   |   |
|   Average      number of common shares outstanding                                                                                                                                                                                                                                                                                                                                                                         |   |                                   | 15,308,048        |   |   |   | 16,571,488 |   |   |   | 16,518,300 |   |
|   Effect      of dilutive      options                                                               |   |                                   | 181,391           |   |   |   | 293,617 |   |   |   | 369,651 |   |
|   Average      number of common shares outstanding used to calculate diluted earnings per      common share                                                                                                                                                                                                                                                                                                                |   |                                   |   15,489,439 |   |   |   |   16,865,105 |   |   |   |   16,887,951 |   |

----

----

----

|                                     |   | At      December 31, 2007 |    |
|------------------------------------------|--------|---------------------------|---------|
|                                     |   | Historical Cost           |    |   | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |
|                                     |   | (In      thousands)       |    |
|                                     |   |                      |    |   |   |   |   |   |   |   |   |   |
| Collateralized      Mortgage Obligations |   | $                         | 313,274 |   |   | $ | 3,514 |   |   | $ | — |   |   | $ | 316,788 |   |

|                                     |   | At      December 31, 2006 |    |
|------------------------------------------|--------|---------------------------|---------|
|                                     |   | Historical Cost           |    |   | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |
|                                     |   | (In      thousands)       |    |
|                                     |   |                      |    |   |   |   |   |   |   |   |   |   |
| Collateralized      Mortgage Obligations |   | $                         | 311,467 |   |   | $ | 742 |   |   | $ | (359 | ) |   | $ | 311,850 |   |

|   |   | At      December 31, 2007 |   |
|--------|--------|---------------------------|--------|
|   |   | Historical Cost           |   |   | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | FairValue |   |
|   |   | (In      thousands)       |   |
|   |   |                      |   |   |   |   |   |   |   |   |   |   |
| FNMA   |   | $                         | 3,021  |   |   | $ | 4 |   |   | $ | — |   |   | $ | 3,025 |   |
| FHLMC  |   |                      | 43,356 |   |   |   | 54 |   |   |   | — |   |   |   | 43,410 |   |
|   |   | $                         | 46,377 |   |   | $ | 58 |   |   | $ | — |   |   | $ | 46,435 |   |

|   |   | At      December 31, 2006 |   |
|--------|--------|---------------------------|--------|
|   |   | Historical Cost           |   |   | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | FairValue |   |
|   |   | (In      thousands)       |   |
|   |   |                      |   |   |   |   |   |   |   |   |   |   |
| FNMA   |   | $                         | 3,897  |   |   | $ | 10 |   |   | $ | — |   |   | $ | 3,907 |   |
| FHLMC  |   |                      | 53,157 |   |   |   | 133 |   |   |   | — |   |   |   | 53,290 |   |
|   |   | $                         | 57,054 |   |   | $ | 143 |   |   | $ | — |   |   | $ | 57,197 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | At      December 31, |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2007                 |      |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (In      thousands)  |      |
| Real      estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                 |      |   |   |   |
|   First      trust deed residential loans:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                 |      |   |   |   |
|      One-to-four      units                                                                                   |   | $                    | 4,652,876 |   |   | $ | 6,444,225 |   |
|      Five      or more units                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                 | 1,709,815 |   |   |   | 1,811,966 |   |
|      Residential      loans                                                                                   |   |                 | 6,362,691 |   |   |   | 8,256,191 |   |
|   Other      real estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                 |      |   |   |   |   |   |
|      Commercial      and      industrial                                                                      |   |                 | 159,052   |   |   |   | 196,569 |   |
|      Land                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                 | 4,242     |   |   |   | — |   |
|      Second      trust      deeds                                                                             |   |                 | 2,159     |   |   |   | 3,392 |   |
|   Real      estate      loans                                                                                                |   |                 | 6,528,144 |   |   |   | 8,456,152 |   |
| Non-real      estate loans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |
|   Deposit      accounts                                                                                                      |   |                 | 2,061     |   |   |   | 825 |   |
|   Commercial      business      loans                                                                                        |   |                 | 75,848    |   |   |   | 83,759 |   |
|   Consumer                                                                                                                   |   |                 | 33,136    |   |   |   | 44,528 |   |
|      Loans      receivable                                                                                    |   |                 | 6,639,189 |   |   |   | 8,585,264 |   |
| Less:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 |      |   |   |   |   |   |
|   General      loan valuation      allowance                                                                                 |   |                 | 127,503   |   |   |   | 109,768 |   |
|   Valuation      allowances for impaired      loans                                                                          |   |                 | 555       |   |   |   | — |   |
|   Deferred      loan origination (costs)      fees                                                                           |   |                 | (7,083    | ) |   |   | (41,956 | ) |
|      Subtotal                                                                                                 |   |                 | 6,518,214 |   |   |   | 8,517,452 |   |
| Less:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 |      |   |   |   |   |   |
| Loans      held-for-sale                                                                                                                                   |   |                 | —   |   |   |   | 140,860 |   |
| Loans      receivable,      net                                                                                                        |   | $                    | 6,518,214 |   |   | $ | 8,376,592 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  General      Valuation Allowance |    |   | Valuation      Allowances for Impaired Loans |   |    |    Total |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|--------|----------------------------------------------|--------|---------|-------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)                    |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                   |    |   |                                         |   |    |                    |   |   |   |   |
| Balance      at December 31,      2004                                                                                   |   | $                                      | 78,675  |   |                                         | $      | 496     |                    |   | $ | 79,171 |   |
|   Provision      for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                   | 18,650  |   |                                         |   | 1,100   |                    |   |   | 19,750 |   |
|   Charge-offs                                                                                                  |   |                                   | (168    | )      |                                         |   | (1,596  | )                       |   |   | (1,764 | ) |
|   Recoveries                                                                                                   |   |                                   | 401     |   |                                         |   | — |                    |   |   | 401 |   |
| 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 |   |

----

|                      |   | At      December 31, |   |
|---------------------------|--------|----------------------|--------|
|                      |   | 2007                 |   |   | 2006 |   |
|                      |   | (In      thousands)  |   |
| Restructured      loans   |   | $                    | 1,799  |   |   | $ | — |   |
| Non-accrual      loans    |   |                 | 20,112 |   |   |   | 2,544 |   |
| Other      impaired loans |   |                 | 1,625  |   |   |   | 2,894 |   |
| Total      impaired loans |   | $                    | 23,536 |   |   | $ | 5,438 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | At      December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2007                 |    |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (In      thousands)  |    |
|      Impaired      loans without a valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                    | 16,606  |   |   | $ | 5,438 |   |
|      Impaired      loans with a valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                 | 7,485   |   |   |                           ─ |   |
|      Valuation      allowance related to impaired loans                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 | (555    | ) |   |                           ─ |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                 |    |   |   |   |   |   |
|      Non-accrual      loans                                                                          |   |                 | 180,413 |   |   |   | 18,497 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                 |    |   |   |   |   |   |

|                                                                          |                | Year      Ended December 31, |   |
|-------------------------------------------------------------------------------|---------------------|------------------------------|--------|
|                                                                          |                | 2007                         |   |   | 2006 |   |   | 2005 |   |
|                                                                          | (In      thousands) |                         |
|   Average      investment in impaired loans                         |                | $                            | 13,278 |   |   | $ | 6,767 |   |   | $ | 2,649 |   |
|   Total      interest income recognized on impaired loans..         |                |                         | 549    |   |   |   | 689 |   |   |   | 174 |   |
|   Interest      income recognized on a cash basis on impaired loans |                |                         | 508    |   |   |   | 562 |   |   |   | 166 |   |
|                                                                          |                |                         |   |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | For      the Year Ended December 31, |                                                                                                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2007                                 |                                                                                                                                  |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)                  |                                                                                                                                  |
| Net      income from operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |                                                                                                                                  |   |   |   |   |   |   |
|   Gain      on sale of      REO.                                                                                                     |   | $                                    | 1,047                                                                                                                                 |   |   | $ | 325 |   |   | $ |                       - |   |
|   Gain      on sale of real estate held for investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |                            - |   |   |   |                            - |   |   |   | 2,245 |   |
| Write      down on REO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | (4,241                                                                                                                                | ) |   |   |                            - |   |   |   |                            -  |   |
|   Other      REO      operations                                                                                                     |   |                                 | (1,880                                                                                                                                | ) |   |   | (339 | ) |   |   | (232 | ) |
|      Real      estate operations,      net                                                                            |   | $                                    | (5,074                                                                                                                                | ) |   | $ | (14 | ) |   | $ | 2,013 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | At      December 31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2007                 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (In      thousands)  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 |   |   |   |   |
| Land                                                                                                                                      |   | $                    | 6,713  |   |   | $ | 6,713 |   |
| Office      buildings                                                                                                                     |   |                 | 7,051  |   |   |   | 6,843 |   |
| Furniture,      fixtures and      equipment                                                                                               |   |                 | 20,791 |   |   |   | 19,589 |   |
| Leasehold      improvements                                                                                                               |   |                 | 10,847 |   |   |   | 10,387 |   |
| Other                                                                                                                                     |   |                 | 2,593  |   |   |   | 809 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                 | 47,995 |   |   |   | 44,341 |   |
| Less      accumulated depreciation and      amortization                                                                                  |   |                 | 30,210 |   |   |   | 27,772 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                    | 17,785 |   |   | $ | 16,569 |   |

|       |   |   |   |
|------------|--------|--------|--------|
| 2008       |   | $      | 8,211  |   |
| 2009       |   |   | 6,172  |   |
| 2010       |   |   | 5,753  |   |
| 2011       |   |   | 5,560  |   |
| 2012       |   |   | 5,243  |   |
| Thereafter |   |   | 35,162 |   |
|       |   | $      | 66,101 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | At      December 31,        |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2007                        |      |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Amount                      |      |   | % |   |   | Amount |   |   | % |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (Dollars      in thousands) |      |
| Variable      rate non-term accounts:                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |
| Money      market deposit accounts (weighted average rate of      4.05, and 4.12%                                                                                                                                                                                                                                                                                                                                                                            |   | $                           | 952,933   |   |   |   | 23 |   |   | $ | 887,933 |   |   |   | 15 | % |
| Interest-bearing      checking accounts (weighted average      rate of 0.34%, and 0.34%)                                                                                                                                                                                                                                                                                                                                                                     |   |                        | 157,775   |   |   |   | 4 |   |   |   | 172,297 |   |   |   | 3 |   |
| Passbook      accounts (weighted average rate of 1.37%and      1.31%)                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | 75,153    |   |   |   | 2 |   |   |   | 93,155 |   |   |   | 2 |   |
| Non-interest      bearing checking      accounts                                                                   |   |                        | 353,298   |   |   |   | 8 |   |   |   | 361,973 |   |   |   | 6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 1,539,159 |   |   |   | 37 |   |   |   | 1,515,358 |   |   |   | 26 |   |
| Fixed-rate      term certificate accounts:                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Under      six-month term (weighted average rate of 4.99% and 5.29%)                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 661,055   |   |   |   | 16 |   |   |   | 659,843 |   |   |   | 11 |   |
| Six-month      term (weighted average rate of 4.88% and 5.11%)                                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 388,617   |   |   |   | 9 |   |   |   |  724,280 |   |   |   | 12 |   |
| Nine-month      term (weighted average rate of 5.10% and 5.16%)                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 454,130   |   |   |   | 11 |   |   |   | 623,038 |   |   |   | 11 |   |
| One      year to 18-month term (weighted average rate of 5.02% and      5.05%)                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 1,057,739 |   |   |   | 26 |   |   |   | 2,289,550 |   |   |   | 39 |   |
| Two      year to 30-month term (weighted average rate of 4.73% and      4.24%)                                                                                                                                                                                                                                                                                                                                                                               |   |                        | 15,423    |   |   |   | 0 |   |   |   | 19,904 |   |   |   | 0 |   |
| Over      30-month term (weighted average rate of      4.09%     and 3.80%)                                                                                                                                                                                                                                                                                                                                                         |   |                        | 40,569    |   |   |   | 1 |   |   |   | 57,908 |   |   |   | 1 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 2,617,533 |   |   |   | 63 |   |   |   | 4,374,523 |   |   |   | 74 |   |
| Total      deposits (weighted average rate of 4.11% and 4.44%)                                                                                                                                                                                                                                                                                                                                                                                               |   | $                           | 4,156,692 |   |   |   | 100 | % |   | $ | 5,889,881 |   |   |   | 100 | % |

|                                      |   |                        |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|-----------------------------|-----------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   | Non-Term                    |      |   |   |   |      |   |   |   |   |   |   | There- |   |   |   |   |
|                                      |   | Accounts                    |      |   | 2008   |   |      | 2009   |   |   | 2010   |   |   | after  |   |   | Total  |   |
|                                      |   | (Dollars      in thousands) |      |
|                                      |   |                        |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits      at December      31, 2007   |   | $                           | 1,539,159 |   |   | $      | 2,579,309 |   |   | $      | 24,464 |   |   |   | 8,537  |   |   | $      | 5,223 |   |   | $ | 4,156,692 |   |
| Weighted      average      interest rates |   |                        | 2.62%     |   |   |   | 5.00%     |   |   |   | 4.60%  |   |   |   | 4.38%  |   |   |   | 4.65% |   |   |   | 4.11% |   |

----

| Maturing      in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|   1      month or      less                                                                                        |   | $      | 146,472 |   |
|   Over      1 month to 3      months                                                                               |   |   | 251,837 |   |
|   Over      3 months to 6      months                                                                              |   |   | 296,238 |   |
|   Over      6 months to 12      months                                                                             |   |   | 240,418 |   |
|   Over      12      months                                                                                         |   |   | 15,506  |   |
| Total                                                                                                                        |   | $      | 950,471 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                | For      the Year Ended December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                | 2007                                 |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (In      thousands) |                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                |                                 |    |   |   |   |   |   |   |
| Passbook      accounts                                                                                       |                | $                                    | 1,244   |   |   | $ | 1,348 |   |   | $ | 1,205 |   |
| Money      market deposits and interest-bearing checking accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                |                                 | 38,879  |   |   |   | 34,164 |   |   |   | 22,585 |   |
| Certificate      accounts                                                                                    |                |                                 | 172,187 |   |   |   | 185,420 |   |   |   | 74,067 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                | $                                    | 212,310 |   |   | $ | 220,932 |   |   | $ | 97,857 |   |

|       |   |   |      |
|------------|--------|--------|-----------|
|  2008 |   | $      | 1,959,000 |   |
|  2009 |   |   | 105,000   |   |
|  2010 |   |   | 20,000    |   |
|       |   | $      | 2,084,000 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | For      the Year Ended December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2007                                 |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | (In      thousands)                  |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |   |   |   |   |   |
| FHLB      advances                                                                                              |   | $                                    | 76,109  |   |   | $ | 138,881 |   |   | $ | 114,780 |   |
| Reverse      repurchase      agreements                                                                         |   |                                 | 37,073  |   |   |   | 49,233 |   |   |   | 35,006 |   |
| Senior      debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 8,180   |   |   |   | 5,940 |   |   |   | 1,557 |   |
| Other                                                                                                           |   |                                 | (68     | ) |   |   | 64 |   |   |   | (10 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                                    | 121,294 |   |   | $ | 194,118 |   |   | $ | 151,333 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Year      Ended December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2007                         |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (In      thousands)          |    |
| Current:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         |    |   |   |   |   |   |   |
|   Federal                                                                        |   | $                            | 67,504  |   |   | $ | 82,965 |   |   | $ | 60,602 |   |
|   State                                                                          |   |                         | 24,127  |   |   |   | 28,122 |   |   |   | 20,299 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         | 91,631  |   |   |   | 111,087 |   |   |   | 80,901 |   |
| Deferred:                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                         |    |   |   |   |   |   |   |   |   |   |
|   Federal                                                                        |   |                         | (16,971 | ) |   |   | (12,775 | ) |   |   | (11,208 | ) |
|   State                                                                          |   |                         | (6,217  | ) |   |   | (3,442 | ) |   |   | (2,940 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         | (23,188 | ) |   |   | (16,217 | ) |   |   | (14,148 | ) |
| Total:                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |    |   |   |   |   |   |   |   |   |   |
|   Federal                                                                        |   |                         | 50,533  |   |   |   | 70,190 |   |   |   | 49,394 |   |
|   State                                                                          |   |                         | 17,910  |   |   |   | 24,680 |   |   |   | 17,359 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                            | 68,443  |   |   | $ | 94,870 |   |   | $ | 66,753 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Year      Ended December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |   |   |   |   |   |   |   |
| Statutory      federal income tax      rate                                                                 |   |                         | 35.0   | % |   |   | 35.0 | % |   |   | 35.0 | % |
| Increase      in taxes resulting from:                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         |   |   |   |   |   |   |   |   |   |   |
| State      franchise tax, net of federal income tax benefit                                                                                                                                                                                                                                                                                                                                                                                 |   |                         | 7.2    |   |   |   | 7.2 |   |   |   | 7.1 |   |
| Non-deductible      stock options                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         | 0.4    |   |   |   | 0.2 |   |   |                ─ |   |
| Other,      net                                                                                             |   |                         | (0.2   | ) |   |           ─ |   |   |                ─ |   |
| Effective      rate                                                                                         |   |                         | 42.4   | % |   |   | 42.4 | % |   |   | 42.1 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | At      December 31, |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2007                 |     |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (In      thousands)  |     |
| Components      of the deferred tax asset:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                 |     |   |   |   |
|   Bad      debts                                                                                                                                                                             |   | $                    | (58,993  | ) |   | $ | (50,609 | ) |
|   Pension      expense.                                                                                                                                                                      |   |                 | (7,020   | ) |   |   | (6,524 | ) |
|   State      taxes                                                                                                                                                                           |   |                 | (3,164   | ) |   |   | (6,315 | ) |
|   Core      deposit intangible      asset                                                                                                                                                    |   |                 | (3,162   | ) |   |   | (3,270 | ) |
|  SERP      liability adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                 | (1,505   | ) |   |   | (1,559 | ) |
|   Loan      fees                                                                                                                                                                             |   |                 | (24,875  | ) |   |   | (18,235 | ) |
|   Other                                                                                                                                                                                      |   |                 | (3,510   | ) |   |   | (2,368 | ) |
|     Total      deferred tax      asset                                                                                                                                             |   |                 | (102,229 | ) |   |   | (88,880 | ) |
| Components      of the deferred tax liability:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                 |     |   |   |   |   |   |
|   FHLB      stock      dividends                                                                                                                                                             |   |                 | 19,632   |   |   |   | 29,529 |   |
|   Tax      effect of unrealized gain on     securities      available for      sale                                                                                 |   |                 | 1,502    |   |   |   | 221 |   |
|   Other                                                                                                                                                                                      |   |                 | 441      |   |   |   | 328 |   |
|     Total      deferred tax      liability                                                                                                                                         |   |                 | 21,575   |   |   |   | 30,078 |   |
| Net      deferred tax      asset                                                                                                                                                                       |   | $                    | (80,654  | ) |   | $ | (58,802 | ) |

----

|                                           |   |   |   | December      31, 2007 |                                                                                                                                                          |
|------------------------------------------------|--------|--------|--------|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |   |   |   | Tangible      Capital       |                                                                                                                                                          |   | Core      Capital |   |   | 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 | % |
|                                           |   |   |   |                        |                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   | December      31, 2006 |                                                                                                                                                          |
|                                           |   |   |   | Tangible      Capital       |                                                                                                                                                          |   | Core      Capital |   |   | Tier      1Risk-based      Capital |   |   | Risk-based      Capital |   |
|                                           |   |   |   | (Dollars      in thousands) |                                                                                                                                                          |
| Actual      capital:                           |   |   |   |                        |                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         |   |   |   | $                           | 788,611                                                                                                                                                       |   |   | $ | 788,611 |   |   | $ | 788,611 |   |   | $ | 849,821 |   |
| Ratio                                          |   |   |   |                        | 8.49                                                                                                                                                          | % |   |   | 8.49 | % |   |   | 16.27 | % |   |   | 17.53 | % |
| FDICIA      minimum required capital:          |   |   |   |                        |                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         |   |   |   | $                           | 139,393                                                                                                                                                       |   |   | $ | 371,715 |   |   | $  | ─ |   |   | $ | 387,857 |   |
| Ratio                                          |   |   |   |                        | 1.50                                                                                                                                                          | % |   |   | 4.00 | % |   | ─     | %  |   |   | 8.00 | % |
| FDICIA      well-capitalized required capital: |   |   |   |                        |                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                         |   |   |   | $                           |                      ─                                                       |   |   | $ | 464,643 |   |   | $ | 290,893 |   |   | $ | 484,822 |   |
| Ratio                                          |   |   |   |                        |                       ─         | %  |   |   | 5.00 | % |   |   | 6.00 | % |   |   | 10.00 | % |
|                                           |   |   |   |                        |                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | At      December 31,                                                                                                                        |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2007                                                                                                                                        |    |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)                                                                                                                         |    |
| Change      in Benefit Obligation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                        |    |   |   |   |
| Projected      benefit obligation, beginning of the      year                                                                                     |   | $                                                                                                                                           | 15,151  |   |   | $ | 14,433 |   |
| Service      cost                                                                                                                                 |   |                                                                                                                                        | 305     |   |   |   | 291 |   |
| Interest      cost                                                                                                                                |   |                                                                                                                                        | 863     |   |   |   | 786 |   |
| Benefits      paid                                                                                                                                |   |                                                                                                                                        | (287    | ) |   |   | (287 | ) |
| Actuarial      (gain)      loss                                                                                                                   |   |                                                                                                                                        | 256     |   |   |   | (72 | ) |
| Projected      benefit obligation, end of the      year                                                                                           |   | $                                                                                                                                           | 16,288  |   |   | $ | 15,151 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                        |    |   |   |   |   |   |
| Change      in Plan Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                        |    |   |   |   |   |   |
| Benefits      paid                                                                                                                                |   | $                                                                                                                                           | (287    | ) |   | $ | (287 | ) |
| Employer      contributions                                                                                                                       |   |                                                                                                                                        | 287     |   |   |   | 287 |   |
| Funded      status                                                                                                                                |   |                                                                                                                                        | (16,289 | ) |   |   | (15,151 | ) |
| Unrecognized      transition      obligation                                                                                                      |   |                            ─ |    |   |                           ─ |   |
| Unrecognized      prior service      cost                                                                                                         |   |                            ─ |    |   |                           ─ |   |
| Unrecognized      net actuarial      loss                                                                                                         |   |                                                                                                                                        | 3,580   |   |   |   | 3,707 |   |
| Net      amount      recognized                                                                                                                   |   | $                                                                                                                                           | (12,709 | ) |   | $ | (11,444 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                        |    |   |   |   |   |   |
| Components      of Net Periodic Benefit Cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                        |    |   |   |   |   |   |
| Service      cost                                                                                                                                 |   | $                                                                                                                                           | 305     |   |   | $ | 291 |   |
| Interest      cost                                                                                                                                |   |                                                                                                                                        | 863     |   |   |   | 786 |   |
| Amortization      of unrecognized net      loss                                                                                                   |   |                                                                                                                                        | 384     |   |   |   | 449 |   |
| Amortization      of unrecognized prior service      cost                                                                                         |   |                            ─ |    |   |                           ─ |   |
| Pension      cost                                                                                                                                 |   | $                                                                                                                                           | 1,552   |   |   | $ | 1,526 |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------------|
|      Options      Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2007                                    |          |   | 2006 |   |   | 2005 |   |
|      (Weighted      average option prices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (In      shares except intrinsic value) |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    |          |   |   |   |   |   |   |
| Beginning      of year ($36.07, $29.70, and $24.05)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    | 820,380  |   |   |   | 758,081  |   |   |   | 725,458  |   |
|        Granted      ($67.20, $58.73, and      $52.47)                                                                                         |   |                                    | 124,984       |   |   |   | 180,115 |   |   |   | 156,150 |   |
|        Exercised      ($19.97, $20.27, and      $17.43)                                                                                       |   |                                    | (127,293      | ) |   |   | (81,109 | ) |   |   | (68,497 | ) |
|        Forfeited      ($57.71, $50.61, and      $35.45)                                                                                       |   |                                    | (36,284       | ) |   |   | (36,707 | ) |   |   | (55,030 | ) |
| End      of year ($42.67, $36.07, and      $29.70)                                                                                                                               |   |                                    | 781,787       |   |   |   | 820,380 |   |   |   | 758,081 |   |
|        Shares      exercisable at December 31, ($29.38, $23.54, and $20.44)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    | 369,841       |   |   |   | 410,247 |   |   |   | 394,448 |   |

|   Non-vested      shares:  |   |   Shares |    |   | Weighted      Average Grant-Date Fair Value |   |
|--------------------------------------|--------|--------------------|---------|--------|---------------------------------------------|--------|
|                                 |   |               |    |   |                                        |   |
| Non-vested      at January 1, 2007   |   |               | 416,058 |   |                                        | $      | 19.03 |   |
| Granted                              |   |               | 124,984 |   |                                        |   | 25.28 |   |
| Vested                               |   |               | (92,812 | )      |                                        |   | 16.74 |   |
| Forfeited                            |   |               | (36,284 | )      |                                        |   | 22.27 |   |
| Non-vested      at December 31, 2006 |   |               | 411,946 |   |                                        | $      | 21.16 |   |

|                                                      |   | Price Ranges |                        |
|-----------------------------------------------------------|--------|--------------|-----------------------------|
|                                                      |   |         | ($13.12 -      ($17.25 |   |   |   | ($26.75      - $31.44) |   |   |   | ($41.70      - $67.26) |   |
|      Options      Outstanding:   |   |         |                        |   |   |   |   |   |   |   |   |   |
| Number      of outstanding shares                         |   |         | 133,846                     |   |   |   | 190,308 |   |   |   | 457,633 |   |
| Weighted-average      remaining contractual life in years |   |         | 1.30                        |   |   |   | 4.19 |   |   |   | 7.74 |   |
| Weighted-average      exercise price                      |   | $            | 15.11                       |   |   | $ | 29.09 |   |   | $ | 56.37 |   |
|                                                      |   |         |                        |   |   |   |   |   |   |   |   |   |
|      Options      Exercisable:   |   |         |                        |   |   |   |   |   |   |   |   |   |
| Number      of outstanding shares                         |   |         | 133,846                     |   |   |   | 142,818 |   |   |   | 93,177 |   |
| Weighted-average      remaining contractual life in years |   |         | 1.30                        |   |   |   | 4.05 |   |   |   | 7.01 |   |
| Weighted-average      exercise price                      |   | $            | 15.11                       |   |   | $ | 29.26 |   |   | $ | 50.06 |   |

----

|   Non-vested      Stock:    |   |  Number      of Shares                                                                                         |   |   | Weighted      Average Gran-Date Fair Value |   |
|---------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|
|                                  |   |                                                                                                                |   |   |                                       |   |
| Outstanding      at January 1, 2007   |   |                  ─                                     |   |   | ─                                    |   |
| Granted                               |   |                                                                                                                | 6,300  |   |                                       |   | $67.26 |   |
| Vested                                |   |                                                                                                                | (900   | )      |                                       |   | $67.26 |   |
| Forfeited                             |   |                        ─ |   |   | ─                                    |   |
| Outstanding      at December 31, 2007 |   |                                                                                                                | 5,400  |   |                                       |   | $67.26 |   |

|                                                                                                                                                                                                               |   | December      31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                               |   | 2005              |   |
| (in      thousands, except per share data)                                                                                                                                                                         |   |
|                                                                                                                                                                                                               |   |              |   |
|   Net      income as reported                                                                                                                                                                            |   | $                 | 91,698 |   |
|                                                                                                                                                                                                               |   |              |   |   |
|   Deduction:                                                                                                                                                                                             |   |              |   |   |
|     Total      stock-based compensation         expense determined under the fair-         value-based method for all rewards,         net of tax |   |              | (1,137 | ) |
|     Pro      forma net income                                                                                                                                                                  |   | $                 | 90,561 |   |
|                                                                                                                                                                                                               |   |              |   |   |
|   Earnings      per share:                                                                                                                                                                               |   |              |   |   |
|   Basic:                                                                                                                                                                                                 |   |              |   |   |
|     As      reported                                                                                                                                                                           |   | $                 | 5.55   |   |
|     Pro      forma                                                                                                                                                                             |   | $                 | 5.48   |   |
|                                                                                                                                                                                                               |   |              |   |   |
|   Diluted:                                                                                                                                                                                               |   |              |   |   |
|     As      reported                                                                                                                                                                           |   | $                 | 5.43   |   |
|     Pro      forma                                                                                                                                                                             |   | $                 | 5.38   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | At      December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2007                 |    |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (In      thousands)  |    |
| Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                 |    |   |   |   |
| Cash                                                                                                                     |   | $                    | 11,933  |   |   | $ | 11,990 |   |
| Other      assets,      net                                                                                              |   |                 | 337     |   |   |   | 2,359 |   |
| Investment      in      subsidiary                                                                                       |   |                 | 792,229 |   |   |   | 790,366 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                    | 804,499 |   |   | $ | 804,715 |   |
| Liabilities      and Stockholders' Equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                 |    |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                 |    |   |   |   |   |   |
| Senior      notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                 | 150,000 |   |   |   | 100,000 |   |
| Stockholders’      equity                                                                                          |   |                 | 654,499 |   |   |   | 704,715 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                    | 804,499 |   |   | $ | 804,715 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                 |    |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Year      Ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
| CONDENSED      STATEMENTS OF INCOME AND                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
|                  COMPREHENSIVE      INCOME                                                                                                                                                                                                                                                                                                                                                                |   | (In      thousands)          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |   |
| Equity      in undistributed net income of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                            | 97,970 |   |   | $ | 132,827 |   |   | $ | 92,829 |   |
| Other      expense,      net                                                                            |   |                         | (5,096 | ) |   |   | (3,737 | ) |   |   | (1,131 | ) |
| Net      Income                                                                                         |   |                         | 92,874 |   |   |   | 129,090 |   |   |   | 91,698 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |   |   |   |   |
| Change      in other comprehensive income (loss), net of taxes                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         | 1,839  |   |   |   | (2,278 | ) |   |   | (453 | ) |
| Comprehensive      Income                                                                               |   | $                            | 94,713 |   |   | $ | 126,812 |   |   | $ | 91,245 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Year      Ended December 31,                                                                                                                      |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| CONDENSED      STATEMENTS OF CASH FLOWS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2007                                                                                                                                              |     |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (In      thousands)                                                                                                                               |     |
| Net      Cash Flows from Operating Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                              |     |   |   |   |   |   |   |
|   Net      income                                                                                                                                                                                 |   | $                                                                                                                                                 | 92,874   |   |   | $ | 129,090 |   |   | $ | 91,698 |   |
|   Adjustments      to reconcile net income to       net      cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                              |     |   |   |   |   |   |   |   |   |   |
|     Equity      in undistributed       net      income of      subsidiary                                                                            |   |                                                                                                                                              | (97,970  | ) |   |   | (132,827 | ) |   |   | (92,829 | ) |
| Stock      option compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                              | 2,059    |   |   |   | 1,880 |   |   |   |                          ─ |   |
|     Other                                                                                                                                                                               |   |                                                                                                                                              | 2,022    |   |   |   | (145 | ) |   |   | (1,360 | ) |
|     Net      cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                              | (1,015   | ) |   |   | (2,002 | ) |   |   | (2,491 | ) |
| Cash      Flows from Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                              |     |   |   |   |   |   |   |   |   |   |
|     Dividends      received from Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                              | 100,000  |   |   |   |  ─ |   |   |   | ─ |   |
|     Investment      in subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                             ─ |     |   |                             ─ |   |   |   | (110,000 | ) |
|     Net      cash provided by (used in) investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                              | 100,000  |   |   |                             ─ |   |   |   | (110,000 | ) |
| Cash      Flows from Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                              |     |   |   |   |   |   |   |   |   |   |
|     Purchase      of treasury      stock                                                                                                                                                |   |                                                                                                                                              | (152,264 | ) |   |                             ─ |   |   |                             ─ |   |
|     Proceeds      from issuance of senior debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                              | 50,000   |   |   |                             ─ |   |   |   | 100,000 |   |
|     Decrease      (increase) in unreleased      shares                                                                                                                                  |   |                                                                                                                                              | 1,711    |   |   |   | (946 | ) |   |   | (1,051 | ) |
|     Exercise      of stock      options                                                                                                                                                 |   |                                                                                                                                              | 4,027    |   |   |   | 3,233 |   |   |   | 3,024 |   |
|     Other                                                                                                                                                                               |   |                                                                                                                                              | (2,516   | ) |   |   | (1,530 | ) |   |   | 146 |   |
| Net      cash provided by (used in) financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                              | (99,042  | ) |   |   | 757 |   |   |   | 102,119 |   |
| Net      (decrease) in      cash                                                                                                                                                                            |   |                                                                                                                                              | (57      | ) |   |   | (1,245 | ) |   |   | (10,372 | ) |
| Cash      at beginning of      period                                                                                                                                                                       |   |                                                                                                                                              | 11,990   |   |   |   | 13,235 |   |   |   | 23,607 |   |
| Cash      at end of      period                                                                                                                                                                             |   | $                                                                                                                                                 | 11,933   |   |   | $ | 11,990 |   |   | $ | 13,235 |   |

----

|                |   |  Interest      Income                 |    |   |  Interest      Expense |   |    | Provision      for Loan Losses |   |   | Non-Interest      Income |   |   | Non-Interest      Expense |   |   |  Net      Income |   |   | Basic      Earnings per Share |   |   | Diluted      Earningsper Share |   |
|---------------------|--------|--------------------------------------------|---------|--------|-----------------------------|--------|---------|--------------------------------|--------|--------|--------------------------|--------|--------|---------------------------|--------|--------|-----------------------|--------|--------|-------------------------------|--------|--------|-------------------------------------|--------|
|                |   | (In      thousands, except per share data) |    |
| First      quarter  |   |                                       |    |   |                        |   |    |                           |   |   |                     |   |   |                      |   |   |                  |   |   |                          |   |   |                                |   |
| 2007                |   | $                                          | 170,417 |   |                        | $      | 95,199  |                           |   | $      | 3,800                    |   |   | $                         | 5,666  |   |                  | $      | 20,661 |                          |   | $      | 32,384                              |   |   | $ | 1.95 |   |   | $ | 1.92 |   |
| 2006                |   |                                       | 169,493 |   |                        |   | 94,982  |                           |   |   | 3,900                    |   |   |                      | 2,483  |   |                  |   | 19,916 |                          |   |   | 30,774                              |   |   |   | 1.86 |   |   |   | 1.82 |   |
| 2005                |   |                                       | 94,402  |   |                        |   | 41,580  |                           |   |   | 3,750                    |   |   |                      | 1,751  |   |                  |   | 18,867 |                          |   |   | 18,492                              |   |   |   | 1.12 |   |   |   | 1.10 |   |
| Second      quarter |   |                                       |    |   |                        |   |    |                           |   |   |                     |   |   |                      |   |   |                  |   |   |                          |   |   |                                |   |   |   |   |   |   |   |   |   |
| 2007                |   | $                                          | 154,736 |   |                        | $      | 85,044  |                           |   | $      | 3,100                    |   |   | $                         | 3,973  |   |                  | $      | 20,571 |                          |   | $      | 29,071                              |   |   | $ | 1.77 |   |   | $ | 1.74 |   |
| 2006                |   |                                       | 178,513 |   |                        |   | 104,649 |                           |   |   | 2,500                    |   |   |                      | 4,622  |   |                  |   | 19,416 |                          |   |   | 32,479                              |   |   |   | 1.96 |   |   |   | 1.92 |   |
| 2005                |   |                                       | 113,423 |   |                        |   | 55,027  |                           |   |   | 4,000                    |   |   |                      | 1,760  |   |                  |   | 18,686 |                          |   |   | 21,685                              |   |   |   | 1.31 |   |   |   | 1.29 |   |
| Third      quarter  |   |                                       |    |   |                        |   |    |                           |   |   |                     |   |   |                      |   |   |                  |   |   |                          |   |   |                                |   |   |   |   |   |   |   |   |   |
| 2007                |   | $                                          | 140,413 |   |                        | $      | 78,234  |                           |   | $      | 4,500                    |   |   | $                         | 1,054  |   |                  | $      | 18,662 |                          |   | $      | 23,001                              |   |   | $ | 1.58 |   |   | $ | 1.57 |   |
| 2006                |   |                                       | 183,473 |   |                        |   | 109,855 |                           |   |   | 3,000                    |   |   |                      | 4,046  |   |                  |   | 18,343 |                          |   |   | 32,462                              |   |   |   | 1.96 |   |   |   | 1.93 |   |
| 2005                |   |                                       | 131,190 |   |                        |   | 68,755  |                           |   |   | 8,000                    |   |   |                      | 3,705  |   |                  |   | 17,772 |                          |   |   | 23,358                              |   |   |   | 1.41 |   |   |   | 1.38 |   |
| Fourth      quarter |   |                                       |    |   |                        |   |    |                           |   |   |                     |   |   |                      |   |   |                  |   |   |                          |   |   |                                |   |   |   |   |   |   |   |   |   |
| 2007                |   | $                                          | 132,147 |   |                        | $      | 75,127  |                           |   | $      | 21,000                   | (1)    |   | $                         | 490    |   |                  | $      | 21,681 |                          |   | $      | 8,418                               |   |   | $ | 0.62 |   |   | $ | 0.61 |   |
| 2006                |   |                                       | 181,143 |   |                        |   | 105,564 |                           |   |   | 3,000                    |   |   |                      | 5,085  |   |                  |   | 19,773 |                          |   |   | 33,375                              |   |   |   | 2.01 |   |   |   | 1.98 |   |
| 2005                |   |                                       | 152,091 |   |                        |   | 83,828  |                           |   |   | 4,000                    |   |   |                      | 2,550  |   |                  |   | 18,156 |                          |   |   | 28,163                              |   |   |   | 1.70 |   |   |   | 1.67 |   |
| Total      year     |   |                                       |    |   |                        |   |    |                           |   |   |                     |   |   |                      |   |   |                  |   |   |                          |   |   |                                |   |   |   |   |   |   |   |   |   |
| 2007                |   | $                                          | 597,713 |   |                        | $      | 333,604 |                           |   | $      | 32,400                   |   |   | $                         | 11,183 |   |                  | $      | 81,575 |                          |   | $      | 92,874                              |   |   | $ | 6.07 |   |   | $ | 6.00 |   |
| 2006                |   |                                       | 712,622 |   |                        |   | 415,050 |                           |   |   | 12,400                   |   |   |                      | 16,236 |   |                  |   | 77,448 |                          |   |   | 129,090                             |   |   |   | 7.79 |   |   |   | 7.65 |   |
| 2005                |   |                                       | 491,106 |   |                        |   | 249,190 |                           |   |   | 19,750                   |   |   |                      | 9,766  |   |                  |   | 73,481 |                          |   |   | 91,698                              |   |   |   | 5.55 |   |   |   | 5.43 |   |

|                                                                                                                                                                                                                                                                                                                                                                                  |   | At      December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                  |   | 2007                 |    |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                  |   | Carrying      Value  |    |   | Fair      Value |   |   | Carrying      Value |   |   | Fair      Value |   |
|                                                                                                                                                                                                                                                                                                                                                                                  |   | (In      thousands)  |    |
|                                                                                                                                                                                                                                                                                                                                                                                  |   |                 |    |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      securities                                                          |   | $                    | 46,435  |   |   | $ | 46,435 |   |   | $ | 57,197 |   |   | $ | 57,197 |   |
| Collateralized      mortgage obligations                                                                                                                                                                                                                                                                                                                                              |   |                 | 316,788 |   |   |   | 316,788 |   |   |   | 311,850 |   |   |   | 311,850 |   |
| Loans      held-for-sale                                                                 |   |                 | — |   |   |   | — |   |   |   | 140,860 |   |   |   | 143,141 |   |
| FHLB stock                                                                                                                                                                                                                                                                                                                                                                  |   |                 | 104,387 |   |   |   | 104,387 |   |   |   | 118,979 |   |   |   | 118,979 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                            |   | At      December 31, |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                            |   | 2007                 |      |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   | Historical Cost |      |   | CalculatedFair      Value Amount |   |   | Historical      Cost |   |   | CalculatedFair      Value Amount |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   | (In      thousands)  |      |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                          |   |                 |      |   |   |   |   |   |   |   |   |   |
| Adjustable      loans:                                                                                                                                                                                                                                                                                                                                                                          |   |                 |      |   |   |   |   |   |   |   |   |   |
|   Single      family                                                                     |   | $                    | 4,645,963 |   |   | $ | 4,359,108 |   |   | $ | 6,437,616 |   |   | $ | 6,671,076 |   |
|   Multi-family                                                                           |   |                 | 1,708,145 |   |   |   | 1,754,548 |   |   |   | 1,809,751 |   |   |   | 1,847,532 |   |
|   Commercial                                                                             |   |                 | 143,022   |   |   |   | 143,482 |   |   |   | 161,487 |   |   |   | 168,364 |   |
| Fixed      rate loans:                                                                                                                                                                                                                                                                                                                                                                          |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Single      family                                                               |   |                 | 6,913     |   |   |   | 6,274 |   |   |   | 6,609 |   |   |   | 6,638 |   |
|    Multi-family                                                                     |   |                 | 1,670     |   |   |   | 1,670 |   |   |   | 2,215 |   |   |   | 2,217 |   |
|    Commercial                                                                       |   |                 | 16,030    |   |   |   | 16,442 |   |   |   | 35,082 |   |   |   | 35,848 |   |
| Land      loans                                                                                    |   |                 | 4,242     |   |   |   | 4,301 |   |   |   | — |   |   |   | — |   |
| Commercial      business      loans                                                                |   |                 | 75,848    |   |   |   | 76,654 |   |   |   | 83,759 |   |   |   | 83,363 |   |
| Consumer      loans                                                                                |   |                 | 33,136    |   |   |   | 33,568 |   |   |   | 44,528 |   |   |   | 46,021 |   |
| Other      loans                                                                                   |   |                 | 4,220     |   |   |   | 4,210 |   |   |   | 4,217 |   |   |   | 4,254 |   |
| Non-performing      loans                                                                          |   |                 | 180,413   |   |   |   | 135,310 |   |   |   | 18,497 |   |   |   | 18,497 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                     |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-term      certificate      accounts                                                          |   |                 | 2,617,533 |   |   |   | 2,617,802 |   |   |   | 4,374,523 |   |   |   | 4,373,474 |   |
| Non-term      deposit      accounts                                                                |   |                 | 1,539,159 |   |   |   | 1,539,159 |   |   |   | 1,515,358 |   |   |   | 1,515,358 |   |
| Borrowings                                                                                         |   |                 | 2,354,000 |   |   |   | 2,384,522 |   |   |   | 2,568,448 |   |   |   | 2,569,372 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|   | Board      of Directors and Stockholders |
|--------|------------------------------------------|

|   | FirstFed      Financial Corp. and Subsidiary |
|--------|----------------------------------------------|

|   | Woodland      Hills, California |
|--------|---------------------------------|

|   | February 28,      2008 |
|--------|------------------------|

----

| ITEM   9.      — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING      AND FINANCIAL DISCLOSURE |
|--------------------------------------------------------------------------------------------------------------------------------------|

|   | Not      applicable. |
|--------|----------------------|

|   | (a) | Under      the supervision and with the participation of the Company’s management,      including its principal executive officer and principal accounting      officer, the Company conducted an evaluation of its disclosure controls      and procedures, as such term is defined under Rule 13a-14(c) promulgated      under the Securities Exchange Act of 1934, as amended (the “Exchange      Act”), within 90 days of the filing date of this report.  Based      on their evaluation, the Company’s principal executive officer and      principal accounting officer concluded that the Company’s disclosure      controls and procedures are effective to alert them to any material      information relating to the Company (including its consolidated      subsidiaries) that must be included in the Company’s periodic Securities      and Exchange Commission filings. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | There      have been no significant changes (including corrective actions with regard      to significant deficiencies or material weaknesses) in the Company’s      internal controls or in other factors that could significantly affect      these controls subsequent to the date of the evaluation referenced in      paragraph (a) above. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | The      Company intends to review and evaluate the design and effectiveness of its      disclosure controls and procedures from time to time in order to improve      its controls and procedures. If any deficiencies are discovered in the      future, corrective action will be taken in order to ensure that senior      management has timely access to all material financial and non-financial      information concerning the Company’s business. While management believes      that the Company’s disclosure controls and procedures are currently      effective to achieve these results, future events affecting the Company’s      business may cause management to modify its disclosure controls and      procedures. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ITEM      12. — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      AND RELATED STOCKHOLDERMATTERS |
|-------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      15. — EXHIBITS, FINANCIAL STATEMENTSCHEDULE |
|-------------------------------------------------------------|

|   | (a) | The      following documents are filed as a part of this  report: |
|--------|-----|-------------------------------------------------------------------|

|   | (1)      Financial Statements (included in this 2007 Annual Report on Form 10-K      under Item 8) |
|--------|----------------------------------------------------------------------------------------------------|

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

|  (3.1)       |   | Restated      Certificate of Incorporation file as Exhibit 3.1 to Form 10-K for the      fiscal year ended December 31, 1999 and incorporated by      reference.  |
|-------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (3.2)       |   | By-laws      filed as Exhibit 3.2 to Form 10-Q dated August 12, 2002 and incorporated      by reference.                                                          |
|        (3.3) |   | Amendment      to By-laws filed as Exhibit 3.(ii) to Form 8-K dated January 10, 2008 and      incorporated by reference.                                               |

|        (4.1) |   | Amended      and Restated Rights Agreement dated as of September 25, 1998, filed as      Exhibit 4.1 to Form 8-A/A, dated September 25, 1998 and incorporated by      reference. |
|-------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (10.1) |   | Supplemental      Executive Retirement Plan dated January 16, 1986 filed as Exhibit 10.5 to      Form 10-K for the fiscal year ended December 31, 1992 and incorporated by      reference. |
|--------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (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      Exhibits 10.3 and 10.4 for change of control to Form 10-Q for the Quarter      ended June 30, 2001 and incorporated by  reference. |
|--------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (10.3) |   | 1997      Non-employee Directors Stock Incentive Plan filed as Exhibit 1 to Form S-8      dated August 12, 1997 |
|--------------------|--------|-----------------------------------------------------------------------------------------------------------------|

|   |   | and      Amendment filed as Exhibit 10.5 to Form 10-Q for the Quarter ended June      30, 2001 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. |
|--------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (21)         |   | Registrant's      sole subsidiary is First Federal Bank of California, a federal      savings bank.                                                                                                          |
|  (23)         |   | Independent      Auditors' consent.                                                                                                                                                                               |
| (24)               |   | Power      of Attorney (included at page 78).                                                                                                                                                                     |
|  (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.             |
| 401 Wilshire      Boulevard          |
| Santa Monica,      California 90401  |

| If after March 15,      2008  | 12555 Jefferson      Boulevard      |
|------------------------------------|------------------------------------------|
|                               | Los Angeles,      California 90066  |

----

|  SIGNATURE |                              | TITLE  |
|-----------------|-----------------------------------|--------|
|            |                              |   |   |
|            |                              |   | Chairman      of the Board and |
|  /s/  | Babette      E. Heimbuch          |   | Chief      Executive Officer (Principal Executive Officer) |
|            | Babette      E. Heimbuch     |   |   |
|            |                              |   |   |
|  /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      |   |   |
|            |                              |   |   |
|  /s/  | Brenda      J. Battey             |   | Senior      Vice President and Controller |
|            | Brenda      J. Battey        |   |   |
|            |                              |   |   |
|  /s/  | Gisselle      Acevedo             |   | Director |
|            | Gisselle      Acevedo        |   |   |
|            |                              |   |   |
|  /s/  | Brian      E. Argrett             |   | Director |
|            | Brian      E. Argrett        |   |   |
|            |                              |   |   |
|  /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      annual 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 annual      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-14 and 15d-14) and internal control over      financial reporting (as defined in Exchange Act Rules 13a-15(f) and      15d-15(f)) for the registrant andhave: |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i)  | 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; and |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 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;      and |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | 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 |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | 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: |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i)  | 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 |
|--------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii)  | 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; and |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)  | The      registrant’s other certifying officer and I have indicated in this annual      report whether or not there were significant changes in internal control      over financial reporting or in other factors that could significantly      affect internal control over financial reporting subsequent to the date of      our most recent evaluation, including any corrective actions with regard      to significant deficiencies and material  weaknesses. |
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| (1)  | I have reviewed this      annual report on Form 10-K of FirstFed Financial  Corp.;  |
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| (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      annual report; |
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| (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 annual      report; |
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| (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-14 and 15d-14) and internal control over      financial reporting (as defined in Exchange Act Rules 13a-15(f) and      15d-15(f)) for the registrant andhave: |
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|   | (i) | 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; and |
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|   | (ii) | 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;      and |
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|   | (iii) | 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 |
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|   | (iv) | 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 |
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| (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: |
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|   | (i)  | 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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|   | (ii)  | 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; and |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)  | The      registrant’s other certifying officer and I have indicated in this annual      report whether or not there were significant changes in internal control      over financial reporting or in other factors that could significantly      affect internal control over financial reporting subsequent to the date of      our most recent evaluation, including any corrective actions with regard      to significant deficiencies and material  weaknesses. |
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|   | (1) | the      Form 10-K of FirstFed Financial Corp. (the "Company") for the annual      period ended December 31, 2007 (the "Report ") accompanying this      certification fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));      and |
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|   | (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. |
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|   | (1) | the      Form 10-K of FirstFed Financial Corp. (the "Company") for the annual      period ended December 31, 2007 (the "Report ") accompanying this      certification fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));      and |
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|   | (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. |
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