##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 COMMISSION FILE NUMBER 0-20006
 ANCHOR BANCORP WISCONSIN INC.
 (Exact name of registrant as specified in its charter)
 Wisconsin
    
    39-1726871(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer Identification No.)25 West Main StreetMadison, Wisconsin
    
    53703(Address of principal executive office)
    
    (Zip Code)
 
  
  þ o
  o þ o
 o þ




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##### 



ANCHOR BANCORP WISCONSIN INC.
INDEX  FORM 10-Q
 Page #Part I  Financial InformationItem 1 Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2006
and March 31, 2006
    
    
    2Consolidated Statements of Income for the Three
Months Ended June 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows for the Three Months
Ended June 30, 2006 and 2005
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    17Results of Operations
    
    
    21Financial Condition
    
    
    24Asset Quality
    
    
    25Liquidity & Capital Resources
    
    
    28Guarantees
    
    
    30Asset/Liability Management
    
    
    31Item 3Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4 Controls and Procedures
    
    
    32Part II  Other InformationItem 1 Legal Proceedings
    
    
    32Item 1ARisk Factors
    
    
    32Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3 Defaults upon Senior Securities
    
    
    33Item 4Submission of Matters to a Vote of Security Holders
    
    
    33Item 5 Other Information
    
    
    34Item 6Exhibits
    
    
    34Signatures
    
    
    35302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
  1




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##### Table of Contents



Anchor Bancorp Wisconsin Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 June 30,
    
    
    March 31,2006
    
    
    2006(In Thousands, Except Share Data)AssetsCash
    
    $
    82,169
    
    
    $
    66,192Interest-bearing deposits
    
    
    37,187
    
    
    
    86,352Cash and cash equivalents
    
    
    119,356
    
    
    
    152,544Investment securities available for sale
    
    
    67,999
    
    
    
    49,521Mortgage-related securities available for sale
    
    
    252,052
    
    
    
    247,438Mortgage-related securities held to maturity (fair value of $75
and $77, respectively)
    
    
    74
    
    
    
    77Loans, less allowance for loan losses of $15,636 at June 30, 2006
and $15,570 at March 31, 2006:Held for sale
    
    
    4,118
    
    
    
    5,509Held for investment
    
    
    3,709,745
    
    
    
    3,614,265Foreclosed properties and repossessed assets, net
    
    
    3,006
    
    
    
    2,192Real estate held for development and sale
    
    
    56,824
    
    
    
    54,330Office properties and equipment
    
    
    29,679
    
    
    
    29,867Federal Home Loan Bank stockat cost
    
    
    41,598
    
    
    
    45,348Accrued interest on investments and loans and other assets
    
    
    52,514
    
    
    
    54,093Goodwill
    
    
    19,956
    
    
    
    19,956Total assets
    
    $
    4,356,921
    
    
    $
    4,275,140Liabilities and Stockholders EquityDepositsNon-interest bearing
    
    $
    266,555
    
    
    $
    242,924Interest bearing
    
    
    2,910,665
    
    
    
    2,797,293Total deposits
    
    
    3,177,220
    
    
    
    3,040,217Short-term borrowings
    
    
    179,300
    
    
    
    186,200Long-term borrowings
    
    
    611,798
    
    
    
    675,661Other liabilities
    
    
    54,304
    
    
    
    45,040Total liabilities
    
    
    4,022,622
    
    
    
    3,947,118Minority interest in real estate partnerships
    
    
    7,804
    
    
    
    6,997Commitments and contingent liabilities (Note 8)Preferred stock, $.10 par value, 5,000,000 shares
authorized, none outstanding
    
    
    
    
    
    
    Common stock, $.10 par value, 100,000,000 shares authorized,
25,363,339 shares issued, 21,902,275 and 21,854,303 shares outstanding,
respectively
    
    
    2,536
    
    
    
    2,536Additional paid-in capital
    
    
    71,262
    
    
    
    70,517Retained earnings
    
    
    345,261
    
    
    
    340,364Accumulated other comprehensive loss
    
    
    (4,029
    )
    
    
    (2,558
    )Treasury stock (3,461,064 shares and 3,509,036 shares, respectively), at cost
    
    
    (80,584
    )
    
    
    (82,144
    )Unearned deferred compensation
    
    
    (7,951
    )
    
    
    (7,690
    )Total stockholders equity
    
    
    326,495
    
    
    
    321,025Total liabilities and stockholders equity
    
    $
    4,356,921
    
    
    $
    4,275,140See
accompanying Notes to Unaudited Consolidated Financial Statements.
 2




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Anchor Bancorp Wisconsin Inc. and Subsidiaries
 
 Consolidated Statements of Income
  Three Months Ended June 30,2006
    
    
    2005(In Thousands, Except Per Share Data)Interest income:Loans
    
    $
    61,774
    
    
    $
    51,225Mortgage-related securities
    
    
    2,904
    
    
    
    2,543Investment securities
    
    
    957
    
    
    
    1,018Interest-bearing deposits
    
    
    631
    
    
    
    781Total interest income
    
    
    66,266
    
    
    
    55,567Interest expense:Deposits
    
    
    25,356
    
    
    
    16,473Short-term borrowings
    
    
    2,262
    
    
    
    2,262Long-term borrowings
    
    
    5,803
    
    
    
    4,687Total interest expense
    
    
    33,421
    
    
    
    23,422Net interest income
    
    
    32,845
    
    
    
    32,145Provision for loan losses
    
    
    1,205
    
    
    
    265Net interest income after provision for loan losses
    
    
    31,640
    
    
    
    31,880Non-interest income:Real estate investment partnership revenue
    
    
    4,486
    
    
    
    11,513Loan servicing income
    
    
    997
    
    
    
    1,312Credit enhancement income
    
    
    417
    
    
    
    395Service charges on deposits
    
    
    2,428
    
    
    
    2,372Insurance commissions
    
    
    826
    
    
    
    687Net gain on sale of loans
    
    
    869
    
    
    
    123Net gain (loss) on sale of investments and mortgage-related securities
    
    
    (283
    )
    
    
    7Other revenue from real estate operations
    
    
    2,147
    
    
    
    1,215Other
    
    
    1,420
    
    
    
    1,155Total non-interest income
    
    
    13,307
    
    
    
    18,779Non-interest expense:Compensation
    
    
    10,726
    
    
    
    10,872Real estate investment partnership cost of sales
    
    
    3,853
    
    
    
    8,411Occupancy
    
    
    1,999
    
    
    
    1,577Furniture and equipment
    
    
    1,453
    
    
    
    1,567Data processing
    
    
    1,421
    
    
    
    1,281Marketing
    
    
    1,152
    
    
    
    1,095Other expenses from real estate partnership operations
    
    
    2,578
    
    
    
    2,049Other
    
    
    3,257
    
    
    
    3,189Total non-interest expense
    
    
    26,439
    
    
    
    30,041Minority interest in income of real estate partnership operations
    
    
    438
    
    
    
    1,288Income before income taxes
    
    
    18,070
    
    
    
    19,330Income taxes
    
    
    7,423
    
    
    
    7,770Net income
    
    $
    10,647
    
    
    $
    11,560Earnings per share:Basic
    
    $
    0.50
    
    
    $
    0.53Diluted
    
    
    0.49
    
    
    
    0.52Dividends declared per share
    
    
    0.16
    
    
    
    0.14
 
 See accompanying Notes to Unaudited Consolidated Financial Statements. 3




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Anchor Bancorp Wisconsin Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
  Three Months Ended June 30,2006
    
    
    2005(In Thousands)Operating ActivitiesNet income
    
    $
    10,647
    
    
    $
    11,560Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    1,205
    
    
    
    265Provision for depreciation and amortization
    
    
    1,100
    
    
    
    1,107Cash paid due to origination of loans held for sale
    
    
    (91,601
    )
    
    
    (270,183
    )Cash received due to sale of loans held for sale
    
    
    93,861
    
    
    
    268,231Net gain on sales of loans
    
    
    (869
    )
    
    
    (123
    )Loss (gain) sale of investments
    
    
    283
    
    
    
    (7
    )Increase in accrued interest receivable
    
    
    (959
    )
    
    
    (1,321
    )Decrease in prepaid exp and other assets
    
    
    2,538
    
    
    
    5,916(Decrease) increase in accrued interest payable
    
    
    (788
    )
    
    
    153Increase (decrease) in accounts payable
    
    
    9,626
    
    
    
    (11,309
    )Other
    
    
    93
    
    
    
    (965
    )Net cash provided by operating activities
    
    
    25,136
    
    
    
    3,324Investing ActivitiesProceeds from sales of investment securities available for sale
    
    
    65
    
    
    
    79Proceeds from maturities of investment securities
    
    
    22,915
    
    
    
    36,080Purchase of investment securities available for sale
    
    
    (41,354
    )
    
    
    (25,987
    )Proceeds from sale of mortgage-related securities available for sale
    
    
    
    
    
    
    1,307Purchase of mortgage-related securities available for sale
    
    
    (19,913
    )
    
    
    (9,096
    )Principal collected on mortgage-related securities
    
    
    12,975
    
    
    
    15,042Decrease in FHLB stock
    
    
    3,750
    
    
    
    Net increase in loans held for investment
    
    
    (96,349
    )
    
    
    (62,771
    )Purchases of office properties and equipment
    
    
    (795
    )
    
    
    (160
    )Sales of real estate
    
    
    
    
    
    
    (384
    )Investment in real estate held for development and sale
    
    
    (2,578
    )
    
    
    5,720Net cash used in investing activities
    
    
    (121,284
    )
    
    
    (40,170
    )
 4




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Anchor Bancorp Wisconsin Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Contd)
 Three Months Ended June 30,2006
    
    
    2005(In Thousands)Financing ActivitiesIncrease in deposit accounts
    
    $
    132,335
    
    
    $
    80,178Increase in advance payments by borrowers
for taxes and insurance
    
    
    5,094
    
    
    
    6,473(Decrease) increase in short-term borrowings
    
    
    (6,900
    )
    
    
    12,100Proceeds from long-term borrowings
    
    
    4,079
    
    
    
    35,712Repayment of long-term borrowings
    
    
    (67,942
    )
    
    
    (42,494
    )Treasury stock purchased
    
    
    (1,427
    )
    
    
    (5,934
    )Exercise of stock options
    
    
    686
    
    
    
    451Cash received from employee stock purchase plan
    
    
    (277
    )
    
    
    1Tax benefit from stock related compensation
    
    
    745
    
    
    
    257Payments of cash dividends to stockholders
    
    
    (3,433
    )
    
    
    (2,943
    )Net cash provided by financing activities
    
    
    62,960
    
    
    
    83,801Net (decrease) increase in cash and cash equivalents
    
    
    (33,188
    )
    
    
    46,955Cash and cash equivalents at beginning of period
    
    
    152,544
    
    
    
    166,436Cash and cash equivalents at end of period
    
    $
    119,356
    
    
    $
    213,391Supplementary cash flow information:Cash paid or credited to accounts:Interest on deposits and borrowings
    
    $
    32,633
    
    
    $
    23,269Income taxes
    
    
    5,990
    
    
    
    12,750Non-cash transactions:Transfer of mortgage loans held to maturity to held for sale
    
    
    
    
    
    
    94,129Securitization of mortgage loans held for sale to mortgage-backed
securities
    
    
    
    
    
    
    94,165
 
 See accompanying Notes to Unaudited Consolidated Financial Statements 5




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ANCHOR BANCORP WISCONSIN INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Principles of Consolidation
  Note 2  Basis of Presentation
       6




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Note 3  Stock-Based Compensation
   Three months ended June 30, 2006WeightedAverageOptions
    
    
    PriceOutstanding at beginning of period
    
    
    1,159,022
    
    
    $
    17.75Granted
    
    
    
    
    
    
    Exercised
    
    
    (112,624
    )
    
    
    9.69Forfeited
    
    
    
    
    
    
    Outstanding at end of period
    
    
    1,046,398
    
    
    $
    18.62Options exercisable at June 30, 2006
    
    
    1,046,398
    
    
    $
    18.62
    Options Outstanding
    
    Exercisable OptionsWeighted- AverageRemainingContractual Life
    
    Weighted- Average
    
    
    
    
    
    Weighted- AverageRange of Exercise Prices
    
    Shares
    
    (Years)
    
    Exercise Price
    
    Shares
    
    Exercise Price$8.50  $12.99
    
    
    210,596
    
    
    
    0.97
    
    
    $
    11.63
    
    
    
    210,596
    
    
    $
    11.63$15.06  $23.77
    
    
    759,712
    
    
    
    4.72
    
    
    
    19.41
    
    
    
    759,712
    
    
    
    19.41$28.50  $31.95
    
    
    76,090
    
    
    
    8.69
    
    
    
    29.99
    
    
    
    76,090
    
    
    
    29.991,046,398
    
    
    
    4.26
    
    
    
    18.62
    
    
    
    1,046,398
    
    
    
    18.62
 7




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##### Table of Contents



Three months ended June 30, 2006WeightedAverageOptions
    
    
    PriceBalance at beginning of period
    
    
    20,700
    
    
    $
    31.95Restricted stock granted
    
    
    
    
    
    
    Restricted stock vested
    
    
    
    
    
    
    Restriced stock forfeited
    
    
    
    
    
    
    Balance at end of period
    
    
    20,700
    
    
    $
    31.95
     8




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##### Table of Contents



Three monthsended June 30, 2005(Dollars in thousands,except per sharedata)Net income, as reported
    
    $
    11,560Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects
    
    
    (85
    )Pro forma net income
    
    $
    11,475Earnings per share:Basic:As reported
    
    $
    0.53Pro forma
    
    
    0.53Diluted:As reported
    
    $
    0.52Pro forma
    
    
    0.52
 Note 4  Goodwill and Other Intangible Assets
  June 30,
    
    
    March 31,2006
    
    
    2006(In Thousands)Mortgage servicing rights at beginning of period
    
    $
    7,059
    
    
    $
    6,950Additions
    
    
    830
    
    
    
    2,341Amortization
    
    
    (842
    )
    
    
    (2,232
    )Mortgage servicing rights before valuation
allowance at end of period
    
    
    7,047
    
    
    
    7,059Valuation allowance
    
    
    (435
    )
    
    
    (456
    )Net mortgage servicing rights at end of period
    
    $
    6,612
    
    
    $
    6,603
  9




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##### Table of Contents



MortgageServicingRights(In Thousands)Quarter ended June 30, 2006 (actual)
    
    $
    842Estimate for the year ended March 31,2007
    
    
    3,3682008
    
    
    3,3682009
    
    
    3112010
    
    
    $
    7,047
  10




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Note 5  Stockholders Equity
   11




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##### Table of Contents



Note 6  Earnings Per Share
  Three Months Ended June 30,2006
    
    
    2005Numerator:Net income
    
    $
    10,647,428
    
    
    $
    11,560,158Numerator for basic and diluted earnings
per shareincome available to common
stockholders
    
    $
    10,647,428
    
    
    $
    11,560,158Denominator:Denominator for basic earnings per
shareweighted-average common
shares outstanding
    
    
    21,458,857
    
    
    
    21,788,039Effect of dilutive securities:Employee stock options
    
    
    332,611
    
    
    
    428,064Management Recognition Plans
    
    
    
    
    
    
    5,106Denominator for diluted earnings per
shareadjusted weighted-average
common shares and assumed conversions
    
    
    21,791,468
    
    
    
    22,221,209Basic earnings per share
    
    $
    0.50
    
    
    $
    0.53Diluted earnings per share
    
    $
    0.49
    
    
    $
    0.52
 12




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##### Table of Contents



Note 7  Segment Information
  Community Banking:
 Real Estate Investments:
  13




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##### Table of Contents



Three Months Ended June 30, 2006(In Thousands)ConsolidatedReal Estate
    
    
    Community
    
    
    Intersegment
    
    
    FinancialInvestments
    
    
    Banking
    
    
    Eliminations
    
    
    StatementsInterest income
    
    $
    105
    
    
    $
    66,602
    
    
    $
    (441
    )
    
    $
    66,266Interest expense
    
    
    424
    
    
    
    33,438
    
    
    
    (441
    )
    
    
    33,421Net interest income (loss)
    
    
    (319
    )
    
    
    33,164
    
    
    
    
    
    
    
    32,845Provision for loan losses
    
    
    
    
    
    
    1,205
    
    
    
    
    
    
    
    1,205Net interest income (loss) after provision for loan
losses
    
    
    (319
    )
    
    
    31,959
    
    
    
    
    
    
    
    31,640Real estate investment partnership revenue
    
    
    4,486
    
    
    
    
    
    
    
    
    
    
    
    4,486Other revenue from real estate operations
    
    
    2,147
    
    
    
    
    
    
    
    
    
    
    
    2,147Other income
    
    
    
    
    
    
    6,704
    
    
    
    (30
    )
    
    
    6,674Real estate investment partnership cost of sales
    
    
    (3,853
    )
    
    
    
    
    
    
    
    
    
    
    (3,853
    )Other expense from real estate partnership operations
    
    
    (2,608
    )
    
    
    
    
    
    
    30
    
    
    
    (2,578
    )Minority interest in income of real estate partnerships
    
    
    (438
    )
    
    
    
    
    
    
    
    
    
    
    (438
    )Other expense
    
    
    
    
    
    
    (20,008
    )
    
    
    
    
    
    
    (20,008
    )Income before income taxes
    
    
    (585
    )
    
    
    18,655
    
    
    
    
    
    
    
    18,070Income tax expense
    
    
    (207
    )
    
    
    7,630
    
    
    
    
    
    
    
    7,423Net income
    
    $
    (378
    )
    
    $
    11,025
    
    
    $
    
    
    
    $
    10,647Total Assets
    
    $
    77,030
    
    
    $
    4,279,891
    
    
    $
    
    
    
    $
    4,356,921
 Three Months Ended June 30, 2005(In Thousands)ConsolidatedReal Estate
    
    
    Community
    
    
    Intersegment
    
    
    FinancialInvestments
    
    
    Banking
    
    
    Eliminations
    
    
    StatementsInterest income
    
    $
    70
    
    
    $
    55,868
    
    
    $
    (371
    )
    
    $
    55,567Interest expense
    
    
    370
    
    
    
    23,423
    
    
    
    (371
    )
    
    
    23,422Net interest income (loss)
    
    
    (300
    )
    
    
    32,445
    
    
    
    
    
    
    
    32,145Provision for loan losses
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    265Net interest income (loss) after provision for loan
losses
    
    
    (300
    )
    
    
    32,180
    
    
    
    
    
    
    
    31,880Real estate investment partnership revenue
    
    
    11,513
    
    
    
    
    
    
    
    
    
    
    
    11,513Other revenue from real estate operations
    
    
    1,215
    
    
    
    
    
    
    
    
    
    
    
    1,215Other income
    
    
    
    
    
    
    6,081
    
    
    
    (30
    )
    
    
    6,051Real estate investment partnership cost of sales
    
    
    (8,411
    )
    
    
    
    
    
    
    
    
    
    
    (8,411
    )Other expense from real estate partnership operations
    
    
    (2,079
    )
    
    
    
    
    
    
    30
    
    
    
    (2,049
    )Minority interest in income of real estate partnerships
    
    
    (1,288
    )
    
    
    
    
    
    
    
    
    
    
    (1,288
    )Other expense
    
    
    
    
    
    
    (19,581
    )
    
    
    
    
    
    
    (19,581
    )Income before income taxes
    
    
    650
    
    
    
    18,680
    
    
    
    
    
    
    
    19,330Income tax expense
    
    
    291
    
    
    
    7,479
    
    
    
    
    
    
    
    7,770Net income
    
    $
    359
    
    
    $
    11,201
    
    
    $
    
    
    
    $
    11,560Total Assets
    
    $
    77,035
    
    
    $
    4,059,787
    
    
    $
    
    
    
    $
    4,136,822
 14




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##### Table of Contents



Note 8  Commitments and Contingent Liabilities
   June 30,
    
    
    March 31,2006
    
    
    2006Commitments to extend credit:
    
    $
    82,416
    
    
    $
    95,209Unused lines of credit:Home equity
    
    
    95,466
    
    
    
    94,844Credit cards
    
    
    42,163
    
    
    
    43,255Commercial
    
    
    140,890
    
    
    
    138,751Letters of credit
    
    
    70,380
    
    
    
    68,282Credit enhancement under the Federal
Home Loan Bank of Chicago Mortgage
Partnership Finance Program
    
    
    18,742
    
    
    
    17,977Real estate investment segment borrowings
    
    
    19,005
    
    
    
    18,041
    15




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Note 9  Subsequent Events
  16




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC.
 
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Executive Overview
  
    
    Diluted earnings per share decreased to $0.49 for the quarter ended June 30, 2006
compared to $0.52 per share for the quarter ended June 30, 2005;
    
    The net interest margin decreased to 3.23% for the quarter ended June 30, 2006 compared
to 3.32% for the quarter ended June 30, 2005;
    
    Loans receivable increased $324.3 million or 9.57% since June 30, 2005 and increased
$94.1 million, or 2.60%, since March 31, 2006;
    
    Deposits grew $216.8 million or 7.32% since June 30, 2005 and $137.0 million, or 4.51%,
since March 31, 2006; and
    
    Book value per share increased to $14.91 at June 30, 2006 compared to $14.69 at March
31, 2006 and $14.22 at June 30, 2005.
  17




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##### Table of Contents



Three Months Ended(Dollars in thousands - except per share amounts)
    
    6/30/2006
    
    3/31/2006
    
    12/31/2005
    
    9/30/2005Operations Data:Net interest income
    
    $
    32,845
    
    
    $
    33,294
    
    
    $
    33,837
    
    
    $
    33,428Provision for loan losses
    
    
    1,205
    
    
    
    1,450
    
    
    
    700
    
    
    
    1,485Net gain on sale of loans
    
    
    869
    
    
    
    1,348
    
    
    
    144
    
    
    
    1,193Real estate investment partnership revenue
    
    
    4,486
    
    
    
    4,524
    
    
    
    6,378
    
    
    
    11,559Other non-interest income
    
    
    7,952
    
    
    
    8,063
    
    
    
    7,898
    
    
    
    7,090Real estate investment partnership cost of sales
    
    
    3,853
    
    
    
    3,791
    
    
    
    5,527
    
    
    
    10,780Other non-interest expense
    
    
    22,586
    
    
    
    22,534
    
    
    
    23,238
    
    
    
    22,536Minority interest in income of
real estate partnership operations
    
    
    438
    
    
    
    29
    
    
    
    304
    
    
    
    102Income before income taxes
    
    
    18,070
    
    
    
    19,425
    
    
    
    18,488
    
    
    
    18,367Income taxes
    
    
    7,423
    
    
    
    7,973
    
    
    
    7,595
    
    
    
    7,589Net income
    
    
    10,647
    
    
    
    11,452
    
    
    
    10,893
    
    
    
    10,778Selected Financial Ratios(1):Yield on earning assets
    
    
    6.52
    %
    
    
    6.34
    %
    
    
    6.15
    %
    
    
    5.97
    %Cost of funds
    
    
    3.43
    
    
    
    3.11
    
    
    
    2.88
    
    
    
    2.68Interest rate spread
    
    
    3.09
    
    
    
    3.23
    
    
    
    3.27
    
    
    
    3.29Net interest margin
    
    
    3.23
    
    
    
    3.35
    
    
    
    3.39
    
    
    
    3.40Return on average assets
    
    
    1.00
    
    
    
    1.10
    
    
    
    1.04
    
    
    
    1.04Return on average equity
    
    
    13.14
    
    
    
    14.46
    
    
    
    13.91
    
    
    
    13.62Average equity to average assets
    
    
    7.60
    
    
    
    7.59
    
    
    
    7.45
    
    
    
    7.66Non-interest expense to average assets
    
    
    2.48
    
    
    
    2.52
    
    
    
    2.74
    
    
    
    3.22Per Share:Basic earnings per share
    
    $
    0.50
    
    
    $
    0.54
    
    
    $
    0.51
    
    
    $
    0.49Diluted earnings per share
    
    
    0.49
    
    
    
    0.53
    
    
    
    0.50
    
    
    
    0.48Dividends per share
    
    
    0.16
    
    
    
    0.16
    
    
    
    0.16
    
    
    
    0.16Book value per share
    
    
    14.91
    
    
    
    14.69
    
    
    
    14.32
    
    
    
    14.28Financial Condition:Total assets
    
    $
    4,356,921
    
    
    $
    4,275,140
    
    
    $
    4,200,234
    
    
    $
    4,204,470Loans receivable, netHeld for sale
    
    
    4,118
    
    
    
    5,509
    
    
    
    5,847
    
    
    
    6,957Held for investment
    
    
    3,709,745
    
    
    
    3,614,265
    
    
    
    3,545,436
    
    
    
    3,466,265Deposits
    
    
    3,177,220
    
    
    
    3,040,217
    
    
    
    2,987,284
    
    
    
    3,032,976Borrowings
    
    
    791,098
    
    
    
    861,861
    
    
    
    814,641
    
    
    
    794,044Stockholders equity
    
    
    326,495
    
    
    
    321,025
    
    
    
    312,089
    
    
    
    315,349Allowance for loan losses
    
    
    15,636
    
    
    
    15,570
    
    
    
    15,252
    
    
    
    22,582Non-performing assets
    
    
    18,836
    
    
    
    15,721
    
    
    
    17,265
    
    
    
    16,201
 
 (1) Annualized when appropriate. 18




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##### Table of Contents



Three Months Ended(Dollars in thousands - except per share amounts)
    
    6/30/2005
    
    3/31/2005
    
    12/31/2004
    
    9/30/2004Operations Data:Net interest income
    
    $
    32,145
    
    
    $
    31,231
    
    
    $
    31,651
    
    
    $
    29,615Provision for loan losses
    
    
    265
    
    
    
    165
    
    
    
    664
    
    
    
    300Net gain (loss) on sale of loans
    
    
    123
    
    
    
    763
    
    
    
    1,001
    
    
    
    1,043Real estate investment partnership revenue
    
    
    11,513
    
    
    
    51,112
    
    
    
    16,104
    
    
    
    15,143Other non-interest income
    
    
    7,143
    
    
    
    7,838
    
    
    
    5,758
    
    
    
    6,469Real estate investment partnership cost of sales
    
    
    8,411
    
    
    
    30,966
    
    
    
    13,131
    
    
    
    11,067Other non-interest expense
    
    
    21,630
    
    
    
    24,682
    
    
    
    20,368
    
    
    
    21,933Minority interest in income of
real estate partnership operations
    
    
    1,288
    
    
    
    8,582
    
    
    
    2,023
    
    
    
    1,359Income before income taxes
    
    
    19,330
    
    
    
    26,549
    
    
    
    18,328
    
    
    
    17,611Income taxes
    
    
    7,770
    
    
    
    9,748
    
    
    
    7,618
    
    
    
    7,006Net income
    
    
    11,560
    
    
    
    16,801
    
    
    
    10,710
    
    
    
    10,605Selected Financial Ratios(1):Yield on earning assets
    
    
    5.73
    %
    
    
    5.56
    %
    
    
    5.51
    %
    
    
    5.35
    %Cost of funds
    
    
    2.53
    
    
    
    2.37
    
    
    
    2.22
    
    
    
    2.22Interest rate spread
    
    
    3.20
    
    
    
    3.19
    
    
    
    3.29
    
    
    
    3.13Net interest margin
    
    
    3.32
    
    
    
    3.29
    
    
    
    3.40
    
    
    
    3.25Return on average assets
    
    
    1.14
    
    
    
    1.68
    
    
    
    1.09
    
    
    
    1.11Return on average equity
    
    
    14.70
    
    
    
    21.44
    
    
    
    13.64
    
    
    
    13.78Average equity to average assets
    
    
    7.75
    
    
    
    7.82
    
    
    
    8.01
    
    
    
    8.09Non-interest expense to average assets
    
    
    2.96
    
    
    
    5.56
    
    
    
    3.42
    
    
    
    3.47Per Share:Basic earnings per share
    
    $
    0.53
    
    
    $
    0.75
    
    
    $
    0.47
    
    
    $
    0.47Diluted earnings per share
    
    
    0.52
    
    
    
    0.74
    
    
    
    0.46
    
    
    
    0.46Dividends per share
    
    
    0.14
    
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.13Book value per share
    
    
    14.22
    
    
    
    13.92
    
    
    
    13.77
    
    
    
    13.55Financial Condition:Total assets
    
    $
    4,136,822
    
    
    $
    4,050,456
    
    
    $
    3,929,881
    
    
    $
    3,909,961Loans receivable, netHeld for sale
    
    
    6,313
    
    
    
    4,361
    
    
    
    11,816
    
    
    
    7,057Held for investment
    
    
    3,383,250
    
    
    
    3,414,608
    
    
    
    3,292,339
    
    
    
    3,231,826Deposits
    
    
    2,960,468
    
    
    
    2,873,533
    
    
    
    2,705,495
    
    
    
    2,681,757Borrowings
    
    
    798,927
    
    
    
    793,609
    
    
    
    826,928
    
    
    
    846,139Stockholders equity
    
    
    315,416
    
    
    
    310,678
    
    
    
    316,243
    
    
    
    312,063Allowance for loan losses
    
    
    26,532
    
    
    
    26,444
    
    
    
    27,526
    
    
    
    28,213Non-performing assets
    
    
    17,030
    
    
    
    15,908
    
    
    
    21,029
    
    
    
    21,187
 
 (1) Annualized when appropriate. 19




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##### Table of Contents



Significant Accounting Policies
  
    
    The allowance for loan losses is maintained at a level believed adequate by management to
absorb probable and estimable losses inherent in the loan portfolio and is based on the size
and current risk characteristics of the loan portfolio; an assessment of individual problem
loans; actual and anticipated loss experience; and current economic events in specific
industries and geographical areas. These economic events include unemployment levels,
regulatory guidance, and general economic conditions. Determination of the reserve is
inherently subjective as it requires significant estimates, including the amounts and timing
of expected future cash flows on impaired loans, estimated losses on pools of homogeneous
loans based on historical loss experience, and consideration of current economic trends, all
of which may be susceptible to significant change. Loan losses are charged off against the
allowance, while recoveries of amounts previously charged off are credited to the allowance.
A provision for loan losses is charged to operating expense based on managements periodic
evaluation of the factors previously mentioned as well as other pertinent factors.Specific reserves are established for expected losses resulting from analysis developed through
specific credit allocations on individual loans and are based on a regular analysis of impaired
loans where the internal credit rating is at or below a predetermined classification. A loan is
considered impaired when it is probable that the Corporation will be unable to collect all
contractual principal and interest due according to the terms of the loan agreement. Loans
subject to impairment are defined as non-accrual and restructured loans exclusive of smaller
homogeneous loans such as home equity, installment, and 1-4 family residential loans. The fair
value of the loans is determined based on the present value of expected future cash flows
discounted at the loans effective interest rate, the market price of the loan, or the fair
value of the underlying collateral less costs to sell, if the loan is collateral dependent.
    
    Valuation of mortgage servicing rights requires the use of
judgment. Mortgage servicing rights are established on loans that
are originated and subsequently sold with servicing rights
retained. A portion of the loans book basis is allocated to
mortgage servicing rights when a loan is sold. The fair value of
mortgage servicing rights is the present value of estimated future
net cash flows from the servicing relationship using current
market assumptions for prepayments, servicing costs and other
factors. As the loans are repaid and net servicing revenue is
earned, mortgage servicing rights are amortized into expense. Net
servicing revenues are expected to exceed this amortization
expense. However, if actual prepayment experience exceeds what
was originally anticipated, net servicing revenues may be less
than expected and mortgage servicing rights may be impaired.
    
    Goodwill is reviewed at least annually for impairment, which
requires judgment. Goodwill has been recorded as a result of an
acquisition in which purchase price exceeded fair value of net
assets acquired. The price paid for the acquisition is analyzed
and compared to a number of current indices. If goodwill is
determined to be impaired, it would be expensed in the period in
which it became impaired.
  20




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##### Table of Contents



RESULTS OF OPERATIONS
 General.
 Net Interest Income.
   Provision for Loan Losses.
 Average Interest-Earning Assets, Average Interest-Bearing Liabilities and Interest Rate
Spread.
 21




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##### Table of Contents



Three Months Ended June 30,2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost(1)
    
    
    Balance
    
    
    Interest
    
    
    Cost(1)(Dollars In Thousands)Interest-Earning AssetsMortgage loans
    
    $
    2,840,872
    
    
    $
    46,487
    
    
    
    6.55
    %
    
    $
    2,646,272
    
    
    $
    38,654
    
    
    
    5.84
    %Consumer loans
    
    
    620,841
    
    
    
    11,014
    
    
    
    7.10
    
    
    
    595,013
    
    
    
    9,381
    
    
    
    6.31Commercial business loans
    
    
    203,198
    
    
    
    4,273
    
    
    
    8.41
    
    
    
    190,895
    
    
    
    3,190
    
    
    
    6.68Total loans receivable (2) (3)
    
    
    3,664,911
    
    
    
    61,774
    
    
    
    6.74
    
    
    
    3,432,180
    
    
    
    51,225
    
    
    
    5.97Mortgage-related securities (4)
    
    
    248,949
    
    
    
    2,904
    
    
    
    4.67
    
    
    
    237,536
    
    
    
    2,543
    
    
    
    4.28Investment securities (4)
    
    
    54,904
    
    
    
    610
    
    
    
    4.44
    
    
    
    48,888
    
    
    
    409
    
    
    
    3.35Interest-bearing deposits
    
    
    51,685
    
    
    
    631
    
    
    
    4.88
    
    
    
    113,413
    
    
    
    781
    
    
    
    2.75Federal Home Loan Bank stock
    
    
    44,895
    
    
    
    347
    
    
    
    3.09
    
    
    
    44,923
    
    
    
    609
    
    
    
    5.42Total interest-earning assets
    
    
    4,065,344
    
    
    
    66,266
    
    
    
    6.52
    
    
    
    3,876,940
    
    
    
    55,567
    
    
    
    5.73Non-interest-earning assets
    
    
    200,411
    
    
    
    
    
    
    
    
    
    
    
    183,269Total assets
    
    $
    4,265,755
    
    
    
    
    
    
    
    
    
    
    $
    4,060,209Interest-Bearing LiabilitiesDemand deposits
    
    $
    830,797
    
    
    
    4,409
    
    
    
    2.12
    
    
    $
    759,352
    
    
    
    2,204
    
    
    
    1.16Regular passbook savings
    
    
    214,062
    
    
    
    244
    
    
    
    0.46
    
    
    
    239,633
    
    
    
    255
    
    
    
    0.43Certificates of deposit
    
    
    2,044,304
    
    
    
    20,703
    
    
    
    4.05
    
    
    
    1,916,882
    
    
    
    14,014
    
    
    
    2.92Total deposits
    
    
    3,089,163
    
    
    
    25,356
    
    
    
    3.28
    
    
    
    2,915,867
    
    
    
    16,473
    
    
    
    2.26Short-term borrowings
    
    
    166,090
    
    
    
    2,262
    
    
    
    5.45
    
    
    
    257,561
    
    
    
    2,262
    
    
    
    3.51Long-term borrowings
    
    
    646,181
    
    
    
    5,803
    
    
    
    3.59
    
    
    
    527,916
    
    
    
    4,687
    
    
    
    3.55Total interest-bearing liabilities
    
    
    3,901,434
    
    
    
    33,421
    
    
    
    3.43
    
    
    
    3,701,344
    
    
    
    23,422
    
    
    
    2.53Non-interest-bearing liabilities
    
    
    40,099
    
    
    
    
    
    
    
    
    
    
    
    44,394Total liabilities
    
    
    3,941,533
    
    
    
    
    
    
    
    
    
    
    
    3,745,738Stockholders equity
    
    
    324,222
    
    
    
    
    
    
    
    
    
    
    
    314,471Total liabilities and stockholders
equity
    
    $
    4,265,755
    
    
    
    
    
    
    
    
    
    
    $
    4,060,209Net interest income/interest rate spread (5)
    
    
    
    
    
    $
    32,845
    
    
    
    3.09
    %
    
    
    
    
    
    $
    32,145
    
    
    
    3.20
    %Net interest-earning assets
    
    $
    163,910
    
    
    
    
    
    
    
    
    
    
    $
    175,596Net interest margin (6)
    
    
    
    
    
    
    
    
    
    
    3.23
    %
    
    
    
    
    
    
    
    
    
    
    3.32
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    1.04
    
    
    
    
    
    
    
    
    
    
    
    1.05
 
 (1)
    
    Annualized(2)
    
    For the purpose of these computations, non-accrual loans are included in the daily average loan amounts
outstanding.(3)
    
    Interest earned on loans includes loan fees (which are not material in amount) and interest income which has
been received from borrowers whose loans were removed from non-accrual status during the period indicated.(4)
    
    Average balances of securities available-for-sale are based on amortized cost.(5)
    
    Interest rate spread represents the difference between the average yield on interest-earning assets and the
average cost of interest-bearing liabilities and is represented on a fully tax equivalent basis.(6)
    
    Net interest margin represents net interest income as a percentage of average interest-earning assets. 22




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Non-Interest Income.
 Non-Interest Expense.
 Income Taxes.
 23




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##### Table of Contents



FINANCIAL CONDITION
          24




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##### Table of Contents



ASSET QUALITY
   At June 30,
    
    
    At March 31,2006
    
    
    2006
    
    
    2005
    
    
    2004(Dollars In Thousands)Non-accrual loans:Single-family residential
    
    $
    2,833
    
    
    $
    2,856
    
    
    $
    2,406
    
    
    $
    3,247Multi-family residential
    
    
    7,250
    
    
    
    4,214
    
    
    
    
    
    
    
    Commercial real estate
    
    
    3,798
    
    
    
    3,398
    
    
    
    4,894
    
    
    
    8,764Consumer
    
    
    613
    
    
    
    548
    
    
    
    453
    
    
    
    642Commercial business
    
    
    1,336
    
    
    
    2,513
    
    
    
    6,697
    
    
    
    2,268Total non-accrual loans
    
    
    15,830
    
    
    
    13,529
    
    
    
    14,450
    
    
    
    14,921Foreclosed properties and repossessed assets, net
    
    
    3,006
    
    
    
    2,192
    
    
    
    1,458
    
    
    
    2,422Total non-performing assets
    
    $
    18,836
    
    
    $
    15,721
    
    
    $
    15,908
    
    
    $
    17,343Performing troubled debt restructurings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,649Total non-accrual loans to total loans(1)
    
    
    0.41
    %
    
    
    0.35
    %
    
    
    0.40
    %
    
    
    0.45
    %Total non-performing assets to total assets
    
    
    0.43
    
    
    
    0.37
    
    
    
    0.39
    
    
    
    0.46Allowance for loan losses to total loans(1)
    
    
    0.40
    
    
    
    0.41
    
    
    
    0.73
    
    
    
    0.87Allowance for loan losses to total
non-accrual loans
    
    
    98.77
    
    
    
    115.09
    
    
    
    183.00
    
    
    
    191.72Allowance for loan and foreclosure losses
to total non-performing assets
    
    
    83.80
    
    
    
    100.48
    
    
    
    167.39
    
    
    
    165.78
 
 (1) Total loans are gross loans receivable before the reduction for loans in process, unearned interest and loan fees and the allowance for loan losses.   25




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##### Table of Contents



At June 30,
    
    
    At March 31,2006
    
    
    2006
    
    
    2005
    
    
    2004(In Thousands)Impaired loans with valuation
reserve required
    
    $
    5,111
    
    
    $
    6,381
    
    
    $
    10,827
    
    
    $
    17,126Less:Specific valuation allowance
    
    
    2,108
    
    
    
    3,111
    
    
    
    7,126
    
    
    
    5,382Total impaired loans
    
    $
    3,003
    
    
    $
    3,270
    
    
    $
    3,701
    
    
    $
    11,744Average impaired loans
    
    $
    3,690
    
    
    $
    3,829
    
    
    $
    11,535
    
    
    $
    6,389Interest income recognized
on impaired loans
    
    $
    1
    
    
    $
    208
    
    
    $
    249
    
    
    $
    710Interest income recognized on a cash basis
on impaired loans
    
    $
    1
    
    
    $
    208
    
    
    $
    249
    
    
    $
    710
 26




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##### Table of Contents



At June 30,
    
    
    At March 31,2006
    
    
    2006
    
    
    2005
    
    
    2004(In Thousands)30 to 59 days
    
    $
    12,323
    
    
    $
    9,874
    
    
    $
    5,853
    
    
    $
    4,88760 to 89 days
    
    
    4,700
    
    
    
    733
    
    
    
    714
    
    
    
    10,941Total
    
    $
    17,023
    
    
    $
    10,607
    
    
    $
    6,567
    
    
    $
    15,828
    Three Months EndedJune 30,2006
    
    
    2005(Dollars In Thousands)Allowance at beginning of period
    
    $
    15,570
    
    
    $
    26,444Charge-offs:Mortgage
    
    
    (415
    )
    
    
    (23
    )Consumer
    
    
    (70
    )
    
    
    (202
    )Commercial business
    
    
    (836
    )
    
    
    (17
    )Total charge-offs
    
    
    (1,321
    )
    
    
    (242
    )Recoveries:Mortgage
    
    
    1
    
    
    
    1Consumer
    
    
    6
    
    
    
    16Commercial business
    
    
    175
    
    
    
    48Total recoveries
    
    
    182
    
    
    
    65Net charge-offs
    
    
    (1,139
    )
    
    
    (177
    )Provision
    
    
    1,205
    
    
    
    265Allowance at end of period
    
    $
    15,636
    
    
    $
    26,532Net charge-offs to
average loans
    
    
    (0.12
    )%
    
    
    (0.02
    )%
 27




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
     28




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##### Table of Contents



Minimum RequiredMinimum Required
    
to be WellFor Capital
    
    Capitalized UnderActual
    
    Adequacy Purposes
    
    OTS RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars In Thousands)As of June 30, 2006:Tier 1 capital(to adjusted tangible assets)
    
    $
    340,663
    
    
    
    7.99
    %
    
    $
    127,947
    
    
    
    3.00
    %
    
    $
    213,245
    
    
    
    5.00
    %Risk-based capital(to risk-based assets)
    
    
    354,191
    
    
    
    10.53
    
    
    
    269,085
    
    
    
    8.00
    
    
    
    336,356
    
    
    
    10.00Tangible capital(to tangible assets)
    
    
    340,663
    
    
    
    7.99
    
    
    
    63,973
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/AAs of March 31, 2006:Tier 1 capital(to adjusted tangible assets)
    
    $
    333,342
    
    
    
    7.96
    %
    
    $
    125,590
    
    
    
    3.00
    %
    
    $
    209,316
    
    
    
    5.00
    %Risk-based capital(to risk-based assets)
    
    
    345,801
    
    
    
    10.48
    
    
    
    263,914
    
    
    
    8.00
    
    
    
    329,893
    
    
    
    10.00Tangible capital(to tangible assets)
    
    
    333,342
    
    
    
    7.96
    
    
    
    62,795
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
  June 30,
    
    
    March 31,2006
    
    
    2006(In Thousands)Stockholders equity of the Bank
    
    $
    356,556
    
    
    $
    350,696Less: Goodwill and intangible assets
    
    
    (19,956
    )
    
    
    (19,956
    )Accumulated other comprehensive income
    
    
    4,063
    
    
    
    2,602Tier 1 and tangible capital
    
    
    340,663
    
    
    
    333,342Plus: Allowable general valuation allowances
    
    
    13,528
    
    
    
    12,459Risk based capital
    
    $
    354,191
    
    
    $
    345,801
 29




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##### Table of Contents



GUARANTEES
   Amount
    
    
    AmountSubsidiary
    
    Partnership
    
    
    Amount
    
    
    Outstanding
    
    
    Outstandingof IDI
    
    Entity
    
    
    Guaranteed
    
    
    at 6/30/06
    
    
    at 3/31/06(Dollars in thousands)Oakmont
    
    Chandler Creek
    
    $
    14,150
    
    
    $
    12,350
    
    
    $
    14,150Davsha III
    
    Indian Palms 147, LLC
    
    
    4,655
    
    
    
    1,472
    
    
    
    1,322Davsha V
    
    Villa Santa Rosa, LLC
    
    
    11,000
    
    
    
    4,005
    
    
    
    4,765Davsha VII
    
    La Vista Grande 121, LLC
    
    
    14,619
    
    
    
    7,592
    
    
    
    6,146Total
    
    
    
    
    
    $
    44,424
    
    
    $
    25,419
    
    
    $
    26,383
     30




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##### Table of Contents



ASSET/LIABILITY MANAGEMENT
     31




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##### Table of Contents



Item 3 Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4 Controls and Procedures
   
 Part II  Other Information
 
 Item 1 Legal Proceedings.
  
 Item 1A Risk Factors.
  32




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##### Table of Contents



Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.
   Total Number ofShares Purchased
    
    
    Maximum Number ofTotal Number
    
    
    Average
    
    
    as Part of Publicly
    
    
    Shares that May Yet Beof Shares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    Plans or Programs(2)April 1 -April 30, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    1,519,360May 1 - May 31, 2006
    
    
    23,476
    
    
    
    29.06
    
    
    
    
    
    
    
    1,519,360June 1 - June 30, 2006
    
    
    50,000
    
    
    
    28.53
    
    
    
    50,000
    
    
    
    1,469,360Total
    
    
    73,476
    (1)
    
    $
    28.70
    
    
    
    50,000
    
    
    
    1,469,360
 
 (1)
    
    Consists of 50,000 shares purchased pursuant to a publicly announced repurchase program,
as described in Note 2, and 23,476 shares acquired from employees in payment for the exercise
price of stock options granted to them pursuant to the Corporations stock option program.(2)
    
    Effective November 7, 2005, the Board of Directors extended the current share repurchase
program and authorized an additional share repurchase program of 5% or approximately 1.10
million shares of its outstanding common stock in the open market. The repurchases are
authorized to be made from time to
time in open-market and/or negotiated transactions as, in the opinion of management, market
conditions may warrant. The repurchased shares will be held as treasury stock and will be
available for general corporate purposes. The Corporation utilizes various securities
brokers as its agent for the stock repurchase program. 
 Item 3 Defaults upon Senior Securities.
  
 Item 4 Submission of Matters to a Vote of Security Holders.
  33




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##### Table of Contents



Number of VotesFor
    
    
    
    
    
    WithheldElection of Directors for three-year terms
expiring in 2009:Holly Cremer Berkenstadt
    
    
    17,635,630
    
    
    
    
    
    
    
    3,357,271Donald D. Kropidlowski
    
    
    16,398,409
    
    
    
    
    
    
    
    4,594,492Mark D. Timmerman
    
    
    17,637,347
    
    
    
    
    
    
    
    3,355,554
 For
    
    Against
    
    AbstainedAppointment of McGladrey & Pullen LLP as independent
registered public accounting firm for the fiscal
year ending March 31, 2007
    
    
    20,562,126
    
    
    
    300,327
    
    
    
    130,448
  
 Item 5 Other Information.
 .
 
 Item 6 Exhibits
  Exhibit 31.1
    
    Certification of Chief Executive Officer Pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934 and Section 302 of the
Sarbanes-Oxley Act of 2002 is included herein as an exhibit to this Report.
 Exhibit 31.2
    
    Certification of Chief Financial Officer Pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934 and Section 302 of the
Sarbanes-Oxley Act of 2002 is included as an exhibit to this Report.
 Exhibit 32.1
    
    Certification of the Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) is included herein as an
exhibit to this Report.
 Exhibit 32.2
    
    Certification of the Chief Financial Officer pursuant to Section 906 of
the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) is included herein as an
exhibit to this Report.
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##### Table of Contents



SIGNATURES
   Date: August 7, 2006
    
    
    
    By:
    
    /s/ Douglas J. Timmerman

Douglas J. Timmerman, Chairman of theBoard, President and Chief Executive OfficerDate: August 7, 2006
    
    
    
    By:
    
    /s/ Michael W. Helser

Michael W. Helser, Treasurer andChief Financial Officer
 35