##### 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 December 31, 2010
 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 001-34955
 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 Street 
Madison, Wisconsin
    
    53703(Address of principal executive office)
    
    (Zip Code)
 Registrants telephone number, including area code
 (Former name, former address, and former fiscal year, if changed since last report)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



ANCHOR BANCORP WISCONSIN INC.
INDEX  FORM 10-Q
  
 Page #Part I  Financial InformationItem 1 Financial StatementsUnaudited Consolidated Balance Sheets as of December 31, 2010
and March 31, 2010
    
    
    2Unaudited Consolidated Statements of Operations for the Three
and Nine Months Ended December 31, 2010 and 2009
    
    
    3Unaudited Consolidated Statements of Changes in Stockholders
Equity for the Nine Months Ended December 31, 2010 and Year
Ended March 31, 2010
    
    
    5Unaudited Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 2010 and 2009
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    8Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    35Executive Overview
    
    
    35Results of Operations
    
    
    40Financial Condition
    
    
    45Risk Management
    
    
    50Credit Risk Management
    
    
    50Liquidity Risk Management
    
    
    57Market Risk Management
    
    
    62Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    68Item 4 Controls and Procedures
    
    
    68Part II  Other InformationItem 1 Legal Proceedings
    
    
    69Item 1A Risk Factors
    
    
    69Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    71Item 3 Intentionally Left Blank
    
    
    71Item 4 Removed and Reserved
    
    
    71Item 5 Other Information
    
    
    71Item 6 Exhibits
    
    
    72Signatures
    
    
    73EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
  December 31,
    
    March 31,2010
    
    2010(In Thousands, Except Share Data)AssetsCash and due from banks
    
    $
    74,913
    
    
    $
    42,411Interest-bearing deposits
    
    
    59,605
    
    
    
    469,751Cash and cash equivalents
    
    
    134,518
    
    
    
    512,162Investment securities available for sale
    
    
    529,801
    
    
    
    416,203Investment securities held to maturity (fair value of $31
and $40, respectively)
    
    
    31
    
    
    
    39Loans, less allowance for loan losses of $157,438 at December 31, 2010
and $179,644 at March 31, 2010:Held for sale
    
    
    37,196
    
    
    
    19,484Held for investment
    
    
    2,661,991
    
    
    
    3,229,580Foreclosed properties and repossessed assets, net
    
    
    69,241
    
    
    
    55,436Real estate held for development and sale
    
    
    1,213
    
    
    
    1,304Office properties and equipment
    
    
    30,251
    
    
    
    43,558Federal Home Loan Bank stockat cost
    
    
    54,829
    
    
    
    54,829Accrued interest and other assets
    
    
    61,681
    
    
    
    83,670Total assets
    
    $
    3,580,752
    
    
    $
    4,416,265Liabilities and Stockholders (Deficit) EquityDepositsNon-interest bearing
    
    $
    255,595
    
    
    $
    285,374Interest bearing deposits and accrued interest
    
    
    2,588,730
    
    
    
    3,267,388Total deposits and accrued interest
    
    
    2,844,325
    
    
    
    3,552,762Other borrowed funds
    
    
    685,608
    
    
    
    796,153Other liabilities
    
    
    60,340
    
    
    
    37,237Total liabilities
    
    
    3,590,273
    
    
    
    4,386,152Commitments and contingent liabilities (Note 11)Preferred stock, $.10 par value, 5,000,000 shares authorized,
110,000 shares issued and outstanding
    
    
    87,165
    
    
    
    81,596Common stock, $.10 par value, 100,000,000 shares authorized, 25,363,339 shares issued, 21,683,304 and 21,685,925 shares outstanding,
respectively
    
    
    2,536
    
    
    
    2,536Additional paid-in capital
    
    
    109,133
    
    
    
    109,133Retained deficit
    
    
    (92,061
    )
    
    
    (61,249
    )Accumulated other comprehensive income (loss) related to AFS securities
    
    
    (16,463
    )
    
    
    507Accumulated other comprehensive loss related to OTTI non credit issues
    
    
    (3,771
    )
    
    
    (5,906
    )Total accumulated other comprehensive income (loss)
    
    
    (20,234
    )
    
    
    (5,399
    )Treasury stock (3,680,035 and 3,677,414 shares, respectively), at cost
    
    
    (90,526
    )
    
    
    (90,975
    )Deferred compensation obligation
    
    
    (5,534
    )
    
    
    (5,529
    )Total Anchor BanCorp stockholders (deficit) equity
    
    
    (9,521
    )
    
    
    30,113Total liabilities and stockholders (deficit) equity
    
    $
    3,580,752
    
    
    $
    4,416,265
  2




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations
  Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In Thousands, Except Per Share Data)Interest income:Loans
    
    $
    36,631
    
    
    $
    48,545
    
    
    $
    117,461
    
    
    $
    151,886Investment securities and Federal Home Loan Bank stock
    
    
    4,442
    
    
    
    4,801
    
    
    
    11,308
    
    
    
    16,321Interest-bearing deposits
    
    
    78
    
    
    
    208
    
    
    
    454
    
    
    
    838Total interest income
    
    
    41,151
    
    
    
    53,554
    
    
    
    129,223
    
    
    
    169,045Interest expense:Deposits
    
    
    10,993
    
    
    
    21,278
    
    
    
    40,048
    
    
    
    68,451Other borrowed funds
    
    
    7,963
    
    
    
    9,943
    
    
    
    25,854
    
    
    
    34,407Total interest expense
    
    
    18,956
    
    
    
    31,221
    
    
    
    65,902
    
    
    
    102,858Net interest income
    
    
    22,195
    
    
    
    22,333
    
    
    
    63,321
    
    
    
    66,187Provision for credit losses
    
    
    21,412
    
    
    
    10,456
    
    
    
    41,020
    
    
    
    141,756Net interest income (loss) after provision for credit losses
    
    
    783
    
    
    
    11,877
    
    
    
    22,301
    
    
    
    (75,569
    )Non-interest income:Total other than temporary losses
    
    
    
    
    
    
    (872
    )
    
    
    
    
    
    
    (1,910
    )Portion of loss recognized in other comprehensive income
    
    
    
    
    
    
    786
    
    
    
    
    
    
    
    1,741Reclassification from other comprehensive income
    
    
    (163
    )
    
    
    (260
    )
    
    
    (362
    )
    
    
    (576
    )Net impairment losses recognized in earnings
    
    
    (163
    )
    
    
    (346
    )
    
    
    (362
    )
    
    
    (745
    )Loan
servicing income (loss), net of amortization
    
    
    (416
    )
    
    
    1,038
    
    
    
    1,076
    
    
    
    1,525Credit enhancement income on mortgage loans sold
    
    
    116
    
    
    
    293
    
    
    
    605
    
    
    
    989Service charges on deposits
    
    
    2,855
    
    
    
    3,949
    
    
    
    9,773
    
    
    
    11,924Investment and insurance commissions
    
    
    971
    
    
    
    1,070
    
    
    
    2,696
    
    
    
    2,672Net gain on sale of loans
    
    
    5,601
    
    
    
    2,805
    
    
    
    16,164
    
    
    
    15,270Net gain on sale of investment securities
    
    
    1,187
    
    
    
    5,783
    
    
    
    7,952
    
    
    
    9,396Net gain on sale of branches
    
    
    100
    
    
    
    
    
    
    
    7,348
    
    
    
    Other revenue from real estate partnership operations
    
    
    
    
    
    
    
    
    
    
    387
    
    
    
    2,393Other
    
    
    1,435
    
    
    
    1,104
    
    
    
    3,434
    
    
    
    2,823Total non-interest income
    
    
    11,686
    
    
    
    15,696
    
    
    
    49,073
    
    
    
    46,247
  3




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES  Consolidated Statements of Operations ( Cont .)
 Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In Thousands, Except Per Share Data)Non-interest expense:Compensation
    
    $
    10,396
    
    
    $
    12,415
    
    
    $
    31,799
    
    
    $
    40,864Occupancy
    
    
    1,921
    
    
    
    2,427
    
    
    
    6,305
    
    
    
    7,487Federal deposit insurance premiums
    
    
    1,423
    
    
    
    4,300
    
    
    
    9,119
    
    
    
    14,486Furniture and equipment
    
    
    1,520
    
    
    
    1,836
    
    
    
    5,023
    
    
    
    5,978Data processing
    
    
    1,627
    
    
    
    1,914
    
    
    
    4,981
    
    
    
    5,535Marketing
    
    
    248
    
    
    
    542
    
    
    
    965
    
    
    
    1,557Other expenses from real estate partnership operations
    
    
    32
    
    
    
    211
    
    
    
    547
    
    
    
    3,870Foreclosed properties and repossessed assetsnet expense
    
    
    3,307
    
    
    
    7,710
    
    
    
    15,747
    
    
    
    20,480Foreclosure cost advance impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,708Mortgage servicing rights recovery
    
    
    (1,611
    )
    
    
    (415
    )
    
    
    (149
    )
    
    
    (1,765
    )Legal services
    
    
    1,866
    
    
    
    1,961
    
    
    
    6,645
    
    
    
    3,834Other professional fees
    
    
    767
    
    
    
    1,007
    
    
    
    2,877
    
    
    
    3,168Other
    
    
    3,151
    
    
    
    3,862
    
    
    
    10,595
    
    
    
    11,905Total non-interest expense
    
    
    24,647
    
    
    
    37,770
    
    
    
    94,454
    
    
    
    121,107Loss before income taxes
    
    
    (12,178
    )
    
    
    (10,197
    )
    
    
    (23,080
    )
    
    
    (150,429
    )Income taxes
    
    
    
    
    
    
    3
    
    
    
    14
    
    
    
    3Net Loss
    
    
    (12,178
    )
    
    
    (10,200
    )
    
    
    (23,094
    )
    
    
    (150,432
    )Preferred stock dividends and discount accretion
    
    
    (1,853
    )
    
    
    (3,228
    )
    
    
    (7,622
    )
    
    
    (9,700
    )Net loss available to common equity of Anchor BanCorp
    
    $
    (14,031
    )
    
    $
    (13,428
    )
    
    $
    (30,716
    )
    
    $
    (160,132
    )Comprehensive loss
    
    $
    (35,099
    )
    
    $
    (20,101
    )
    
    $
    (37,929
    )
    
    $
    (155,362
    )Loss per common share:Basic
    
    $
    (0.66
    )
    
    $
    (0.63
    )
    
    $
    (1.45
    )
    
    $
    (7.56
    )Diluted
    
    
    (0.66
    )
    
    
    (0.63
    )
    
    
    (1.45
    )
    
    
    (7.56
    )Dividends declared per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  4




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES  
 Consolidated Statements of Changes in Stockholders (Deficit) Equity
 Accu-mulatedOtherCompre-Non-
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Retained
    
    
    
    
    
    
    Deferred
    
    
    hensiveControlling
    
    
    Preferred
    
    
    Common
    
    
    Paid-in
    
    
    Earnings
    
    
    Treasury
    
    
    Compensation
    
    
    IncomeInterest
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    (Deficit)
    
    
    Stock
    
    
    Obligation
    
    
    (Loss)
    
    
    Total(Dollars in thousands except per share data)Balance at
April 1, 2009 (as restated)
    
    $
    411
    
    
    $
    74,185
    
    
    $
    2,536
    
    
    $
    109,327
    
    
    $
    131,878
    
    
    $
    (94,744
    )
    
    $
    (5,480
    )
    
    $
    (6,337
    )
    
    $
    211,776Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177,062
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177,062
    )Non-credit portion of other-than-temporary impairments:Available-for-sale securities, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,100
    )
    
    
    (2,100
    )Reclassification adjustment for net gains realized in income, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,095
    )
    
    
    (11,095
    )Reclassification adjustment for credit portion of other-than-temporary impairment realized in income, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    847
    
    
    
    847Change in net unrealized gains (losses) on available-for-sale securities net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,286
    
    
    
    13,286Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (176,124
    )Change in non-controlling interest
    
    
    (411
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (411
    )Dividend on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,500
    )Issuance of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (194
    )
    
    
    (3,154
    )
    
    
    3,769
    
    
    
    (49
    )
    
    
    
    
    
    
    372Accretion of preferred stock discount
    
    
    
    
    
    
    7,411
    
    
    
    
    
    
    
    
    
    
    
    (7,411
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2010
    
    $
    
    
    
    $
    81,596
    
    
    $
    2,536
    
    
    $
    109,133
    
    
    $
    (61,249
    )
    
    $
    (90,975
    )
    
    $
    (5,529
    )
    
    $
    (5,399
    )
    
    $
    30,113Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,094
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,094
    )Reclassification adjustment for net gains realized in income, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,952
    )
    
    
    (7,952
    )Reclassification adjustment for credit portion of other-than-temporary impairment realized in income, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    362
    
    
    
    362Change in
net unrealized gains (losses) on available-for-sale securities net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,245
    )
    
    
    (7,245
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (37,929
    )Dividend on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,053
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,053
    )Issuance of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    449
    
    
    
    (5
    )
    
    
    
    
    
    
    348Accretion of preferred stock discount
    
    
    
    
    
    
    5,569
    
    
    
    
    
    
    
    
    
    
    
    (5,569
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2010
    
    $
    
    
    
    $
    87,165
    
    
    $
    2,536
    
    
    $
    109,133
    
    
    $
    (92,061
    )
    
    $
    (90,526
    )
    
    $
    (5,534
    )
    
    $
    (20,234
    )
    
    $
    (9,521
    )
  5




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES  
 Consolidated Statements of Cash Flows
 Nine Months Ended December 31,2010
    
    
    2009(In Thousands)Operating ActivitiesNet loss
    
    $
    (23,094
    )
    
    $
    (150,432
    )Adjustments
to reconcile net loss to net cash provided by operating activities:Provision for credit losses
    
    
    41,020
    
    
    
    141,756OREO losses, net
    
    
    7,229
    
    
    
    13,705Depreciation and amortization
    
    
    3,955
    
    
    
    3,705Amortization and accretion of investment securities, net
    
    
    2,192
    
    
    
    1,873Mortgage servicing rights impairment (recovery)
    
    
    (149
    )
    
    
    (1,765
    )Foreclosure cost advance impairment
    
    
    
    
    
    
    3,708Cash paid due to origination of loans held for sale
    
    
    (699,518
    )
    
    
    (996,214
    )Cash received due to sale of loans held for sale
    
    
    697,970
    
    
    
    1,137,808Net gain on sales of loans
    
    
    (16,164
    )
    
    
    (15,270
    )Net gain on sale of investment securities
    
    
    (7,952
    )
    
    
    (9,396
    )(Gain) loss on sale of foreclosed properties
    
    
    (3,325
    )
    
    
    452Net gain on sale of branches
    
    
    (7,348
    )
    
    
    Net impairment losses recognized in earnings
    
    
    362
    
    
    
    745Stock-based compensation expense
    
    
    348
    
    
    
    566Capitalized improvments of OREO
    
    
    (522
    )
    
    
    Decrease in accrued interest receivable
    
    
    3,029
    
    
    
    3,311Decrease in prepaid expense and other assets
    
    
    26,457
    
    
    
    24,017Increase (decrease) in accrued interest payable on deposits
    
    
    5,826
    
    
    
    (1,782
    )Increase (decrease) in other liabilities
    
    
    12,433
    
    
    
    (18,179
    )Decrease in non-controlling interest in real estate partnerships
    
    
    
    
    
    
    (411
    )Net cash provided by operating activities
    
    
    42,749
    
    
    
    138,197Investing ActivitiesProceeds from sale of investment securities
    
    
    385,209
    
    
    
    391,615Proceeds from maturities of investment securities
    
    
    62,825
    
    
    
    49,965Purchase of investment securities
    
    
    (615,458
    )
    
    
    (455,659
    )Principal collected on investment securities
    
    
    44,399
    
    
    
    84,377Net decrease in loans held for investment
    
    
    388,280
    
    
    
    301,620Purchases of office properties and equipment
    
    
    (1,232
    )
    
    
    (2,024
    )Proceeds from sales of office properties and equipment
    
    
    496
    
    
    
    468Proceeds from sale of foreclosed properties
    
    
    34,408
    
    
    
    18,925Investment in real estate held for development and sale
    
    
    91
    
    
    
    13,945Branch sale  Royal Credit Union net of cash and cash equivalents
    
    
    (99,897
    )
    
    
    Branch sale  Nicolet net of cash and cash equivalents
    
    
    (80,256
    )
    
    
    Net cash provided by investing activities
    
    
    118,865
    
    
    
    403,232
  6




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES  Consolidated Statements of Cash Flows (Contd)
 Nine Months Ended December 31,2010
    
    

    2009(In Thousands)Financing ActivitiesDecrease in deposit accounts
    
    $
    (418,821
    )
    
    $
    (316,944
    )Increase in advance payments by borrowers
for taxes and insurance
    
    
    (7,837
    )
    
    
    (6,916
    )Proceeds from borrowed funds
    
    
    15,500
    
    
    
    257Repayment of borrowed funds
    
    
    (128,100
    )
    
    
    (319,170
    )Tax benefit from stock related compensation
    
    
    
    
    
    
    (194
    )Net cash used in financing activities
    
    
    (539,258
    )
    
    
    (642,967
    )Net decrease in cash and cash equivalents
    
    
    (377,644
    )
    
    
    (101,538
    )Cash and cash equivalents at beginning of period
    
    
    512,162
    
    
    
    433,826Cash and cash equivalents at end of period
    
    $
    134,518
    
    
    $
    332,288Supplementary cash flow information:Cash paid or credited to accounts:Interest on deposits and borrowings
    
    $
    71,728
    
    
    $
    102,470Income taxes
    
    
    (17,142
    )
    
    
    (29,376
    )Non-cash transactions:Transfer of loans to foreclosed properties
    
    
    51,595
    
    
    
    20,939Securitization of mortgage loans held for sale to mortgage-backed
securities
    
    
    
    
    
    
    48,878
  7




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Principles of Consolidation
  Note 2  Basis of Presentation
     8




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##### Table of Contents



Note 3  Significant Risks and Uncertainties
 Regulatory Agreements
        Going Concern
  9




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##### Table of Contents



Credit Risks
  Note 4  Summary of Significant Accounting Related to Loans Held for Investment and Allowance for
Loan Losses
 Loans Held for Investment.
 10




---



##### Table of Contents



Loan Fees and Discounts.
 Allowance for Loan Losses.
    11




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##### Table of Contents



Reserve for Unfunded Commitments.
 Note 5  Recent Accounting Pronouncements
 ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)  Improving Disclosures About
Fair Value Measurements.
 FASB ASC Topic 860, Transfers and Servicing.
 ASU No. 2010-11, Derivatives and Hedging (Topic 815)  Scope Exception Related to Embedded Credit
Derivatives.
 12




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##### Table of Contents



ASU No. 2010-20, Receivables (Topic 830)  Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses. Receivables (Topic 310):
Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No.
2010-20
 Note 6  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    (Losses)
    
    
    Fair ValueAt December 31, 2010:Available-for-sale:U.S. government and federal agency obligations
    
    $
    7,740
    
    
    $
    112
    
    
    $
    
    
    
    $
    7,852Corporate stock and other
    
    
    1,152
    
    
    
    99
    
    
    
    (104
    )
    
    
    1,147Agency CMOs and REMICs
    
    
    365
    
    
    
    17
    
    
    
    
    
    
    
    382Non-agency CMOs
    
    
    54,163
    
    
    
    437
    
    
    
    (3,874
    )
    
    
    50,726Residential
agency mortgage-backed securities
    
    
    6,513
    
    
    
    285
    
    
    
    (13
    )
    
    
    6,785GNMA securities
    
    
    480,102
    
    
    
    1,462
    
    
    
    (18,655
    )
    
    
    462,909$
    550,035
    
    
    $
    2,412
    
    
    $
    (22,646
    )
    
    $
    529,801Held-to-maturity:Residential
agency mortgage-backed securities
    
    $
    31
    
    
    $
    
    
    
    $
    
    
    
    $
    31$
    31
    
    
    $
    
    
    
    $
    
    
    
    $
    31
 13




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##### Table of Contents



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    (Losses)
    
    
    Fair ValueAt March 31, 2010:Available-for-sale:U.S. government and federal agency obligations
    
    $
    51,029
    
    
    $
    49
    
    
    $
    (47)
    
    
    $
    51,031Corporate stock and other
    
    
    1,176
    
    
    
    72
    
    
    
    (50)
    
    
    
    1,198Agency CMOs and REMICs
    
    
    1,393
    
    
    
    20
    
    
    
    
    
    
    
    1,413Non-agency CMOs
    
    
    91,140
    
    
    
    550
    
    
    
    (6,323)
    
    
    
    85,367Residential
agency mortgage-backed securities
    
    
    14,907
    
    
    
    593
    
    
    
    (60)
    
    
    
    15,440GNMA securities
    
    
    261,957
    
    
    
    1,226
    
    
    
    (1,429)
    
    
    
    261,754$
    421,602
    
    
    $
    2,510
    
    
    $
    (7,909)
    
    
    $
    416,203Held-to-maturity:Residential agency mortgage-backed securities
    
    $
    39
    
    
    $
    1
    
    
    $
    
    
    
    $
    40$
    39
    
    
    $
    1
    
    
    $
    
    
    
    $
    40
  At December 31, 2010Unrealized loss position
    
    
    Unrealized loss positionLess than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss(In Thousands)Corporate stock and other
    
    $
    
    
    
    $
    
    
    
    $
    48
    
    
    $
    (104
    )
    
    $
    48
    
    
    $
    (104
    )Non-agency CMOs
    
    
    5,532
    
    
    
    (25
    )
    
    
    23,555
    
    
    
    (3,849
    )
    
    
    29,087
    
    
    
    (3,874
    )Residential
agency mortgage-backed
securities
    
    
    963
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    (13
    )GNMA securities
    
    
    387,356
    
    
    
    (18,655
    )
    
    
    
    
    
    
    
    
    
    
    387,356
    
    
    
    (18,655
    )$
    393,851
    
    
    $
    (18,693
    )
    
    $
    23,603
    
    
    $
    (3,953
    )
    
    $
    417,454
    
    
    $
    (22,646
    )
 At March 31, 2010Unrealized loss position
    
    
    Unrealized loss positionLess than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss(In Thousands)US government and federal
agency obligations
    
    $
    4,000
    
    
    $
    (47
    )
    
    $
    
    
    
    $
    
    
    
    $
    4,000
    
    
    $
    (47
    )Corporate stock and other
    
    
    51
    
    
    
    (13
    )
    
    
    50
    
    
    
    (37
    )
    
    
    101
    
    
    
    (50
    )Non-agency CMOs
    
    
    4,244
    
    
    
    (37
    )
    
    
    43,029
    
    
    
    (6,286
    )
    
    
    47,273
    
    
    
    (6,323
    )Residential
agency mortgage-backed
securities
    
    
    1,336
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    1,336
    
    
    
    (60
    )GNMA securities
    
    
    138,996
    
    
    
    (1,429
    )
    
    
    
    
    
    
    
    
    
    
    138,996
    
    
    
    (1,429
    )$
    148,627
    
    
    $
    (1,586
    )
    
    $
    43,079
    
    
    $
    (6,323
    )
    
    $
    191,706
    
    
    $
    (7,909
    )
  14




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15




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##### Table of Contents



Three Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedDecember 31, 2010
    
    
    December 31, 2009
    
    
    December 31, 2010
    
    
    December 31, 2009Beginning balance of the amount of OTTI related to
credit losses
    
    $
    1,964
    
    
    $
    1,203
    
    
    $
    1,889
    
    
    $
    805The credit portion of OTTI not previously recognized
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    168Additional increases to the amount related to the
credit loss
for which OTTI was previously recognized
    
    
    163
    
    
    
    260
    
    
    
    362
    
    
    
    576Credit portion of OTTI previously recognized for
securities sold during the period
    
    
    
    
    
    
    
    
    
    
    (124
    )
    
    
    Ending balance of the amount of OTTI related to
credit losses
    
    $
    2,127
    
    
    $
    1,549
    
    
    $
    2,127
    
    
    $
    1,549
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands)Proceeds from sales
    
    $
    82,490
    
    
    $
    243,545
    
    
    $
    385,209
    
    
    $
    391,615Gross gains on sales
    
    
    1,187
    
    
    
    5,783
    
    
    
    7,952
    
    
    
    9,396Gross losses on sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net gain on sales
    
    $
    1,187
    
    
    $
    5,783
    
    
    $
    7,952
    
    
    $
    9,396
   16




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After 1
    
    
    After 5Year
    
    
    YearsWithin 1
    
    
    through 5
    
    
    through 10
    
    
    Over TenYear
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalAvailable-for-sale, at fair value:U.S. government and federal
agency obligations
    
    $
    3,700
    
    
    $
    4,152
    
    
    $
    
    
    
    $
    
    
    
    $
    7,852Corporate stock and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,147
    
    
    
    1,147Agency CMOs and REMICs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    382Non-agency CMOs
    
    
    
    
    
    
    29
    
    
    
    9,666
    
    
    
    41,031
    
    
    
    50,726Residential
agency mortgage-backed securities
    
    
    
    
    
    
    590
    
    
    
    907
    
    
    
    5,288
    
    
    
    6,785GNMA secrurities
    
    
    
    
    
    
    
    
    
    
    718
    
    
    
    462,191
    
    
    
    462,909Total
    
    $
    3,700
    
    
    $
    4,771
    
    
    $
    11,291
    
    
    $
    510,039
    
    
    $
    529,801Held-to-maturity, at fair value:Residential agency  mortgage-backed securities
    
    $
    
    
    
    $
    7
    
    
    $
    24
    
    
    $
    
    
    
    $
    31Total
    
    $
    
    
    
    $
    7
    
    
    $
    24
    
    
    $
    
    
    
    $
    31$
    3,700
    
    
    $
    4,778
    
    
    $
    11,315
    
    
    $
    510,039
    
    
    $
    529,832Held-to-maturity, at cost:Residential
agency mortgage-backed securities
    
    $
    
    
    
    $
    7
    
    
    $
    24
    
    
    $
    
    
    
    $
    31
 17




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##### Table of Contents



Note 7  Loans Receivable
  December 31,
    
    
    March 31,2010
    
    
    2010Residential
    
    $
    685,536
    
    
    $
    775,520Commercial and Industrial
    
    
    112,568
    
    
    
    169,050Land and Construction
    
    
    268,358
    
    
    
    333,503Multi-Family
    
    
    456,210
    
    
    
    535,905Other Commercial Real Estate
    
    
    290,828
    
    
    
    361,202Retail/office
    
    
    449,408
    
    
    
    551,512Other Consumer
    
    
    300,752
    
    
    
    378,385Education
    
    
    286,489
    
    
    
    331,4752,850,149
    
    
    
    3,436,552Contras to loans:Undisbursed loan proceeds*
    
    
    (27,076
    )
    
    
    (23,334
    )Allowance for loan losses
    
    
    (157,438
    )
    
    
    (179,644
    )Unearned loan fees
    
    
    (3,536
    )
    
    
    (3,898
    )Net discount on loans purchased
    
    
    (5
    )
    
    
    (8
    )Unearned interest
    
    
    (103
    )
    
    
    (88
    )(188,158
    )
    
    
    (206,972
    )$
    2,661,991
    
    
    $
    3,229,580
 
 *
    
    Undisbursed loan proceeds are funds to be disbursed upon a draw request approved by the
Bank.   Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars In Thousands)
    
    
    (Dollars In Thousands)Allowance at beginning of period
    
    $
    156,186
    
    
    $
    170,664
    
    
    $
    179,644
    
    
    $
    137,165Provision
    
    
    21,691
    
    
    
    10,456
    
    
    
    40,213
    
    
    
    141,756Charge-offs
    
    
    (23,467
    )
    
    
    (17,131
    )
    
    
    (68,257
    )
    
    
    (116,792
    )Recoveries
    
    
    3,028
    
    
    
    505
    
    
    
    5,838
    
    
    
    2,365Allowance at end of period
    
    $
    157,438
    
    
    $
    164,494
    
    
    $
    157,438
    
    
    $
    164,494
 18




---



##### Table of Contents



Commercial
    
    
    CommercialResidential
    
    
    and Industrial
    
    
    Real Estate
    
    
    Consumer
    
    
    TotalAllowance for Loan Losses:Ending balance
    
    $
    24,554
    
    
    $
    15,461
    
    
    $
    113,627
    
    
    $
    3,796
    
    
    $
    157,438Allowance for Loan Losses:Ending allowance balance attributable to
loans:Individually evaluated for impairment
    
    $
    9,815
    
    
    $
    5,159
    
    
    $
    33,434
    
    
    $
    428
    
    
    $
    48,837Collectively evaluated for impairment
    
    
    14,738
    
    
    
    10,302
    
    
    
    80,193
    
    
    
    3,368
    
    
    
    108,602Total ending allowance balance
    
    $
    24,554
    
    
    $
    15,461
    
    
    $
    113,627
    
    
    $
    3,796
    
    
    $
    157,438Loans:Loans individually evaluated
    
    $
    73,872
    
    
    $
    21,448
    
    
    $
    296,275
    
    
    $
    31,323
    
    
    $
    422,918Loans collectively evaluated
    
    
    611,664
    
    
    
    91,120
    
    
    
    1,168,529
    
    
    
    555,918
    
    
    
    2,427,231Total ending gross loans balance
    
    $
    685,536
    
    
    $
    112,568
    
    
    $
    1,464,804
    
    
    $
    587,241
    
    
    $
    2,850,149
  Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars In Thousands)
    
    
    (Dollars In Thousands)Provision for loan losses
    
    $
    21,691
    
    
    $
    10,456
    
    
    $
    40,213
    
    
    $
    141,756Provision for unfunded commitment losses
    
    
    (279
    )
    
    
    
    
    
    
    807
    
    
    
    Provision for credit losses
    
    $
    21,412
    
    
    $
    10,456
    
    
    $
    41,020
    
    
    $
    141,756
   19




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Average
    
    
    InterestCarrying
    
    
    Unpaid Principal
    
    
    Associated
    
    
    Carrying
    
    
    IncomeAmount
    
    
    Balance
    
    
    Allowance
    
    
    Amount
    
    
    RecognizedWith no specific allowance recorded:Residential
    
    $
    29,405
    
    
    $
    29,405
    
    
    $
    N/A
    
    
    $
    34,781
    
    
    $
    401Commercial and Industrial
    
    
    7,213
    
    
    
    7,213
    
    
    
    N/A
    
    
    
    12,063
    
    
    
    265Land and Construction
    
    
    43,076
    
    
    
    43,076
    
    
    
    N/A
    
    
    
    49,800
    
    
    
    255Multi-Family
    
    
    36,740
    
    
    
    36,740
    
    
    
    N/A
    
    
    
    41,665
    
    
    
    253Retail/Office
    
    
    37,289
    
    
    
    37,289
    
    
    
    N/A
    
    
    
    45,388
    
    
    
    385Other Commercial Real Estate
    
    
    32,480
    
    
    
    32,480
    
    
    
    N/A
    
    
    
    39,805
    
    
    
    572Education
    
    
    24,011
    
    
    
    24,011
    
    
    
    N/A
    
    
    
    28,582
    
    
    
    Other Consumer
    
    
    405
    
    
    
    405
    
    
    
    N/A
    
    
    
    841
    
    
    
    39With an allowance recorded:Residential
    
    
    34,652
    
    
    
    44,467
    
    
    
    9,815
    
    
    
    44,031
    
    
    
    672Commercial and Industrial
    
    
    9,076
    
    
    
    14,235
    
    
    
    5,159
    
    
    
    14,349
    
    
    
    341Land and Construction
    
    
    25,750
    
    
    
    33,414
    
    
    
    7,664
    
    
    
    34,147
    
    
    
    287Multi-Family
    
    
    21,914
    
    
    
    29,747
    
    
    
    7,833
    
    
    
    30,009
    
    
    
    514Retail/Office
    
    
    37,033
    
    
    
    48,341
    
    
    
    11,308
    
    
    
    48,726
    
    
    
    1,463Other Commercial Real Estate
    
    
    28,558
    
    
    
    35,188
    
    
    
    6,630
    
    
    
    35,467
    
    
    
    1,036Other Consumer
    
    
    6,479
    
    
    
    6,907
    
    
    
    428
    
    
    
    6,967
    
    
    
    122TotalResidential
    
    
    64,057
    
    
    
    73,872
    
    
    
    9,815
    
    
    
    78,812
    
    
    
    1,073Commercial and Industrial
    
    
    16,289
    
    
    
    21,448
    
    
    
    5,159
    
    
    
    26,412
    
    
    
    606Land and Construction
    
    
    68,826
    
    
    
    76,490
    
    
    
    7,664
    
    
    
    83,947
    
    
    
    542Multi-Family
    
    
    58,654
    
    
    
    66,487
    
    
    
    7,833
    
    
    
    71,674
    
    
    
    767Retail/Office
    
    
    74,322
    
    
    
    85,630
    
    
    
    11,308
    
    
    
    94,114
    
    
    
    1,848Other Commercial Real Estate
    
    
    61,038
    
    
    
    67,668
    
    
    
    6,630
    
    
    
    75,272
    
    
    
    1,608Education
    
    
    24,011
    
    
    
    24,011
    
    
    
    
    
    
    
    28,582
    
    
    
    Other Consumer
    
    
    6,884
    
    
    
    7,312
    
    
    
    428
    
    
    
    7,808
    
    
    
    161Total Impaired Loans
    
    $
    374,081
    
    
    $
    422,918
    
    
    $
    48,837
    
    
    $
    466,621
    
    
    $
    6,605
   At December 31,
    
    
    At March 31,2010
    
    
    2010
    
    
    2009
    
    
    2008(In Thousands)Loans and troubled debt restructurings
on non-accrual status
    
    $
    334,123
    
    
    $
    399,936
    
    
    $
    227,814
    
    
    $
    104,058Troubled debt restructurings  accrual
    
    $
    88,795
    
    
    $
    79,891
    
    
    $
    
    
    
    $
    Troubled debt restructurings  non-accrual (1)
    
    $
    9,760
    
    
    $
    44,578
    
    
    $
    61,460
    
    
    $
    400Loans past due ninety days or more and
still accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Troubled debt restructurings  non-accrual are included in the total loans and troubled debt restructurings
on non-accrual status above 20




---



##### Table of Contents



30-59 Days Past
    
    
    60-89 Days Past
    
    
    Greater than 90Due
    
    
    Due
    
    
    Days
    
    
    Total Past DueResidential
    
    $
    5,635
    
    
    $
    5,988
    
    
    $
    58,247
    
    
    $
    69,869Commercial and Industrial
    
    
    362
    
    
    
    993
    
    
    
    12,395
    
    
    
    13,750Land and Construction
    
    
    5,983
    
    
    
    1,796
    
    
    
    55,168
    
    
    
    62,947Multi-Family
    
    
    2,907
    
    
    
    1,773
    
    
    
    50,233
    
    
    
    54,913Retail/Office
    
    
    13,965
    
    
    
    2,047
    
    
    
    46,450
    
    
    
    62,463Other Commercial Real Estate
    
    
    407
    
    
    
    861
    
    
    
    29,914
    
    
    
    31,181Education
    
    
    15,620
    
    
    
    7,242
    
    
    
    24,011
    
    
    
    46,874Other Consumer
    
    
    2,126
    
    
    
    1,241
    
    
    
    6,789
    
    
    
    10,156$
    47,004
    
    
    $
    21,942
    
    
    $
    283,206
    
    
    $
    352,153
  Credit Quality Indicators:
  21




---



##### Table of Contents



Pass.Loans classified as pass represent assets that are evaluated and are performing
under the stated terms. Pass rated assets are analyzed by the pay capacity of the
obligator, current net worth of the obligator and/or by the value of the loan collateralWatch.Loans classified as watch possess potential weaknesses that require management
attention, but do not yet warrant adverse classification. While the status of an asset put
on this list may not technically trigger their classification as Substandard or Non-Accrual,
it is considered a proactive way to identify potential issues and address them before the
situation deteriorates further and does result in a loss for the Bank.Substandard.Loans classified as substandard are inadequately protected by the current net
worth, paying capacity of the obligor, or by the collateral pledged. Substandard assets
must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
They are characterized by the distinct possibility that the Bank will sustain a loss if the
deficiencies are not corrected.Non-Accrual.Loans classified as non-accrual have the weaknesses of those classified as
Substandard, with the added characteristic that the weaknesses make collection or
liquidation in full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable. Loans that fall into this class are deemed collateral
dependent and an individual impairment is performed on all relationships greater than
$500,000. Loans in this category are allocated a specific reserve if the collateral does
not support the outstanding loan balance or charged off if deemed uncollectible.
  Pass
    
    
    Watch
    
    
    Substandard
    
    
    Non-Accrual
    
    
    TotalCommercial and Industrial:
    
    $
    45,857
    
    
    $
    27,619
    
    
    $
    25,543
    
    
    $
    13,548
    
    
    $
    112,568Commercial Real Estate:Land and Construction
    
    
    76,320
    
    
    
    37,121
    
    
    
    87,703
    
    
    
    67,214
    
    
    
    268,358Multi-Family
    
    
    303,538
    
    
    
    40,327
    
    
    
    57,331
    
    
    
    55,015
    
    
    
    456,210Retail/Office
    
    
    231,294
    
    
    
    55,568
    
    
    
    100,263
    
    
    
    62,283
    
    
    
    449,408Other
    
    
    118,993
    
    
    
    76,237
    
    
    
    60,736
    
    
    
    34,862
    
    
    
    290,828$
    776,002
    
    
    $
    236,871
    
    
    $
    331,577
    
    
    $
    232,923
    
    
    $
    1,577,373
  Pass
    
    
    Non-Accrual
    
    
    TotalResidential:
    
    $
    615,570
    
    
    $
    69,966
    
    
    $
    685,535ConsumerEducation
    
    
    262,653
    
    
    
    24,011
    
    
    
    286,664Other Consumer
    
    
    293,354
    
    
    
    7,223
    
    
    
    300,577$
    1,171,577
    
    
    $
    101,200
    
    
    $
    1,272,776
 22




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##### Table of Contents



Note 8  Foreclosed Properties and Repossessed Assets
   Nine months ended
    
    
    Year endedDecember 31,
    
    
    March 31,2010
    
    
    2010Balance at beginning of period
    
    $
    55,436
    
    
    $
    52,563Additions
    
    
    51,595
    
    
    
    61,090Capitalized improvements
    
    
    522
    
    
    
    Valuations/write-offs
    
    
    (7,229
    )
    
    
    (18,129
    )Sales
    
    
    (31,083
    )
    
    
    (40,088
    )Balance at end of period
    
    $
    69,241
    
    
    $
    55,436
   Note 9  Regulatory Capital
  23




---



##### Table of Contents



Minimum RequiredMinimum Required
    
    to be WellFor Capital
    
    Capitalized UnderActual
    
    Adequacy Purposes
    
    OTS RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars In Thousands)At December 31, 2010Tier 1 capital
(to adjusted tangible assets)
    
    $
    159,730
    
    
    
    4.43
    %
    
    $
    108,216
    
    
    
    3.00
    %
    
    $
    180,360
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    189,653
    
    
    
    8.37
    
    
    
    181,308
    
    
    
    8.00
    
    
    
    226,634
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    159,730
    
    
    
    4.43
    
    
    
    54,108
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/AAt March 31, 2010:Tier 1 capital
(to adjusted tangible assets)
    
    $
    164,932
    
    
    
    3.73
    %
    
    $
    132,696
    
    
    
    3.00
    %
    
    $
    221,159
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    201,062
    
    
    
    7.32
    
    
    
    219,751
    
    
    
    8.00
    
    
    
    274,689
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    164,932
    
    
    
    3.73
    
    
    
    66,348
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
   December 31,
    
    
    March 31,2010
    
    
    2010(In Thousands)Stockholders equity of the Bank
    
    $
    140,910
    
    
    $
    165,043Less: Intangible assets
    
    
    
    
    
    
    (4,092
    )Disallowed servicing assets
    
    
    (1,414
    )
    
    
    (1,418
    )Accumulated other comprehensive (income) loss
    
    
    20,234
    
    
    
    5,399Tier 1 and tangible capital
    
    
    159,730
    
    
    
    164,932Plus: Allowable general valuation allowances
    
    
    29,923
    
    
    
    36,130Risk-based capital
    
    $
    189,653
    
    
    $
    201,062
 24




---



##### Table of Contents



Note 10  Earnings Per Share
  Three Months Ended December 31,2010
    
    
    2009(in thousands)Numerator:Numerator for basic and diluted earnings
per shareloss available to common
stockholders
    
    $
    (14,031
    )
    
    $
    (13,428
    )Denominator:Denominator for basic earnings per
shareweighted-average shares
    
    
    21,253
    
    
    
    21,205Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    Management Recognition Plans
    
    
    
    
    
    
    Denominator for diluted earnings per
shareadjusted weighted-average
shares and assumed conversions
    
    
    21,253
    
    
    
    21,205Basic earnings (loss) per common share
    
    $
    (0.66
    )
    
    $
    (0.63
    )Diluted earnings (loss) per common share
    
    $
    (0.66
    )
    
    $
    (0.63
    )
 Nine Months Ended December 31,2010
    
    
    2009(in thousands)Numerator:Numerator for basic and diluted earnings
per shareloss available to common
stockholders
    
    $
    (30,716
    )
    
    $
    (160,132
    )Denominator:Denominator for basic earnings per
shareweighted-average shares
    
    
    21,252
    
    
    
    21,168Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    Management Recognition Plans
    
    
    
    
    
    
    Denominator for diluted earnings per
shareadjusted weighted-average
shares and assumed conversions
    
    
    21,252
    
    
    
    21,168Basic earnings (loss) per common share
    
    $
    (1.45
    )
    
    $
    (7.56
    )Diluted earnings (loss) per common share
    
    $
    (1.45
    )
    
    $
    (7.56
    )
 25




---



##### Table of Contents



Note 11  Commitments and Contingent Liabilities
   December 31,
    
    
    March 31,2010
    
    
    2010Commitments to extend credit:
    
    $
    10,077
    
    
    $
    20,796Unused lines of credit:Home equity
    
    
    119,139
    
    
    
    142,044Credit cards
    
    
    34,158
    
    
    
    37,360Commercial
    
    
    17,591
    
    
    
    42,968Letters of credit
    
    
    20,790
    
    
    
    25,393Credit enhancement under the FederalHome Loan Bank of Chicago MortgagePartnership Finance Program
    
    
    21,602
    
    
    
    21,602IDI borrowing guarantees-unfunded
    
    
    435
    
    
    
    393
   26




---



##### Table of Contents



Note 12  Fair Value of Financial Instruments
   Cash and cash equivalents and accrued interest:
 Investment securities:
 Loans receivable:
 Federal Home Loan Bank stock:
 Deposits:
 Other Borrowed Funds:
 27




---



##### Table of Contents



Off-balance-sheet instruments:
  December 31, 2010
    
    
    March 31, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    134,518
    
    
    $
    134,518
    
    
    $
    512,162
    
    
    $
    512,162Investment securities available for sale
    
    
    529,801
    
    
    
    529,801
    
    
    
    416,203
    
    
    
    416,203Investment securities held to maturity
    
    
    31
    
    
    
    31
    
    
    
    39
    
    
    
    40Loans held for sale
    
    
    37,196
    
    
    
    37,236
    
    
    
    19,484
    
    
    
    19,622Loans held for investment
    
    
    2,661,991
    
    
    
    2,643,408
    
    
    
    3,229,580
    
    
    
    3,278,903Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    54,829
    
    
    
    54,829
    
    
    
    54,829Accrued interest receivable
    
    
    17,129
    
    
    
    17,129
    
    
    
    20,159
    
    
    
    20,159Financial liabilities:Deposits
    
    
    2,840,206
    
    
    
    2,802,107
    
    
    
    3,543,799
    
    
    
    3,513,254Other borrowed funds
    
    
    685,608
    
    
    
    707,744
    
    
    
    796,153
    
    
    
    783,326Accrued interest payableborrowings
    
    
    17,758
    
    
    
    17,758
    
    
    
    7,088
    
    
    
    7,088Accrued interest payabledeposits
    
    
    4,119
    
    
    
    4,119
    
    
    
    8,963
    
    
    
    8,963
   
    
    Level 1: Valuations for assets and liabilities traded in active exchange markets.
Valuations are obtained from readily available pricing sources for market transactions
involving identical assets or liabilities.
    
    Level 2: Valuations for assets and liabilities traded in less active dealer or broker
markets. Valuations are obtained from third party pricing services for identical or similar
assets or liabilities.
    
    Level 3: Valuations for assets and liabilities that are derived from other valuation
methodologies, including option pricing models, discounted cash flow models and similar
techniques, and not based on market exchange, dealer or broker traded transactions. Level 3
valuations incorporate certain unobservable assumptions and projections in determining the
fair value assigned to such assets.
 28




---



##### Table of Contents



Fair Value on a Recurring Basis
  December 31, 2010
    
    
    Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale debt securities:U.S. Government and federal agency obligations
    
    $
    7,852
    
    
    $
    
    
    
    $
    7,852
    
    
    $
    Agency CMOs and REMICs
    
    
    382
    
    
    
    
    
    
    
    382
    
    
    
    Non-agency CMOs
    
    
    50,726
    
    
    
    
    
    
    
    
    
    
    
    50,726Residential
agency mortgage-backed securities
    
    
    6,785
    
    
    
    
    
    
    
    6,785
    
    
    
    GNMA securities
    
    
    462,909
    
    
    
    
    
    
    
    462,909
    
    
    
    Corporate bonds
    
    
    1,099
    
    
    
    599
    
    
    
    500
    
    
    
    Available for sale equity securities:Financial services
    
    
    48
    
    
    
    48
    
    
    
    
    
    
    
    Total assets at fair value
    
    $
    529,801
    
    
    $
    647
    
    
    $
    478,428
    
    
    $
    50,726
 March 31, 2010
    
    
    Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale debt securities:U.S. Government and federal agency obligations
    
    $
    51,031
    
    
    $
    
    
    
    $
    51,031
    
    
    $
    Agency CMOs and REMICs
    
    
    1,413
    
    
    
    
    
    
    
    
    
    
    
    1,413Non-agency CMOs
    
    
    85,367
    
    
    
    
    
    
    
    
    
    
    
    85,367Residential
agency mortgage-backed securities
    
    
    15,440
    
    
    
    
    
    
    
    
    
    
    
    15,440GNMA securities
    
    
    261,754
    
    
    
    
    
    
    
    
    
    
    
    261,754Corporate bonds
    
    
    1,097
    
    
    
    572
    
    
    
    525
    
    
    
    Available for sale equity securities:Financial services
    
    
    101
    
    
    
    101
    
    
    
    
    
    
    
    Total assets at fair value
    
    $
    416,203
    
    
    $
    673
    
    
    $
    51,556
    
    
    $
    363,974
   29




---



##### Table of Contents



Year EndedMarch 31, 2010Nine Months Ended December 31, 2010
    
    
    InvestmentResidential agency
    
    
    
    
    
    
    SecuritiesAgency CMOs and
    
    
    
    
    
    
    mortgage-
    
    
    
    
    
    
    AvailableREMICs
    
    
    Non-agency CMOs
    
    
    backed securities
    
    
    GNMA securities
    
    
    for SaleBalance at beginning of period
    
    $
    1,413
    
    
    $
    85,367
    
    
    $
    15,440
    
    
    $
    261,754
    
    
    $
    407,301Total gains (losses) (realized/unrealized)Included in earnings
    
    
    
    
    
    
    1,994
    
    
    
    (5
    )
    
    
    (1,327
    )
    
    
    7,253Included in other comprehensive income
    
    
    6
    
    
    
    1,293
    
    
    
    491
    
    
    
    6,232
    
    
    
    1,786Included in
earnings as other than temporary impairment
    
    
    
    
    
    
    (362
    )
    
    
    
    
    
    
    
    
    
    
    (1,084
    )Purchases
    
    
    
    
    
    
    
    
    
    
    17,058
    
    
    
    92,879
    
    
    
    437,141Securitization of mortgage loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held for sale to mortgage-related securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,878Principal repayments
    
    
    (663
    )
    
    
    (15,708
    )
    
    
    (1,395
    )
    
    
    (7,168
    )
    
    
    (104,331
    )Sales
    
    
    
    
    
    
    (21,858
    )
    
    
    
    
    
    
    
    
    
    
    (432,970
    )Transfers out of level 3
    
    
    (756
    )
    
    
    
    
    
    
    (31,589
    )
    
    
    (352,370
    )
    
    
    Balance at end of period
    
    $
    
    
    
    $
    50,726
    
    
    $
    
    
    
    $
    
    
    
    $
    363,974
  Fair Value on a Nonrecurring Basis
  December 31, 2010
    
    
    Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired loans
    
    $
    163,462
    
    
    $
    
    
    
    $
    
    
    
    $
    163,462Loans held for sale
    
    
    33,660
    
    
    
    
    
    
    
    
    
    
    
    33,660Mortgage servicing rights
    
    
    7,674
    
    
    
    
    
    
    
    
    
    
    
    7,674Foreclosed properties and repossessed assets
    
    
    69,241
    
    
    
    
    
    
    
    
    
    
    
    69,241Total assets at fair value
    
    $
    274,037
    
    
    $
    
    
    
    $
    
    
    
    $
    274,037
 30




---



##### Table of Contents



March 31, 2010
    
    
    Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired loans
    
    $
    149,802
    
    
    $
    
    
    
    $
    
    
    
    $
    149,802Loans held for sale
    
    
    4,752
    
    
    
    
    
    
    
    4,752
    
    
    
    Mortgage servicing rights
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    7,000Foreclosed properties and repossessed assets
    
    
    55,436
    
    
    
    
    
    
    
    
    
    
    
    55,436Total assets at fair value
    
    $
    216,990
    
    
    $
    
    
    
    $
    4,752
    
    
    $
    212,238
     Note 13  Income Taxes
  31




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##### Table of Contents



At December 31,
    
    

At
March 312010
    
    
    2010
    
    
    2009
    
    
    2008Deferred tax assets:Allowances for loan losses
    
    $
    66,968
    
    
    $
    79,035
    
    
    $
    58,442
    
    
    $
    15,081Other loss reserves
    
    
    1,901
    
    
    
    2,182
    
    
    
    4,822
    
    
    
    269Federal NOL carryforwards
    
    
    57,658
    
    
    
    35,102
    
    
    
    
    
    
    
    State NOL carryforwards
    
    
    13,881
    
    
    
    10,794
    
    
    
    3,604
    
    
    
    631Unrealized gains/(losses)
    
    
    8,033
    
    
    
    2,131
    
    
    
    2,695
    
    
    
    (738
    )Other
    
    
    (3,731
    )
    
    
    6,947
    
    
    
    11,773
    
    
    
    9,045Total deferred tax assets
    
    
    144,710
    
    
    
    136,191
    
    
    
    81,336
    
    
    
    24,288Valuation allowance
    
    
    (136,007
    )
    
    
    (118,600
    )
    
    
    (49,981
    )
    
    
    (997
    )Adjusted deferred tax assets
    
    
    8,703
    
    
    
    17,591
    
    
    
    31,355
    
    
    
    23,291Deferred tax liabilities:FHLB stock dividends
    
    
    (3,976
    )
    
    
    (3,976
    )
    
    
    (3,997
    )
    
    
    (4,022
    )Mortgage servicing rights
    
    
    (9,859
    )
    
    
    (9,312
    )
    
    
    (6,094
    )
    
    
    (4,888
    )Purchase accounting
    
    
    (319
    )
    
    
    (2,933
    )
    
    
    (3,348
    )
    
    
    (4,713
    )Other
    
    
    5,451
    
    
    
    (1,370
    )
    
    
    (1,714
    )
    
    
    (1,513
    )Total deferred tax liabilities
    
    
    (8,703
    )
    
    
    (17,591
    )
    
    
    (15,153
    )
    
    
    (15,136
    )Net deferred tax assets
    
    $
    
    
    
    $
    
    
    
    $
    16,202
    
    
    $
    8,155
    32




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##### Table of Contents



Note 14  Credit Agreement
    
    
    Any event which, either of itself or with the lapse of time or the giving of notice or
both, would constitute a Default under the Credit Agreement;
    
    A default or an event of default under any other material agreement to which the
Corporation or Bank is a party; or
    
    Any pending or threatened litigation or certain administrative proceedings.
  
    
    The Bank shall maintain a Tier 1 Leverage Ratio of not less than (i) 3.75% at all times
during the period from April 29, 2010 through May 31, 2010, (ii) 3.85% at all times during
the period from June 1, 2010 through August 31, 2010, (iii) 3.90% at all times during the
period from September 1, 2010 through November 30, 2010 and (iv) 3.95% at all times
thereafter.
    
    The Bank shall maintain a Total Risk Based Capital ratio of not less than (i) 7.10% at
all times during the period from April 29, 2010 through May 31, 2010, (ii) 7.35% at all
times during the period from June 1, 2010 through August 31, 2010, (iii) 7.60% at all times
during the period from September 1, 2010 through November 30, 2010 and (iv) 7.65% at all
times thereafter.
    
    The ratio of Non-Performing Loans to Gross Loans shall not exceed (i) 14.50% at any time
during the period from April 29, 2010 through May 31, 2010, (ii) 13.00% at any time during
the period from June 1, 2010 through September 30, 2010, (iii) 12.50% at any time during
the period from October 1, 2010 through November 30, 2010, (iv) 12.00% at any time during
the period from December 1, 2010 through March 31, 2011, (v) 11.00% at any time during the
period from April 1, 2011 through April 30, 2011 and (vi) 10.00% at all times thereafter.
  33




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##### Table of Contents



Note 15  Temporary Liquidity Guarantee Program
  Note 16  Capital Purchase Program
  Note 17  Branch Sales
   Note 18  ESOP Termination
  34




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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
   Financial Highlights
   35




---



##### Table of Contents



Liquidity and Capital
Resources,
 Credit Highlights
 Credit Quality
 Recent Market and Industry Developments
    36




---



##### Table of Contents



Financial Highlights
  
    
    Diluted loss per common share increased to $(0.66) for the quarter ended December 31,
2010 compared to $(0.63) per share for the quarter ended December 31, 2009, primarily due
to a $11.0 million increase in the provision for credit losses;
    
    The net interest margin increased to 2.51% for the quarter ended December 31, 2010
compared to 2.05% for the quarter ended December 31, 2009;
    
    Loans receivable decreased $549.9 million, or 16.9%, since March 31, 2010 primarily due
to scheduled pay-offs and amortization, the sale of branches which resulted in a decrease
of $86.6 million, the transfer of $51.6 million to foreclosed properties as well as the
sale of $24 million in student loans;
    
    Deposits and related accrued interest payable decreased $708.4 million, or 19.9%, since
March 31, 2010;
    
    Book value per common share was $(5.51) at December 31, 2010 compared to $(3.68) at
March 31, 2010 and $(2.66) at December 31, 2009;
    
    Total non-performing assets (consisting of loans past due more than ninety days, loans
past due less than ninety days but placed on non-accrual status due to anticipated probable
loss, non-accrual troubled debt restructurings and foreclosed properties and repossessed
assets) decreased $52.0 million, or 11.4%, to $403.4 million at December 31, 2010 from
$455.4 million at March 31, 2010;
    
    Total non-performing loans (consisting of loans past due more than 90 days, loans less
than 90 days delinquent but placed on non-accrual status due to anticipated probable loss
and non-accrual troubled debt restructurings) decreased $65.8 million, or 16.5% to $334.1
million at December 31, 2010 from $399.9 million at March 31, 2010;
    
    Provision for credit losses decreased $100.7 million, or 71.1%, to $41.0
million for the nine months ended December 31, 2010 from $141.8 million for the nine months
ended December 31, 2009. The Corporation has made significant enhancements to risk
management practices; and
    
    Delinquencies (loans past due 30 days or more) decreased $21.0 million or 5.6%, to
$352.2 million at December 31, 2010 from $373.2 million at March 31, 2010.
 37




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##### Table of Contents



Three Months Ended(Dollars in thousands - except per share amounts)
    
    12/31/2010
    
    
    9/30/2010
    
    
    6/30/2010
    
    
    3/31/2010Operations Data:Net interest income
    
    $
    22,195
    
    
    $
    22,318
    
    
    $
    18,808
    
    
    $
    18,624Provision for credit losses
    
    
    21,412
    
    
    
    10,674
    
    
    
    8,934
    
    
    
    20,170Net gain on sale of loans
    
    
    5,601
    
    
    
    9,216
    
    
    
    1,347
    
    
    
    3,314Net gain on sale of investment securities
    
    
    1,187
    
    
    
    6,653
    
    
    
    112
    
    
    
    1,699Net gain on sale of branches
    
    
    100
    
    
    
    2,318
    
    
    
    4,930
    
    
    
    Real estate investment partnership revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other non-interest income
    
    
    4,798
    
    
    
    5,533
    
    
    
    7,278
    
    
    
    5,493Real estate investment partnership cost of sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-interest expense
    
    
    24,647
    
    
    
    34,112
    
    
    
    35,695
    
    
    
    37,093Income (loss) before income tax expense (benefit)
    
    
    (12,178
    )
    
    
    1,252
    
    
    
    (12,154
    )
    
    
    (28,133
    )Income tax expense (benefit)
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    (1,503
    )Net income (loss)
    
    
    (12,178
    )
    
    
    1,238
    
    
    
    (12,154
    )
    
    
    (26,630
    )(Income) loss attributable to non-controlling interest in real estate partnerships
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred stock dividends and discount accretion
    
    
    (1,853
    )
    
    
    (2,401
    )
    
    
    (3,368
    )
    
    
    (3,211
    )Net loss
available to common equity of Anchor BanCorp
    
    
    (14,031
    )
    
    
    (1,163
    )
    
    
    (15,522
    )
    
    
    (29,841
    )Selected Financial Ratios(1):Yield on earning assets
    
    
    4.66
    %
    
    
    4.80
    %
    
    
    4.37
    %
    
    
    4.56
    %Cost of funds
    
    
    2.07
    
    
    
    2.24
    
    
    
    2.42
    
    
    
    2.69Interest rate spread
    
    
    2.59
    
    
    
    2.56
    
    
    
    1.95
    
    
    
    1.87Net interest margin
    
    
    2.51
    
    
    
    2.45
    
    
    
    1.85
    
    
    
    1.77Return on average assets
    
    
    (1.31
    )
    
    
    0.13
    
    
    
    (1.13
    )
    
    
    (2.40
    )Return on average equity
    
    
    N/A
    
    
    
    20.30
    
    
    
    (184.75
    )
    
    
    (232.27
    )Average equity to average assets
    
    
    0.41
    
    
    
    0.63
    
    
    
    0.61
    
    
    
    1.03Non-interest expense to average assets
    
    
    2.64
    
    
    
    3.51
    
    
    
    3.33
    
    
    
    3.34Per Share:Basic loss per common share
    
    $
    (0.66
    )
    
    $
    (0.05
    )
    
    $
    (0.73
    )
    
    $
    (1.40
    )Diluted loss per common share
    
    
    (0.66
    )
    
    
    (0.05
    )
    
    
    (0.73
    )
    
    
    (1.40
    )Dividends per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per common share
    
    
    (5.51
    )
    
    
    (3.91
    )
    
    
    (3.95
    )
    
    
    (3.68
    )Financial Condition:Total assets
    
    $
    3,580,752
    
    
    $
    3,803,853
    
    
    $
    3,998,929
    
    
    $
    4,416,265Loans receivable, netHeld for sale
    
    
    37,196
    
    
    
    28,744
    
    
    
    24,362
    
    
    
    19,484Held for investment
    
    
    2,661,991
    
    
    
    2,839,217
    
    
    
    3,040,398
    
    
    
    3,229,580Deposits and accrued interest
    
    
    2,844,325
    
    
    
    3,027,735
    
    
    
    3,225,382
    
    
    
    3,552,762Other borrowed funds
    
    
    685,608
    
    
    
    704,908
    
    
    
    709,359
    
    
    
    796,153Stockholders (deficit) equity
    
    
    (9,521
    )
    
    
    25,270
    
    
    
    24,348
    
    
    
    30,113Allowance for loan losses
    
    
    157,438
    
    
    
    156,186
    
    
    
    166,649
    
    
    
    179,644Non-performing assets(2)
    
    
    403,364
    
    
    
    410,347
    
    
    
    450,010
    
    
    
    455,372
 
 (1)
    
    Annualized when appropriate.(2)
    
    Non-performing assets consist of loans past due more than ninety days, loans past
due less than ninety days but
placed on non-accrual status due to anticipated probable loss, non-accrual troubled debt
restructurings and OREO. 38




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##### Table of Contents



Three Months Ended(Dollars in thousands - except per share amounts)
    
    12/31/2009
    
    
    9/30/2009
    
    
    6/30/2009
    
    
    3/31/2009Operations Data:Net interest income
    
    $
    22,333
    
    
    $
    18,939
    
    
    $
    24,915
    
    
    $
    28,708Provision for credit losses
    
    
    10,456
    
    
    
    60,900
    
    
    
    70,400
    
    
    
    56,385Net gain on sale of loans
    
    
    2,805
    
    
    
    1,062
    
    
    
    11,403
    
    
    
    7,858Net gain on sale of investment securities
    
    
    5,783
    
    
    
    2,108
    
    
    
    1,505
    
    
    
    Real estate investment partnership revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310Other non-interest income
    
    
    7,033
    
    
    
    7,688
    
    
    
    6,712
    
    
    
    7,794Real estate investment partnership cost of sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    545Other non-interest expense
    
    
    37,695
    
    
    
    43,992
    
    
    
    39,272
    
    
    
    49,755Loss before income tax expense (benefit)
    
    
    (10,197
    )
    
    
    (75,095
    )
    
    
    (65,137
    )
    
    
    (62,015
    )Income tax expense (benefit)
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (16,147
    )Net loss
    
    
    (10,200
    )
    
    
    (75,095
    )
    
    
    (65,137
    )
    
    
    (45,868
    )(Income) loss attributable to non-controlling interest in real estate partnerships
    
    
    
    
    
    
    85
    
    
    
    (85
    )
    
    
    (246
    )Preferred stock dividends and discount accretion
    
    
    (3,228
    )
    
    
    (3,228
    )
    
    
    (3,244
    )
    
    
    (2,172
    )Net loss available to common equity of Anchor BanCorp
    
    
    (13,428
    )
    
    
    (78,408
    )
    
    
    (68,296
    )
    
    
    (47,794
    )Selected Financial Ratios(1):Yield on earning assets
    
    
    4.92
    %
    
    
    4.62
    %
    
    
    4.80
    %
    
    
    5.22
    %Cost of funds
    
    
    2.79
    
    
    
    3.00
    
    
    
    2.79
    
    
    
    2.72Interest rate spread
    
    
    2.13
    
    
    
    1.62
    
    
    
    2.01
    
    
    
    2.50Net interest margin
    
    
    2.05
    
    
    
    1.58
    
    
    
    1.99
    
    
    
    2.45Return on average assets
    
    
    (0.89
    )
    
    
    (5.97
    )
    
    
    (4.92
    )
    
    
    (3.62
    )Return on average equity
    
    
    (64.05
    )
    
    
    (242.30
    )
    
    
    (132.26
    )
    
    
    (84.21
    )Average equity to average assets
    
    
    1.39
    
    
    
    2.46
    
    
    
    3.72
    
    
    
    4.30Non-interest expense to average assets
    
    
    3.30
    
    
    
    3.49
    
    
    
    2.97
    
    
    
    4.00Per Share:Basic loss per common share
    
    $
    (0.63
    )
    
    $
    (3.71
    )
    
    $
    (3.23
    )
    
    $
    (2.26
    )Diluted loss per common share
    
    
    (0.63
    )
    
    
    (3.71
    )
    
    
    (3.23
    )
    
    
    (2.26
    )Dividends per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per common share
    
    
    (2.66
    )
    
    
    (1.70
    )
    
    
    1.71
    
    
    
    4.70Financial Condition:Total assets
    
    $
    4,453,975
    
    
    $
    4,634,619
    
    
    $
    5,236,909
    
    
    $
    5,272,110Loans receivable, netHeld for sale
    
    
    35,640
    
    
    
    28,904
    
    
    
    115,340
    
    
    
    161,964Held for investment
    
    
    3,383,246
    
    
    
    3,506,464
    
    
    
    3,641,708
    
    
    
    3,896,439Deposits and accrued interest
    
    
    3,598,185
    
    
    
    3,739,997
    
    
    
    3,987,906
    
    
    
    3,923,827Other borrowed funds
    
    
    759,479
    
    
    
    759,479
    
    
    
    1,041,049
    
    
    
    1,078,392Stockholders equity
    
    
    52,243
    
    
    
    73,370
    
    
    
    146,918
    
    
    
    211,365Allowance for loan losses
    
    
    164,494
    
    
    
    170,664
    
    
    
    139,455
    
    
    
    137,165Non-performing assets(2)
    
    
    379,526
    
    
    
    485,020
    
    
    
    219,495
    
    
    
    308,366
 
 (1)
    
    Annualized when appropriate.(2)
    
    Non-performing assets consist of loans past due more than ninety days, loans past
due less than ninety days but placed on non-accrual status due to anticipated probable loss, non-accrual troubled debt
restructurings and OREO. 39




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##### Table of Contents



RESULTS OF OPERATIONS
 Overview
  Net Interest Income
     40




---



##### Table of Contents



Provision for Credit Losses
  Average Interest-Earning Assets, Average Interest-Bearing Liabilities and Interest Rate Spread
  41




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##### Table of Contents



Three Months Ended December 31,2010
    
    
    2009Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost(1)
    
    
    Balance
    
    
    Interest
    
    
    Cost(1)(Dollars In Thousands)Interest-Earning AssetsMortgage loans
    
    $
    2,115,373
    
    
    $
    27,318
    
    
    
    5.17
    %
    
    $
    2,579,901
    
    
    $
    36,293
    
    
    
    5.63
    %Consumer loans
    
    
    597,321
    
    
    
    7,678
    
    
    
    5.14
    
    
    
    749,605
    
    
    
    9,433
    
    
    
    5.03Commercial business loans
    
    
    90,190
    
    
    
    1,635
    
    
    
    7.25
    
    
    
    160,362
    
    
    
    2,819
    
    
    
    7.03Total loans receivable (2) (3)
    
    
    2,802,884
    
    
    
    36,631
    
    
    
    5.23
    
    
    
    3,489,868
    
    
    
    48,545
    
    
    
    5.56Investment securities (4)
    
    
    550,732
    
    
    
    4,442
    
    
    
    3.23
    
    
    
    477,794
    
    
    
    4,801
    
    
    
    4.02Interest-bearing deposits
    
    
    126,164
    
    
    
    78
    
    
    
    0.25
    
    
    
    333,038
    
    
    
    208
    
    
    
    0.25Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    
    
    
    
    0.00
    
    
    
    54,829
    
    
    
    
    
    
    
    0.00Total interest-earning assets
    
    
    3,534,609
    
    
    
    41,151
    
    
    
    4.66
    
    
    
    4,355,529
    
    
    
    53,554
    
    
    
    4.92Non-interest-earning assets
    
    
    196,071
    
    
    
    
    
    
    
    
    
    
    
    217,200Total assets
    
    $
    3,730,680
    
    
    
    
    
    
    
    
    
    
    $
    4,572,729Interest-Bearing LiabilitiesDemand deposits
    
    $
    913,605
    
    
    
    666
    
    
    
    0.29
    
    
    $
    954,070
    
    
    
    1,264
    
    
    
    0.53Regular passbook savings
    
    
    239,180
    
    
    
    122
    
    
    
    0.20
    
    
    
    250,920
    
    
    
    189
    
    
    
    0.30Certificates of deposit
    
    
    1,817,747
    
    
    
    10,205
    
    
    
    2.25
    
    
    
    2,505,292
    
    
    
    19,825
    
    
    
    3.17Total deposits and accrued interest
    
    
    2,970,532
    
    
    
    10,993
    
    
    
    1.48
    
    
    
    3,710,282
    
    
    
    21,278
    
    
    
    2.29Other borrowed funds
    
    
    696,824
    
    
    
    7,963
    
    
    
    4.57
    
    
    
    759,479
    
    
    
    9,943
    
    
    
    5.24Total interest-bearing liabilities
    
    
    3,667,356
    
    
    
    18,956
    
    
    
    2.07
    
    
    
    4,469,761
    
    
    
    31,221
    
    
    
    2.79Non-interest-bearing liabilities
    
    
    48,022
    
    
    
    
    
    
    
    
    
    
    
    39,264Total liabilities
    
    
    3,715,378
    
    
    
    
    
    
    
    
    
    
    
    4,509,025Stockholders equity
    
    
    15,302
    
    
    
    
    
    
    
    
    
    
    
    63,704Total liabilities and stockholders equity
    
    $
    3,730,680
    
    
    
    
    
    
    
    
    
    
    $
    4,572,729Net interest income/interest rate spread (5)
    
    
    
    
    
    $
    22,195
    
    
    
    2.59
    %
    
    
    
    
    
    $
    22,333
    
    
    
    2.13
    %Net interest-earning assets
    
    $
    (132,747
    )
    
    
    
    
    
    
    
    
    
    $
    (114,232
    )Net interest margin (6)
    
    
    
    
    
    
    
    
    
    
    2.51
    %
    
    
    
    
    
    
    
    
    
    
    2.05
    %Ratio of average interest-earning assets to average interest-bearing liabilities
    
    
    0.96
    
    
    
    
    
    
    
    
    
    
    
    0.97
 
 (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 weighted-average yield on interest-earning
assets and the
weighted-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. 42




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##### Table of Contents



Nine Months Ended December 31,2010
    
    
    2009Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost(1)
    
    
    Balance
    
    
    Interest
    
    
    Cost(1)(Dollars In Thousands)Interest-Earning AssetsMortgage loans
    
    $
    2,231,967
    
    
    $
    87,316
    
    
    
    5.22
    %
    
    $
    2,753,635
    
    
    $
    113,642
    
    
    
    5.50
    %Consumer loans
    
    
    643,440
    
    
    
    24,590
    
    
    
    5.10
    
    
    
    767,899
    
    
    
    29,764
    
    
    
    5.17Commercial business loans
    
    
    108,110
    
    
    
    5,555
    
    
    
    6.85
    
    
    
    183,853
    
    
    
    8,480
    
    
    
    6.15Total loans receivable (2) (3)
    
    
    2,983,517
    
    
    
    117,461
    
    
    
    5.25
    
    
    
    3,705,387
    
    
    
    151,886
    
    
    
    5.47Investment securities (4)
    
    
    446,360
    
    
    
    11,308
    
    
    
    3.38
    
    
    
    488,416
    
    
    
    16,321
    
    
    
    4.46Interest-bearing deposits
    
    
    259,617
    
    
    
    454
    
    
    
    0.23
    
    
    
    459,167
    
    
    
    838
    
    
    
    0.24Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    
    
    
    
    0.00
    
    
    
    54,829
    
    
    
    
    
    
    
    0.00Total interest-earning assets
    
    
    3,744,323
    
    
    
    129,223
    
    
    
    4.60
    
    
    
    4,707,799
    
    
    
    169,045
    
    
    
    4.79Non-interest-earning assets
    
    
    222,801
    
    
    
    
    
    
    
    
    
    
    
    251,304Total assets
    
    $
    3,967,124
    
    
    
    
    
    
    
    
    
    
    $
    4,959,103Interest-Bearing LiabilitiesDemand deposits
    
    $
    919,427
    
    
    
    2,462
    
    
    
    0.36
    
    
    $
    948,146
    
    
    
    3,967
    
    
    
    0.56Regular passbook savings
    
    
    244,848
    
    
    
    413
    
    
    
    0.22
    
    
    
    246,178
    
    
    
    535
    
    
    
    0.29Certificates of deposit
    
    
    2,025,921
    
    
    
    37,173
    
    
    
    2.45
    
    
    
    2,657,762
    
    
    
    63,949
    
    
    
    3.21Total deposits and accrued interest
    
    
    3,190,196
    
    
    
    40,048
    
    
    
    1.67
    
    
    
    3,852,086
    
    
    
    68,451
    
    
    
    2.37Other borrowed funds
    
    
    713,113
    
    
    
    25,854
    
    
    
    4.83
    
    
    
    937,506
    
    
    
    34,407
    
    
    
    4.89Total interest-bearing liabilities
    
    
    3,903,309
    
    
    
    65,902
    
    
    
    2.25
    
    
    
    4,789,592
    
    
    
    102,858
    
    
    
    2.86Non-interest-bearing liabilities
    
    
    42,374
    
    
    
    
    
    
    
    
    
    
    
    37,716Total liabilities
    
    
    3,945,683
    
    
    
    
    
    
    
    
    
    
    
    4,827,308Stockholders equity
    
    
    21,441
    
    
    
    
    
    
    
    
    
    
    
    131,795Total liabilities and stockholders equity
    
    $
    3,967,124
    
    
    
    
    
    
    
    
    
    
    $
    4,959,103Net interest income/interest rate spread (5)
    
    
    
    
    
    $
    63,321
    
    
    
    2.35
    %
    
    
    
    
    
    $
    66,187
    
    
    
    1.93
    %Net interest-earning assets
    
    $
    (158,986
    )
    
    
    
    
    
    
    
    
    
    $
    (81,793
    )Net interest margin (6)
    
    
    
    
    
    
    
    
    
    
    2.25
    %
    
    
    
    
    
    
    
    
    
    
    1.87
    %Ratio of average interest-earning assets to average interest-bearing liabilities
    
    
    0.96
    
    
    
    
    
    
    
    
    
    
    
    0.98
 
 (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 weighted-average yield on interest-earning
assets and the
weighted-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. 43




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##### Table of Contents



Non-Interest Income
   Non-Interest Expense
   44




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##### Table of Contents



Income Taxes
  
 FINANCIAL CONDITION
       45




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##### Table of Contents



REGULATORY DEVELOPMENTS
 Temporary Liquidity Guarantee Program
   46




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##### Table of Contents



Emergency Economic Stabilization Act of 2008
  
    
    Capital Purchase Program (CPP). Pursuant to this program, Treasury, on behalf of the US
government, purchased preferred stock, along with warrants to purchase common stock, from
certain financial institutions, including bank holding companies, savings and loan holding
companies and banks or savings associations not controlled by a holding company. The
investment has a dividend rate of 5% per year, until the fifth anniversary of Treasurys
investment and a dividend of 9% thereafter. During the time Treasury holds securities issued
pursuant to this program, participating financial institutions will be required to comply with
certain provisions regarding executive compensation and corporate governance. Participation
in CPP also imposes certain restrictions upon an institutions dividends to common
shareholders and stock repurchase activities. The Corporation elected to participate in the
CPP and received $110 million pursuant to the program.
    
    Temporary Liquidity Guarantee Program (TLGP). TLGP includes both (i) a debt guarantee
component, whereby the FDIC will guarantee until June 30, 2012, the senior unsecured debt
issued by eligible financial institutions between October 14, 2008 and October 31, 2009; and
(ii) an account transaction guarantee component, whereby the FDIC will insure 100% of
non-interest bearing deposit transaction accounts held at eligible financial institutions,
such as payment processing accounts, payroll accounts and working capital accounts through
December 31, 2009. The deadline for opting out of TLGP was December 5, 2008. The Corporation
elected not to opt out of TLGP.
    
    Temporary increase in deposit insurance coverage. Pursuant to the EESA, the FDIC temporarily
raised the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per
depositor. The EESA provides that the basic deposit insurance limit will return to $100,000
after December 31, 2013. The Dodd-Frank Act has made the $250,000 maximum permanent.
 The American Recovery and Reinvestment Act of 2009
  
 
 47




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##### Table of Contents




 
 
 
 
   Dodd-Frank Act
  48




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##### Table of Contents



OTS Order to Cease and Desist
       Capital Restoration Plan
   49




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##### Table of Contents



RISK MANAGEMENT
  Risk Management Philosophy
  Risk Management Principles
  
    
    Designed to only take risks consistent with the Banks strategy and within its
capability to manage,
    
    Practice disciplined capital and liquidity management,
    
    Help ensure that risks and earnings volatility are appropriately understood
and measured,
    
    Avoid excessive concentrations, and
    
    Help support external stakeholder confidence.
  
 Credit Risk Management
    50




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##### Table of Contents



Non-Performing Loans
  December 31, 2010
    
    
    March 31, 2010Percent of
    
    
    
    
    
    
    
    
    
    
    Percent ofNon-
    
    
    
    
    
    
    
    
    
    
    Non-Non-
    
    
    Performing
    
    
    Percent of
    
    
    Non-
    
    
    Performing
    
    
    Percent ofPerforming
    
    
    Loans
    
    
    Total Loans
    
    
    Performing
    
    
    Loans
    
    
    Total Loans(Dollars in Thousands)Single-family residential
    
    $
    74,646
    
    
    
    22.3
    %
    
    
    2.62
    %
    
    $
    52,765
    
    
    
    13.2
    %
    
    
    1.54
    %Multi-family residential
    
    
    53,516
    
    
    
    16.0
    %
    
    
    1.88
    %
    
    
    60,485
    
    
    
    15.1
    %
    
    
    1.76
    %Commercial real estate
    
    
    102,139
    
    
    
    30.6
    %
    
    
    3.58
    %
    
    
    131,730
    
    
    
    32.9
    %
    
    
    3.83
    %Construction and land
    
    
    60,103
    
    
    
    18.0
    %
    
    
    2.11
    %
    
    
    97,240
    
    
    
    24.3
    %
    
    
    2.83
    %Consumer
    
    
    7,223
    
    
    
    2.2
    %
    
    
    0.25
    %
    
    
    5,154
    
    
    
    1.3
    %
    
    
    0.15
    %Education
    
    
    24,011
    
    
    
    7.2
    %
    
    
    0.84
    %
    
    
    30,864
    
    
    
    7.7
    %
    
    
    0.90
    %Commercial business
    
    
    12,485
    
    
    
    3.7
    %
    
    
    0.43
    %
    
    
    21,698
    
    
    
    5.4
    %
    
    
    0.63
    %Total Non-Performing Loans
    
    $
    334,123
    
    
    
    100.0
    %
    
    
    11.72
    %
    
    $
    399,936
    
    
    
    100.0
    %
    
    
    11.64
    %
  Non-performingNon-performing
    
    
    
    
    
    
    Transferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    loan balance
    
    
    Remainingloan balance
    
    
    
    
    
    
    to Accrual
    
    
    Transferred
    
    
    
    
    
    
    
    
    
    
    December 31,
    
    
    balance of
    
    
    ALLLLoan Category
    
    April 1, 2010
    
    
    Additions
    
    
    Status
    
    
    to OREO
    
    
    Paid Down
    
    
    Charged Off
    
    
    2010
    
    
    loans
    
    
    AllocatedSingle-family residential
    
    $
    52,765
    
    
    $
    71,447
    
    
    $
    (24,213
    )
    
    $
    (8,990
    )
    
    $
    (5,473
    )
    
    $
    (10,890
    )
    
    $
    74,646
    
    
    $
    614,598
    
    
    $
    25,095Multi-family residential
    
    
    60,485
    
    
    
    36,369
    
    
    
    (25,147
    )
    
    
    (2,132
    )
    
    
    (8,289
    )
    
    
    (7,770
    )
    
    
    53,516
    
    
    
    466,807
    
    
    
    21,745Commercial real estate
    
    
    131,730
    
    
    
    57,585
    
    
    
    (33,775
    )
    
    
    (15,639
    )
    
    
    (13,272
    )
    
    
    (24,490
    )
    
    
    102,139
    
    
    
    580,078
    
    
    
    61,730Construction and land
    
    
    97,240
    
    
    
    26,316
    
    
    
    (19,325
    )
    
    
    (12,450
    )
    
    
    (19,243
    )
    
    
    (12,435
    )
    
    
    60,103
    
    
    
    202,263
    
    
    
    21,040Consumer
    
    
    5,154
    
    
    
    7,369
    
    
    
    (2,713
    )
    
    
    (191
    )
    
    
    (727
    )
    
    
    (1,669
    )
    
    
    7,223
    
    
    
    293,087
    
    
    
    3,484Education
    
    
    30,864
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,853
    )
    
    
    
    
    
    
    24,011
    
    
    
    262,653
    
    
    
    314Commercial business
    
    
    21,698
    
    
    
    13,960
    
    
    
    (10,602
    )
    
    
    (78
    )
    
    
    (6,850
    )
    
    
    (5,643
    )
    
    
    12,485
    
    
    
    96,540
    
    
    
    24,030Total
    
    $
    399,936
    
    
    $
    213,046
    
    
    $
    (115,775
    )
    
    $
    (39,480
    )
    
    $
    (60,707
    )
    
    $
    (62,897
    )
    
    $
    334,123
    
    
    $
    2,516,026
    
    
    $
    157,438
  51




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##### Table of Contents



Non-Performing Assets
  At December 31,
    
    
    At March 31,2010
    
    
    2010(Dollars in thousands)Total non-accrual loans
    
    $
    324,363
    
    
    $
    355,358Troubled debt restructurings  non-accrual (2)
    
    
    9,760
    
    
    
    44,578Other real estate owned (OREO)
    
    
    69,241
    
    
    
    55,436Total non-performing assets
    
    $
    403,364
    
    
    $
    455,372Total non-performing loans to total loans (1)
    
    
    11.72
    %
    
    
    11.64
    %Total non-performing assets to total assets
    
    
    11.26
    
    
    
    10.31Allowance for loan losses to total loans (1)
    
    
    5.52
    
    
    
    5.23Allowance for loan losses to total non-performing loans
    
    
    47.12
    
    
    
    44.92Allowance for loan and foreclosure losses to total non-performing assets
    
    
    42.59
    
    
    
    43.03
 
 (1)
    
    Total loans are gross loans receivable before the reduction for loans in
process, unearned interest and loan fees and the allowance from loans losses.(2)
    
    Troubled debt restructurings  non-accrual represent non-accrual loans that were
modified in a troubled debt restructuring less than six months prior to the period end date or have
not performed in accordance with the modified terms for at least six months.   52




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##### Table of Contents



Past due 90 daysand Still
    
    
    Total Non-
    
    
    Other Real
    
    
    Total Non-Accruing
    
    
    performing
    
    
    Estate Owned
    
    
    performingNon-accrual
    
    
    Interest
    
    
    Loans
    
    
    (OREO)
    
    
    AssetsBalance at April 1, 2010
    
    $
    399,936
    
    
    $
    
    
    
    $
    399,936
    
    
    $
    55,436
    
    
    $
    455,372Additions
    
    
    213,046
    
    
    
    
    
    
    
    213,046
    
    
    
    12,637
    
    
    
    225,683Transfers:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonaccrual to OREO
    
    
    (39,480
    )
    
    
    
    
    
    
    (39,480
    )
    
    
    39,480
    
    
    
    Returned to accrual status
    
    
    (115,775
    )
    
    
    
    
    
    
    (115,775
    )
    
    
    
    
    
    
    (115,775
    )Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,592
    )
    
    
    (29,592
    )Charge-offs/Loss
    
    
    (62,897
    )
    
    
    
    
    
    
    (62,897
    )
    
    
    (6,763
    )
    
    
    (69,660
    )Payments
    
    
    (60,707
    )
    
    
    
    
    
    
    (60,707
    )
    
    
    (1,957
    )
    
    
    (62,664
    )Balance at December 31, 2010
    
    $
    334,123
    
    
    $
    
    
    
    $
    334,123
    
    
    $
    69,241
    
    
    $
    403,364
 Loan Delinquencies Less than 90 Days
  At December 31,
    
    
    At March 31,2010
    
    
    2010
    
    
    2009
    
    
    2008(In Thousands)30 to 59 days
    
    $
    47,004
    
    
    $
    64,593
    
    
    $
    64,862
    
    
    $
    66,61760 to 89 days
    
    
    21,942
    
    
    
    60,369
    
    
    
    29,858
    
    
    
    12,928Total
    
    $
    68,946
    
    
    $
    124,962
    
    
    $
    94,720
    
    
    $
    79,545
  Impaired Loans
  53




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##### Table of Contents



Average
    
    
    InterestCarrying
    
    
    Unpaid Principal
    
    
    Associated
    
    
    Carrying
    
    
    IncomeAmount
    
    
    Balance
    
    
    Allowance
    
    
    Amount
    
    
    RecognizedWith no specific allowance
recorded:Residential
    
    $
    29,405
    
    
    $
    29,405
    
    
    $
    N/A
    
    
    $
    34,781
    
    
    $
    401Commercial and Industrial
    
    
    7,213
    
    
    
    7,213
    
    
    
    N/A
    
    
    
    12,063
    
    
    
    265Land and Construction
    
    
    43,076
    
    
    
    43,076
    
    
    
    N/A
    
    
    
    49,800
    
    
    
    255Multi-Family
    
    
    36,740
    
    
    
    36,740
    
    
    
    N/A
    
    
    
    41,665
    
    
    
    253Retail/Office
    
    
    37,289
    
    
    
    37,289
    
    
    
    N/A
    
    
    
    45,388
    
    
    
    385Other Commercial Real Estate
    
    
    32,480
    
    
    
    32,480
    
    
    
    N/A
    
    
    
    39,805
    
    
    
    572Education
    
    
    24,011
    
    
    
    24,011
    
    
    
    N/A
    
    
    
    28,582
    
    
    
    Other Consumer
    
    
    405
    
    
    
    405
    
    
    
    N/A
    
    
    
    841
    
    
    
    39With an allowance recorded:Residential
    
    
    34,652
    
    
    
    44,467
    
    
    
    9,815
    
    
    
    44,031
    
    
    
    672Commercial and Industrial
    
    
    9,076
    
    
    
    14,235
    
    
    
    5,159
    
    
    
    14,349
    
    
    
    341Land and Construction
    
    
    25,750
    
    
    
    33,414
    
    
    
    7,664
    
    
    
    34,147
    
    
    
    287Multi-Family
    
    
    21,914
    
    
    
    29,747
    
    
    
    7,833
    
    
    
    30,009
    
    
    
    514Retail/Office
    
    
    37,033
    
    
    
    48,341
    
    
    
    11,308
    
    
    
    48,726
    
    
    
    1,463Other Commercial Real Estate
    
    
    28,558
    
    
    
    35,188
    
    
    
    6,630
    
    
    
    35,467
    
    
    
    1,036Other Consumer
    
    
    6,479
    
    
    
    6,907
    
    
    
    428
    
    
    
    6,967
    
    
    
    122TotalResidential
    
    
    64,057
    
    
    
    73,872
    
    
    
    9,815
    
    
    
    78,812
    
    
    
    1,073Commercial and Industrial
    
    
    16,289
    
    
    
    21,448
    
    
    
    5,159
    
    
    
    26,412
    
    
    
    606Land and Construction
    
    
    68,826
    
    
    
    76,490
    
    
    
    7,664
    
    
    
    83,947
    
    
    
    542Multi-Family
    
    
    58,654
    
    
    
    66,487
    
    
    
    7,833
    
    
    
    71,674
    
    
    
    767Retail/Office
    
    
    74,322
    
    
    
    85,630
    
    
    
    11,308
    
    
    
    94,114
    
    
    
    1,848Other Commercial Real Estate
    
    
    61,038
    
    
    
    67,668
    
    
    
    6,630
    
    
    
    75,272
    
    
    
    1,608Education
    
    
    24,011
    
    
    
    24,011
    
    
    
    
    
    
    
    28,582
    
    
    
    Other Consumer
    
    
    6,884
    
    
    
    7,312
    
    
    
    428
    
    
    
    7,808
    
    
    
    161Total Impaired Loans
    
    $
    374,081
    
    
    $
    422,918
    
    
    $
    48,837
    
    
    $
    466,621
    
    
    $
    6,605
   At December 31,
    
    
    At March 31,2010
    
    
    2010
    
    
    2009
    
    
    2008(In Thousands)Loans and
troubled debt restructurings on non-accrual status
    
    $
    334,123
    
    
    $
    399,936
    
    
    $
    227,814
    
    
    $
    104,058Troubled debt restructurings  accrual
    
    $
    88,795
    
    
    $
    79,891
    
    
    $
    
    
    
    $
    Troubled debt restructurings  non-accrual (1)
    
    $
    9,760
    
    
    $
    44,578
    
    
    $
    61,460
    
    
    $
    400Loans past due ninety days or more and
still accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Troubled debt restructurings  non-accrual are included in the total loans
and troubled debt restructurings on non-accrual status above 54




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Allowances for Loan and Lease Losses
     Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars In Thousands)
    
    
    (Dollars In Thousands)Allowance at beginning of period
    
    $
    156,186
    
    
    $
    170,664
    
    
    $
    179,644
    
    
    $
    137,165Provision
    
    
    21,691
    
    
    
    10,456
    
    
    
    40,213
    
    
    
    141,756Charge-offs
    
    
    (23,467
    )
    
    
    (17,131
    )
    
    
    (68,257
    )
    
    
    (116,792
    )Recoveries
    
    
    3,028
    
    
    
    505
    
    
    
    5,838
    
    
    
    2,365Allowance at end of period
    
    $
    157,438
    
    
    $
    164,494
    
    
    $
    157,438
    
    
    $
    164,494
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Commercial
    
    
    CommercialResidential
    
    
    and Industrial
    
    
    Real Estate
    
    
    Consumer
    
    
    TotalAllowance for Loan Losses:Ending balance
    
    $
    24,554
    
    
    $
    15,461
    
    
    $
    113,627
    
    
    $
    3,796
    
    
    $
    157,438Allowance for Loan Losses:Ending allowance balance attributable to
loans:Individually evaluated for impairment
    
    $
    9,815
    
    
    $
    5,159
    
    
    $
    33,434
    
    
    $
    428
    
    
    $
    48,837Collectively evaluated for impairment
    
    
    14,738
    
    
    
    10,302
    
    
    
    80,193
    
    
    
    3,368
    
    
    
    108,602Total ending allowance balance
    
    $
    24,554
    
    
    $
    15,461
    
    
    $
    113,627
    
    
    $
    3,796
    
    
    $
    157,438Loans:Loans individually evaluated
    
    $
    73,872
    
    
    $
    21,448
    
    
    $
    296,275
    
    
    $
    31,323
    
    
    $
    422,918Loans collectively evaluated
    
    
    611,664
    
    
    
    91,120
    
    
    
    1,168,529
    
    
    
    555,918
    
    
    
    2,427,231Total ending gross loans balance
    
    $
    685,536
    
    
    $
    112,568
    
    
    $
    1,464,804
    
    
    $
    587,241
    
    
    $
    2,850,149
  Foreclosed Properties and Repossessed Assets
  56




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CarryingValueDescription
    
    Location
    
    (in thousands)Vacant land
    
    Illinois
    
    $
    6,375Condo units with additional land
    
    Central Wisconsin
    
    
    6,126Condominium and retail complex
    
    Southeast Wisconsin
    
    
    4,401Retail/office building
    
    Central Wisconsin
    
    
    3,433Commercial building and vacant land
    
    Southern Wisconsin
    
    
    2,725Condo units
    
    Northwest Wisconsin
    
    
    2,487Condo units
    
    Minnesota
    
    
    2,069Single family and vacant land
    
    South Central Wisconsin
    
    
    1,950Commercial building
    
    Central Wisconsin
    
    
    1,820Community Based Residential Facility
    
    Northeast Wisconsin
    
    
    1,743Vacant land
    
    Southeast Wisconsin
    
    
    1,530Commercial building
    
    Southeast Wisconsin
    
    
    1,008Other properties individually less than $1
million
    
    
    
    
    33,574$
    69,241
   
 Liquidity Risk Management
   Liquidity and Capital Resources
  57




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58




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59




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Minimum RequiredMinimum Required
    
    
    to be WellFor Capital
    
    
    Capitalized UnderActual
    
    
    Adequacy Purposes
    
    
    OTS RequirementsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars In Thousands)At December 31, 2010Tier 1 capital
(to adjusted tangible assets)
    
    $
    159,730
    
    
    
    4.43
    %
    
    $
    108,216
    
    
    
    3.00
    %
    
    $
    180,360
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    189,653
    
    
    
    8.37
    
    
    
    181,308
    
    
    
    8.00
    
    
    
    226,634
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    159,730
    
    
    
    4.43
    
    
    
    54,108
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/AAt March 31, 2010:Tier 1 capital
(to adjusted tangible assets)
    
    $
    164,932
    
    
    
    3.73
    %
    
    $
    132,696
    
    
    
    3.00
    %
    
    $
    221,159
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    201,062
    
    
    
    7.32
    
    
    
    219,751
    
    
    
    8.00
    
    
    
    274,689
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    164,932
    
    
    
    3.73
    
    
    
    66,348
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
  December 31,
    
    
    March 31,2010
    
    
    2010(In Thousands)Stockholders equity of the Bank
    
    $
    140,910
    
    
    $
    165,043Less: Intangible assets
    
    
    
    
    
    
    (4,092
    )Disallowed servicing assets
    
    
    (1,414
    )
    
    
    (1,418
    )Accumulated other comprehensive income
    
    
    20,234
    
    
    
    5,399Tier 1 and tangible capital
    
    
    159,730
    
    
    
    164,932Plus: Allowable general valuation allowances
    
    
    29,923
    
    
    
    36,130Risk-based capital
    
    $
    189,653
    
    
    $
    201,062
  60




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Credit Agreement
     
    
    Any event which, either of itself or with the lapse of time or the giving of notice or
both, would constitute a Default under the Credit Agreement;
    
    A default or an event of default under any other material agreement to which the
Corporation or Bank is a party; or
    
    Any pending or threatened litigation or certain administrative proceedings.
  
    
    The Bank shall maintain a Tier 1 Leverage Ratio of not less than (i) 3.75% at all times
during the period from April 29, 2010 through May 31, 2010, (ii) 3.85% at all times during
the period from June 1, 2010 through August 31, 2010, (iii) 3.90% at all times during the
period from September 1, 2010 through November 30, 2010 and (iv) 3.95% at all times
thereafter.
    
    The Bank shall maintain a Total Risk Based Capital ratio of not less than (i) 7.10% at
all times during the period from April 29, 2010 through May 31, 2010, (ii) 7.35% at all
times during the period from June 1,
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2010 through August 31, 2010, (iii) 7.60% at all times
during the period from September 1, 2010 through November 30, 2010 and (iv) 7.65% at all
times thereafter.
    
    The ratio of Non-Performing Loans to Gross Loans shall not exceed (i) 14.50% at any time
during the period from April 29, 2010 through May 31, 2010, (ii) 13.00% at any time during
the period from June 1, 2010 through September 30, 2010, (iii) 12.50% at any time during
the period from October 1, 2010 through November 30, 2010, (iv) 12.00% at any time during
the period from December 1, 2010 through March 31, 2011, (v) 11.00% at any time during the
period from April 1, 2011 through April 30, 2011 and (vi) 10.00% at all times thereafter.
   
 Market Risk Management Overview
  Asset/Liability Management
    62




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Compliance Risk Management
  Strategic and/or Reputation Risk Management
  CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
  Fair Value Measurements
    63




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Allowances for Loan Losses
      64




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Foreclosure
  Mortgage Servicing Rights
  Income Taxes
  65




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Revenue Recognition
  
    
    Lending,
    
    Securities portfolio,
    
    Asset management and fund servicing,
    
    Customer deposits,
    
    Loan servicing, and
    
    Sale of loans and securities.
   FORWARD-LOOKING STATEMENTS
  (i)
    
    general economic or industry conditions could be less favorable than expected,
resulting in a deterioration in credit quality, a change in the allowance for loan and
lease losses or a reduced demand for credit or fee-based products and services;(ii)
    
    soundness of other financial institutions with which the Corporation and the Bank
engage in transactions;(iii)
    
    competitive pressures could intensify and affect our profitability, including as a
result of continued industry consolidation, the increased availability of financial
services from non-banks, technological developments or bank regulatory reform;(iv)
    
    changes in technology;(v)
    
    deterioration in commercial real estate, land and construction loan portfolios
resulting in increased loan losses;
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(vi)
    
    uncertainties regarding our ability to continue as a going concern;(vii)
    
    our ability to address our own liquidity problems;(viii)
    
    demand for financial services, loss of customer confidence, and customer deposit account
withdrawals;(ix)
    
    our ability to pay dividends;(x)
    
    changes in the quality or composition of the Banks loan and investment portfolios and
allowances for loan loss;(xi)
    
    unprecedented volatility in the market and fluctuations in the value of our common stock;(xii)
    
    dilution of existing shareholders as a result of possible future transaction;(xiii)
    
    uncertainties about the Corporation and the Banks Cease and Desist Orders with OTS;(xiv)
    
    uncertainties about our ability to raise sufficient new capital in a timely manner in
order to increase the Banks regulatory capital ratios;(xv)
    
    changes in the conditions of the securities markets, which could adversely affect,
among other things, the value or credit quality of our assets, the availability and terms
of funding necessary to meet our liquidity needs and our ability to originate loans;(xvi)
    
    increases in Federal Deposit Insurance Corporation premiums due to market developments
and regulatory changes; changes in accounting principles, policies or guidelines;(xvii)
    
    uncertainties regarding our investment in the common stock of the Federal Home Loan Bank
of Chicago;(xviii)
    
    delisting of the Corporations common stock from Nasdaq;(xix)
    
    significant unforeseen legal expenses;(xx)
    
    uncertainties about market interest rates;(xxi)
    
    security breaches of our information systems;(xxii)
    
    acts or threats of terrorism and actions taken by the United States or other governments
as a result of such acts or threats, severe weather, natural disasters, acts of war;(xxiii)
    
    environmental liability for properties to which we take title;(xxiv)
    
    expiration of Amendment No. 6 to our Amended and Restated Credit Agreement on May 31,
2011;(xxv)
    
    uncertainties about our ability to obtain regulatory approval and finalize
transactions to sell several branch locations;(xxvi)
    
    uncertainties relating to the Emergency Economic Stabilization Act or 2008, the American
Recovery and Reinvestment Act of 2009, the implementation by the U.S. Department of the
Treasury and federal banking regulators of a number of programs to address capital and
liquidity issues in the banking system and additional programs that will apply to us in the
future, all of which may have significant effects on us and the financial services
industry;(xxvii)
    
    changes in the U.S. Department of the Treasurys Capital Purchase Program;(xxviii)
    
    changes in the extensive laws, regulations and policies governing financial holding
companies and their subsidiaries;(xxix)
    
    monetary and fiscal policies of the U.S. Department of the Treasury;(xxx)
    
    implications of the Dodd-Frank Act; and(xxxi)
    
    challenges relating to recruiting and retaining key employees.
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Item 3  Quantitative and Qualitative Disclosures About Market Risk.
 The Corporations market rate risk has not materially changed from March 31, 2010.
See Item 7A in the Corporations Annual Report on Form 10-K for the year ended March
31, 2010. See also Asset/Liability Management in Part I, Item 2 of this report.
 
 Item 4  Controls and Procedures.
 Internal Control over Financial Reporting
 In our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, the
Corporation identified a material weakness in its internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) related
to the following:
 The Corporations chief executive officer and interim principal accounting officer
concluded that the Corporation did not maintain effective entity level controls to
ensure that the financial statements were prepared in accordance with generally
accepted accounting principles by the time our Annual Report on Form 10-K for the
fiscal year ended March 31, 2010 was issued. A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of the annual or
interim financial statements will not be prevented or detected on a timely basis.
 Changes in Internal Control Over Financial Reporting
 There has been no change in the Corporations internal control over financial
reporting ((as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that
occurred during the Corporations most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Corporations internal
control over financial reporting.
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Part II  Other Information
 
 Item 1  Legal Proceedings.
 The Corporation is involved in routine legal proceedings occurring in the ordinary
course of business which, in the aggregate, are believed by management of the
Corporation to be immaterial to the financial condition and results of operations of
the Corporation.
 
 Item 1A  Risk Factors.
 We are subject to a number of risks which may potentially impact our business,
financial condition, results of operations and liquidity. As a financial services
institution, certain elements of risk are inherent in all of our transactions and
are present in every business decision we make. Thus, we encounter risk as part of
the normal course of our business, and we design risk management processes to help
manage these risks.
 The following risk factors are added to the risk factors previously disclosed in our
annual report on Form 10-K for the fiscal year ending March 31, 2010. In general,
each of these risk factors, including the ones added below, presents the risk of a
material impact on our results of operations or financial condition, in addition to
other possible consequences described therein.
 The impact of the recently enacted Dodd-Frank Act is still uncertain, but it may
increase our costs of doing business and could result in restrictions on certain
products and services we offer.
 On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the Dodd-Frank Act) which significantly changes the
financial regulatory landscape and will affect the operating activities of financial
institutions and their holding companies as well as others. Although many of the
details of the Dodd-Frank Act and the full impact it will have on our business will
not be known for many months or years, in part because many of the provisions
require the adoption of implementing rules and regulations, we expect compliance
with the new law and its rules and regulations to result in additional operating
costs.
 For example, the Dodd-Frank Act requires the adoption of new capital regulations
within the next 18 months. The regulations are required to be, at a minimum, as
stringent as current capital and leverage requirements and, may limit the use of
subordinated debt or similar instruments such as trust preferred securities to meet
capital requirements. The new regulations or other regulatory actions could require
us to raise additional capital depending on our business activities, asset mix,
growth plans and results of operation. The Dodd-Frank Act also provides that certain
financial institutions will be required to conduct annual stress tests in accordance
with regulations to be adopted. The testing will require resources and increase our
compliance costs.
 In other provisions, the Dodd-Frank Act increases the regulation of derivatives and
hedging transactions. The regulations are expected to impose additional reporting
and monitoring requirements, require higher capital and margin requirements and
require that certain trades be executed through clearinghouses. We do not expect
these provisions to have a material impact on the Corporation.
 With respect to deposit insurance, the Dodd-Frank Act broadens the base for FDIC
insurance assessments which we expect will increase our FDIC insurance premiums and
permanently increases the deposit insurance limit to $250,000 per depositor. Under
the Dodd-Frank Act, the FDIC will insure the full balance of non-interest bearing
transaction accounts through January 1, 2013, replacing the transaction account
guarantee program at the end of calendar 2010. The Dodd-Frank Act also repeals the
prohibition on banks payment of interest on demand deposit accounts
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of commercial
clients beginning one year from the date of enactment, and the market impact of this
change is not yet known.
 Another significant aspect of the Dodd-Frank Act that will affect us is the creation
of a new Bureau of Consumer Financial Protection with broad powers to supervise and
enforce consumer protection laws. The Bureau will have broad rule-making authority
for a wide range of consumer protection laws that apply to all banks, including the
authority to prohibit unfair, deceptive or abusive acts and practices.
 In addition, the Dodd-Frank Act calls for the dissolution of our primary regulator,
the OTS. The OTS is scheduled to cease operation as of July 21, 2011, although that
date could be delayed under certain circumstances. At such time as the OTS goes out
of existence, regulation of the Bank will be assumed by the Office of the Controller
of the Currency, with the Federal Reserve becoming the Corporations primary
regulator. The impact of this change on our operations is not yet known.
 No assurance can be given as to the ultimate effect that the Dodd-Frank Act or any
of its provisions will have on our business, financial condition and results of
operations, the financial services industry or the economy.
 Our regional concentration makes us particularly at risk for changes in economic
conditions in our primary market.
 Our business is primary located in Wisconsin. Thus, we are particularly vulnerable
to adverse changes in economic conditions in Wisconsin and the Midwest more
generally.
 Our asset valuations include observable inputs and may include methodologies,
estimations and assumptions that are subject to differing interpretations and could
result in changes to asset valuations that may materially adversely affect our
results of operations or financial condition.
 We must use estimates, assumptions and judgments when financial assets and
liabilities are measured and reported at fair value. Assets and liabilities carried
at fair value inherently result in a higher degree of financial statement
volatility. Fair values and the information used to record valuation adjustments for
certain assets and liabilities are based on quoted market prices and/or other
observable inputs provided by independent third-party sources, when available. When
such third-party information is not available, we estimate fair value primarily by
using cash flows and other financial modeling techniques utilizing assumptions such
as credit quality, liquidity, interest rates and other relevant inputs. Changes in
underlying inputs, factors, assumptions or estimates in any of the areas underlying
our estimates could materially impact our future financial condition and results of
operations.
 During periods of market disruption, including periods of significantly rising or
high interest rates, rapidly widening credit spreads or illiquidity, it may be more
difficult to value certain of our assets if trading becomes less frequent and/or
market data becomes less observable. There may be certain asset classes that were in
active markets with significant observable data that become illiquid due to the
current financial environment. In such cases, certain asset valuations may require
more subjectivity and management judgment. As such, valuations may include inputs
and assumptions that are less observable or require greater estimation. Further,
rapidly changing and unprecedented credit and equity market conditions and interest
rates could materially impact the valuation of assets as reported within our
consolidated financial statements, and the period-to-period changes in value could
vary significantly.
 Lenders may be required to repurchase mortgage loans or indemnify mortgage loan
purchasers as a result of breaches of representations and warranties, borrower
fraud, or certain borrower defaults, which could harm our liquidity, results of
operations and financial condition.
 When we sell mortgage loans, whether as whole loans or pursuant to a securitization,
we are required to make customary representations and warranties to the purchaser
about the mortgage
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loans and the manner in which they were originated. Our whole
loan sale agreements require us to repurchase or substitute mortgage loans in the
event we breach any of these representations or warranties. In addition, we may be
required to repurchase mortgage loans as a result of borrower fraud. Likewise, we
are required to repurchase or substitute mortgage loans if we breach a
representation or warranty in connection with our securitizations. While we have
taken steps to enhance our underwriting policies and procedures, there can be no
assurance that these steps will be effective or reduce risk associated with loans
sold in the past. To date, the volume of repurchases has been insignificant. If the
level of repurchase and indemnity activity becomes material, our liquidity, results
of operations and financial condition will be adversely affected.
 Our liquidity is largely dependent upon our ability to receive dividends from our
subsidiary bank, which accounts for most of our revenue and could affect our ability
to pay dividends, and we may be unable to enhance liquidity from other sources.
 We are a separate and distinct legal entity from our subsidiaries, including the
Bank. We receive substantially all of our revenue from dividends from the Bank.
These dividends are the principal source of funds to pay dividends on our common
stock and interest and principal on our debt. Various federal and/or state laws and
regulations limit the amount of dividends that the Bank and certain of our non-bank
subsidiaries may pay us. Additionally, if our subsidiaries earnings are not
sufficient to make dividend payments to us while maintaining adequate capital
levels, our ability to make dividend payments to our preferred and common
shareholders will be negatively impacted. The Bank is currently precluded from
paying dividends to us.
 The infusion of outside capital may dilute the Corporations equity and may
adversely affect the market price of the Corporations common stock.
 In connection with our effort to raise qualified sources of outside capital,
strengthen our balance sheet and improve our financial performance, the Corporation
may issue additional common stock or preferred securities, including securities
convertible or exchangeable for, or that represent the right to receive, common
stock. The market price of the Corporations common stock could decline as a result
of sales of a large number of shares of common stock, preferred stock or similar
securities in the market. The issuance of additional capital stock would dilute the
ownership interest of the Corporations existing shareholders.
 
 Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 As of December 31, 2010, the Corporation does not have a stock repurchase plan in
place.
 
 Item 3
    
    Intentionally Left Blank
 
 Item 4
    
    Removed and Reserved.
 
 Item 5
    
    Other Information.
 On November 5, 2010, the Corporation and American Stock Transfer & Trust Company,
LLC entered into a shareholder rights agreement (the Rights Agreement) designed to
reduce the likelihood that the Corporation will experience an ownership change (as
defined under U.S. federal income tax laws) by (i) discouraging any person or group
of affiliated or associated persons from becoming a beneficial owner of 5% or more
of our Common Stock (an Acquiring
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Person) and (ii) discouraging any Acquiring
Person from acquiring additional shares of the Common Stock. In general, an
ownership change will occur if there is a cumulative change in the Corporations
ownership by 5% shareholders (as defined under U.S. income tax laws) that exceeds
50 percentage points over a rolling three-year period. There is no guarantee,
however, that the Rights Plan will prevent the Corporation from experiencing an
ownership change. The purpose of the Rights Agreement is to protect the
Corporations ability to use certain tax assets, such as net operating loss
carryforwards and built-in losses (the Tax Assets), to offset future income. A
corporation that experiences an ownership change will primarily be subject to an
annual limitation on certain of its pre-ownership change Tax Assets in an amount
generally equal to the equity value of the corporation immediately before the
ownership change subject to certain adjustments, multiplied by the long-term
tax-exempt rate. As a result, the Corporations use of the Tax Assets in the
future would be significantly limited if it were to experience an ownership change.
 Pursuant to the Rights Agreement, the Corporations Board of Directors declared a
dividend distribution of one preferred stock purchase right for each share of common
stock outstanding at the close of business on November 22, 2010. The rights will be
distributable to holders of record of the Corporations common stock as of November
22, 2010, as well as to holders of shares of the Corporations common stock issued
after that date, but would only be exercisable in accordance with the terms of the
Rights Agreement. The adoption of the Rights Agreement has no impact on the results
of operations, consolidated balance sheet or net income (loss) per share. The rights
may be dilutive to earnings per share in the future dependent upon the results of
operations and market value of the Corporations common stock outstanding.
 The above summary does not purport to be complete and is qualified in its entirety
by the full text of the Rights Agreement, which was filed as Exhibit 4.3 to the
Corporations Current Report on Form 8-K, filed on the date hereof. For more
information on the Rights Agreement, see the Current Report on Form 8-K and
Registration Statement on Form 8-A, each filed on the date hereof and incorporated
herein by reference.
 
 Item 6
    
    Exhibits.
 The following exhibits are filed with this report:
 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 Interim Principal Accounting 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 Interim Principal Accounting 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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SIGNATURES
   Date:      February 7, 2011
    By:
    /s/ Chris BauerChris Bauer, President and
 Chief Executive OfficerDate:      February 7, 2011
    By:
    /s/ Mark D. HaymanMark D. Hayman,
 Interim Principal Accounting Officer 73