##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q/A
 (Amendment No, 1)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 COMMISSION FILE NUMBER 0-20006
 ANCHOR BANCORP WISCONSIN INC.
 (Exact name of registrant as specified in its charter)
 Wisconsin
    
    39-1726871(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)25 West Main Street 
Madison, Wisconsin
    
    53703(Address of principal executive office)
    
    (Zip Code)
 
  
   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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##### Table of Contents



EXPLANATORY NOTE
    1




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##### 



ANCHOR BANCORP WISCONSIN INC.
INDEX  FORM 10-Q/A
 Page #Part I  Financial InformationItem 1
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of December 31, 2009
and March 31, 2009
    
    
    3Consolidated Statements of Operations for the Three and Nine
Months Ended December 31, 2009 and 2008
    
    
    4Consolidated Statements of Changes in Stockholders
Equity for the Nine Months Ended December 31, 2009
    
    
    6Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 2009 and 2008
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    9Item 2
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    40Results of Operations
    
    
    45Financial Condition
    
    
    50Asset Quality
    
    
    52Liquidity & Capital Resources
    
    
    56Guarantees
    
    
    61Asset/Liability Management
    
    
    62Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    66Item 4
    
    Controls and Procedures
    
    
    66Part II  Other Information
    
    
    71Item 1
    
    Legal Proceedings
    
    
    71Item 1A
    
    Risk Factors
    
    
    71Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    79Item 3
    
    Defaults upon Senior Securities
    
    
    79Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    79Item 5
    
    Other Information
    
    
    79Item 6
    
    Exhibits
    
    
    80Signatures
    
    
    81EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 December 31,
    
    
    March 31,2009
    
    
    2009(unaudited)(Restated-
    
    
    (Restated-See Note 19)
    
    
    See Note 19)(In Thousands, Except Share Data)AssetsCash
    
    $
    80,475
    
    
    $
    59,654Interest-bearing deposits
    
    
    251,813
    
    
    
    374,172Cash and cash equivalents
    
    
    332,288
    
    
    
    433,826Investment securities available for sale
    
    
    17,396
    
    
    
    77,684Mortgage-related securities available for sale
    
    
    448,025
    
    
    
    407,301Mortgage-related securities held to maturity (fair value of $43
and $50, respectively)
    
    
    42
    
    
    
    50Loans, less allowance for loan losses of $164,494 at December 31, 2009
and $137,165 at March 31, 2009:Held for sale
    
    
    35,640
    
    
    
    161,964Held for investment
    
    
    3,383,246
    
    
    
    3,896,439Foreclosed properties and repossessed assets, net
    
    
    40,420
    
    
    
    52,563Real estate held for development and sale
    
    
    2,013
    
    
    
    16,120Office properties and equipment
    
    
    46,136
    
    
    
    48,123Federal Home Loan Bank stockat cost
    
    
    54,829
    
    
    
    54,829Deferred tax asset, net of valuation allowance
    
    
    
    
    
    
    16,202Accrued interest and other assets
    
    
    93,940
    
    
    
    107,009Total assets
    
    $
    4,453,975
    
    
    $
    5,272,110Liabilities and Stockholders EquityDepositsNon-interest bearing
    
    $
    278,914
    
    
    $
    274,392Interest bearing deposits and accrued interest
    
    
    3,319,271
    
    
    
    3,649,435Total deposits and accrued interest
    
    
    3,598,185
    
    
    
    3,923,827Other borrowed funds
    
    
    759,479
    
    
    
    1,078,392Other liabilities
    
    
    44,068
    
    
    
    58,115Total liabilities
    
    
    4,401,732
    
    
    
    5,060,334Commitments and contingent liabilities (Note 12)Preferred stock, $.10 par value, 5,000,000 shares authorized,
110,000 shares issued and outstanding
    
    
    79,753
    
    
    
    74,185Common stock, $.10 par value, 100,000,000 shares authorized,
25,363,339 shares issued, 21,689,117 and 21,569,785 shares outstanding,
respectively
    
    
    2,536
    
    
    
    2,536Additional paid-in capital
    
    
    109,133
    
    
    
    109,327Retained earnings (deficit)
    
    
    (31,455
    )
    
    
    131,878Accumulated other comprehensive income (loss) related to AFS securities
    
    
    (4,863
    )
    
    
    10Accumulated other comprehensive loss related to OTTI non credit issues
    
    
    (6,404
    )
    
    
    (6,347
    )Total accumulated other comprehensive loss
    
    
    (11,267
    )
    
    
    (6,337
    )Treasury stock (3,674,222 and 3,793,554 shares, respectively), at cost
    
    
    (90,932
    )
    
    
    (94,744
    )Deferred compensation obligation
    
    
    (5,525
    )
    
    
    (5,480
    )Total Anchor BanCorp stockholders equity
    
    
    52,243
    
    
    
    211,365Non-controlling interest in real estate partnerships
    
    
    
    
    
    
    411Total liabilities and stockholders equity
    
    $
    4,453,975
    
    
    $
    5,272,110
  3




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Restated-
    
    
    
    
    
    
    (Restated-See Note 19)
    
    
    
    
    
    
    See Note 19)(In Thousands, Except Per Share Data)Interest income:Loans
    
    $
    48,545
    
    
    $
    60,042
    
    
    $
    151,886
    
    
    $
    185,203Mortgage-related securities
    
    
    4,617
    
    
    
    3,743
    
    
    
    15,367
    
    
    
    11,099Investment securities and Federal Home Loan Bank stock
    
    
    184
    
    
    
    818
    
    
    
    954
    
    
    
    2,398Interest-bearing deposits
    
    
    208
    
    
    
    70
    
    
    
    838
    
    
    
    469Total interest income
    
    
    53,554
    
    
    
    64,673
    
    
    
    169,045
    
    
    
    199,169Interest expense:Deposits
    
    
    21,278
    
    
    
    21,602
    
    
    
    68,451
    
    
    
    72,342Other borrowed funds
    
    
    9,943
    
    
    
    10,364
    
    
    
    34,407
    
    
    
    30,745Total interest expense
    
    
    31,221
    
    
    
    31,966
    
    
    
    102,858
    
    
    
    103,087Net interest income
    
    
    22,333
    
    
    
    32,707
    
    
    
    66,187
    
    
    
    96,082Provision for loan losses
    
    
    10,456
    
    
    
    92,970
    
    
    
    141,756
    
    
    
    149,334Net interest income (loss) after provision for loan losses
    
    
    11,877
    
    
    
    (60,263
    )
    
    
    (75,569
    )
    
    
    (53,252
    )Non-interest income:Real estate investment partnership revenue
    
    
    
    
    
    
    1,836
    
    
    
    
    
    
    
    1,836Loan servicing income
    
    
    1,038
    
    
    
    1,244
    
    
    
    1,525
    
    
    
    3,859Credit enhancement income
    
    
    293
    
    
    
    481
    
    
    
    989
    
    
    
    1,377Service charges on deposits
    
    
    3,949
    
    
    
    3,966
    
    
    
    11,924
    
    
    
    11,959Investment and insurance commissions
    
    
    1,070
    
    
    
    971
    
    
    
    2,672
    
    
    
    3,225Net gain (loss) on sale of loans
    
    
    2,805
    
    
    
    (228
    )
    
    
    15,270
    
    
    
    2,823Net gain (loss) on sale of investments and mortgage-related securities
    
    
    5,783
    
    
    
    (1,396
    )
    
    
    9,396
    
    
    
    (3,298
    )Total other than temporary losses
    
    
    (872
    )
    
    
    
    
    
    
    (1,910
    )
    
    
    Portion of loss recognized in other comprehensive income
    
    
    786
    
    
    
    
    
    
    
    1,741
    
    
    
    Reclassification from other comprehensive income
    
    
    (260
    )
    
    
    
    
    
    
    (576
    )
    
    
    Net impairment losses recognized in earnings
    
    
    (346
    )
    
    
    
    
    
    
    (745
    )
    
    
    Other revenue from real estate partnership operations
    
    
    
    
    
    
    1,707
    
    
    
    2,393
    
    
    
    4,212Other
    
    
    1,029
    
    
    
    932
    
    
    
    2,615
    
    
    
    3,576Total non-interest income
    
    
    15,621
    
    
    
    9,513
    
    
    
    46,039
    
    
    
    29,569
  4




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Restated-
    
    
    
    
    
    
    (Restated-See Note 19)
    
    
    
    
    
    
    See Note 19)(In Thousands, Except Per Share Data)Non-interest expense:Compensation
    
    $
    12,340
    
    
    $
    13,755
    
    
    $
    40,656
    
    
    $
    41,727Real estate investment partnership cost of sales
    
    
    
    
    
    
    1,191
    
    
    
    
    
    
    
    1,191Occupancy
    
    
    2,427
    
    
    
    2,328
    
    
    
    7,487
    
    
    
    7,302Federal deposit insurance premiums
    
    
    4,300
    
    
    
    624
    
    
    
    14,486
    
    
    
    884Furniture and equipment
    
    
    1,836
    
    
    
    2,189
    
    
    
    5,978
    
    
    
    6,382Data processing
    
    
    1,914
    
    
    
    1,858
    
    
    
    5,535
    
    
    
    5,493Marketing
    
    
    542
    
    
    
    727
    
    
    
    1,557
    
    
    
    2,055Other expenses from real estate partnership operations
    
    
    211
    
    
    
    7,170
    
    
    
    3,870
    
    
    
    11,085REO operations  net expense
    
    
    5,867
    
    
    
    8,038
    
    
    
    17,044
    
    
    
    10,179Mortgage servicing rights impairment (recovery)
    
    
    (415
    )
    
    
    2,535
    
    
    
    (1,765
    )
    
    
    2,535Foreclosure cost advance impairment
    
    
    
    
    
    
    
    
    
    
    3,708
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    72,181
    
    
    
    
    
    
    
    72,181Other
    
    
    8,673
    
    
    
    5,661
    
    
    
    22,343
    
    
    
    14,201Total non-interest expense
    
    
    37,695
    
    
    
    118,257
    
    
    
    120,899
    
    
    
    175,215Loss before income taxes
    
    
    (10,197
    )
    
    
    (169,007
    )
    
    
    (150,429
    )
    
    
    (198,898
    )Income tax expense (benefit)
    
    
    3
    
    
    
    (1,899
    )
    
    
    3
    
    
    
    (13,951
    )Net loss
    
    $
    (10,200
    )
    
    $
    (167,108
    )
    
    $
    (150,432
    )
    
    $
    (184,947
    )Income attributable to non-controlling interest in real estate partnerships
    
    
    
    
    
    
    (150
    )
    
    
    
    
    
    
    (98
    )Preferred stock dividends and discount accretion
    
    
    (3,228
    )
    
    
    
    
    
    
    (9,700
    )
    
    
    Net loss available to common equity of Anchor BanCorp
    
    $
    (13,428
    )
    
    $
    (167,258
    )
    
    $
    (160,132
    )
    
    $
    (185,045
    )Comprehensive loss
    
    $
    (20,101
    )
    
    $
    (171,061
    )
    
    $
    (155,362
    )
    
    $
    (194,496
    )Loss per common share:Basic
    
    $
    (0.63
    )
    
    $
    (7.96
    )
    
    $
    (7.56
    )
    
    $
    (8.82
    )Diluted
    
    
    (0.63
    )
    
    
    (7.96
    )
    
    
    (7.56
    )
    
    
    (8.82
    )Dividends declared per common share
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.29
  5




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders 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 March 31, 2009
    
    $
    411
    
    
    $
    74,185
    
    
    $
    2,536
    
    
    $
    109,327
    
    
    $
    134,234
    
    
    $
    (94,744
    )
    
    $
    (5,480
    )
    
    $
    (6,337
    )
    
    $
    214,132Restatement for prior year federal insurance
premium adjustment (See Note 19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,356
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,356
    )Balance at March 31, 2009, as restated
    
    $
    411
    
    
    $
    74,185
    
    
    $
    2,536
    
    
    $
    109,327
    
    
    $
    131,878
    
    
    $
    (94,744
    )
    
    $
    (5,480
    )
    
    $
    (6,337
    )
    
    $
    211,776Comprehensive income (loss):Net loss (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150,432
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150,432
    )Non-credit portion of other-than-
temporary impairments:Available-for-sale securities, net of tax
of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,741
    )
    
    
    (1,741
    )Reclassification adjustment for net gains on sale
of investment and mortgage-related securities
realized in income, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,396
    )
    
    
    (9,396
    )Reclassification adjustment for credit portion
of other-than-temporary impairment on
investments realized in income,
net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    576
    
    
    
    576Change in net unrealized gains (losses)
on available-for-sale securities
net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,631
    
    
    
    5,631Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (155,362
    )Change in non-controlling interest
    
    
    (411
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (411
    )Dividend on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,132
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,132
    )Issuance of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,201
    )
    
    
    3,812
    
    
    
    (45
    )
    
    
    
    
    
    
    566Tax benefit from stock related compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (194
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (194
    )Accretion of preferred stock discount
    
    
    
    
    
    
    5,568
    
    
    
    
    
    
    
    
    
    
    
    (5,568
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2009
    
    $
    
    
    
    $
    79,753
    
    
    $
    2,536
    
    
    $
    109,133
    
    
    $
    (31,455
    )
    
    $
    (90,932
    )
    
    $
    (5,525
    )
    
    $
    (11,267
    )
    
    $
    52,243
 
 (1)
    
    Restated (See Note 19)  6




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##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
 Nine Months Ended December 31,2009
    
    
    2008(Restated-See Note 19)(In Thousands)Operating ActivitiesNet loss
    
    $
    (150,432
    )
    
    $
    (185,045
    )Adjustments to reconcile net loss to net
cash provided by operating activities:Provision for loan losses
    
    
    141,756
    
    
    
    149,334Provision for OREO losses
    
    
    13,705
    
    
    
    5,877Provision for depreciation and amortization
    
    
    3,705
    
    
    
    3,881Amortization and accretion of investment securities, net
    
    
    110
    
    
    
    (296
    )Amortization and accretion of mortgage related securities, net
    
    
    1,763
    
    
    
    Mortgage servicing rights impairment recovery
    
    
    (1,765
    )
    
    
    Goodwill impairment
    
    
    
    
    
    
    72,181Real estate held for development and sale impairment
    
    
    
    
    
    
    4,628Mortgage servicing rights impairment
    
    
    
    
    
    
    2,535Deferred tax impairment
    
    
    
    
    
    
    36,500Foreclosure cost advance impairment
    
    
    3,708
    
    
    
    Increase (decrease) in non-controlling interest in real estate partnerships
    
    
    (411
    )
    
    
    97Cash paid due to origination of loans held for sale
    
    
    (996,214
    )
    
    
    (366,187
    )Cash received due to sale of loans held for sale
    
    
    1,137,808
    
    
    
    346,540Net gain on sales of loans
    
    
    (15,270
    )
    
    
    (2,823
    )Net (gain) loss on sales of investments and mortgage-related securities
    
    
    (9,396
    )
    
    
    3,298Loss on sale of foreclosed properties
    
    
    452
    
    
    
    39Net loss on impairment of securities available for sale
    
    
    745
    
    
    
    Stock-based compensation expense
    
    
    566
    
    
    
    693Decrease in accrued interest receivable
    
    
    3,311
    
    
    
    3,300(Increase) decrease in prepaid expense and other assets
    
    
    24,017
    
    
    
    (63,087
    )Decrease in accrued interest payable on deposits
    
    
    (1,782
    )
    
    
    (10,350
    )Increase (decrease) in other liabilities
    
    
    (18,179
    )
    
    
    28,841Net cash provided by operating activities
    
    
    138,197
    
    
    
    29,956Investing ActivitiesProceeds from sales of investment securities available for sale
    
    
    28,531
    
    
    
    22,170Proceeds from maturities of investment securities available for sale
    
    
    49,965
    
    
    
    73,345Purchase of investment securities available for sale
    
    
    (18,518
    )
    
    
    (86,292
    )Purchase of mortgage-related securities available for sale
    
    
    (437,141
    )
    
    
    (70,010
    )Proceeds from sale of mortgage-related securities available for sale
    
    
    363,084
    
    
    
    Principal collected on mortgage-related securities
    
    
    84,377
    
    
    
    43,074Net decrease in loans held for investment
    
    
    301,620
    
    
    
    50,843Purchases of office properties and equipment
    
    
    (2,024
    )
    
    
    (2,617
    )Proceeds from sales of office properties and equipment
    
    
    468
    
    
    
    79Proceeds from sale of foreclosed properties
    
    
    18,925
    
    
    
    10,896Proceeds from sale of investment in real estate held for development and sale
    
    
    13,961
    
    
    
    Purchase of investment in real estate held for development and sale
    
    
    (16
    )
    
    
    (468
    )Net cash provided by investing activities
    
    
    403,232
    
    
    
    41,020
 7




---



##### Table of Contents



ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Contd)
 Nine Months Ended December 31,2009
    
    
    2008(Restated-See Note 19)(In Thousands)Financing ActivitiesDecrease in deposit accounts
    
    $
    (323,860
    )
    
    $
    (116,195
    )Proceeds from borrowed funds
    
    
    257
    
    
    
    1,162,480Repayment of borrowed funds
    
    
    (319,170
    )
    
    
    (1,217,129
    )Exercise of stock options
    
    
    
    
    
    
    1,485Tax benefit from stock related compensation
    
    
    (194
    )
    
    
    (35
    )Payments of cash dividends to stockholders
    
    
    
    
    
    
    (6,101
    )Net cash used in financing activities
    
    
    (642,967
    )
    
    
    (175,495
    )Net decrease in cash and cash equivalents
    
    
    (101,538
    )
    
    
    (104,519
    )Cash and cash equivalents at beginning of period
    
    
    433,826
    
    
    
    257,743Cash and cash equivalents at end of period
    
    $
    332,288
    
    
    $
    153,224Supplementary cash flow information:Cash paid or credited to accounts:Interest on deposits and borrowings
    
    $
    102,470
    
    
    $
    115,799Income taxes
    
    
    (29,376
    )
    
    
    9,155Non-cash transactions:Transfer of loans to foreclosed properties
    
    
    20,939
    
    
    
    54,591Securitization of mortgage loans held for sale
to mortgage-backed
securities
    
    
    48,878
    
    
    
    
  8




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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
       9




---



##### Table of Contents



Note 3  Significant Risks and Uncertainties
   1.
    
    Realigned corporate structure to ensure that risk is adequately and appropriately identified,
mitigated and where possible, eliminated through the:
 
    
    Appointment a Chief Credit Risk Officer responsible for overseeing all
aspects of corporate risk.
 
    
    Creation of a Special Assets Group to properly assess potential collateral
shortfall exposure and to develop workout plans.
 2.
    
    Created and implemented a new loan risk rating system using qualitative metrics to identify
loans with potential risk so they could be properly classified and monitored.
 3.
    
    Implemented a new enhanced impairment analysis to evaluate all classified loans.
 4.
    
    Introduced a new Allowance for Loan and Lease Policy that improves the timeliness of specific
reserves taken for the allowance for loan and lease calculation.
 5.
    
    Analyzed the population of recent appraisals received and developed a specific reserve amount
to capture the probable deterioration in value.
 6.
    
    Established an independent underwriting group that evaluates the total borrowing relationship
using a global cash flow methodology.
 7.
    
    Began proactive monitoring of matured and delinquent loans.
 8.
    
    Proactively reviewing the performing (non-impaired) portfolio for performance issues.
 9.
    
    Classified assets are reviewed on a monthly basis.
  10




---



##### Table of Contents



Note 4  Recent Accounting Pronouncements
  .
  
    
    acquisition costs are required to be expensed as incurred;
    
    noncontrolling interests (formerly known as minority interests) will
be recorded at fair value at the acquisition date;
    
    the acquirer shall not recognize a separate valuation allowance as of
the acquisition date for assets acquired in a business that are measured at
their acquisition-date fair value;
    
    restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
    
    changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date
 11




---



##### Table of Contents



generally will affect income tax
expense.
     .
 12




---



##### Table of Contents




    
    The period after the balance sheet date during which
management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or
disclosure in the financial statements;
    
    The circumstances under which an entity should recognize
events or transactions occurring after the balance sheet
date in its financial statements; and
    
    The disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.
  ,
  13




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##### Table of Contents



Note 5  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    (Losses)
    
    
    Fair ValueAt December 31, 2009:Available for Sale:U.S. Government and federal agency obligations
    
    $
    10,033
    
    
    $
    2
    
    
    $
    (287
    )
    
    $
    9,748Mutual funds
    
    
    2,757
    
    
    
    
    
    
    
    
    
    
    
    2,757Other
    
    
    4,812
    
    
    
    143
    
    
    
    (64
    )
    
    
    4,891$
    17,602
    
    
    $
    145
    
    
    $
    (351
    )
    
    $
    17,396
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    (Losses)
    
    
    Fair ValueAt March 31, 2009:Available for Sale:U.S. Government and federal agency obligations
    
    $
    48,471
    
    
    $
    501
    
    
    $
    (53
    )
    
    $
    48,919Municipal Bonds
    
    
    21,768
    
    
    
    524
    
    
    
    (59
    )
    
    
    22,233Mutual funds
    
    
    1,797
    
    
    
    
    
    
    
    
    
    
    
    1,797Other
    
    
    4,806
    
    
    
    33
    
    
    
    (104
    )
    
    
    4,735$
    76,842
    
    
    $
    1,058
    
    
    $
    (216
    )
    
    $
    77,684
  At December 31, 2009Less 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
    
    $
    3,969
    
    
    $
    (81
    )
    
    $
    4,776
    
    
    $
    (206
    )
    
    $
    8,745
    
    
    $
    (287
    )Other
    
    
    43
    
    
    
    (21
    )
    
    
    44
    
    
    
    (43
    )
    
    
    87
    
    
    
    (64
    )Total temporarily
impaired securities
    
    $
    4,012
    
    
    $
    (102
    )
    
    $
    4,820
    
    
    $
    (249
    )
    
    $
    8,832
    
    
    $
    (351
    )
 14




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##### Table of Contents



At March 31, 2009Less 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
    
    $
    24,832
    
    
    $
    (53
    )
    
    $
    
    
    
    $
    
    
    
    $
    24,832
    
    
    $
    (53
    )Municipal Bonds
    
    
    1,455
    
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    1,455
    
    
    
    (59
    )Other
    
    
    151
    
    
    
    (104
    )
    
    
    
    
    
    
    
    
    
    
    151
    
    
    
    (104
    )Total temporarily
impaired securities
    
    $
    26,438
    
    
    $
    (216
    )
    
    $
    
    
    
    $
    
    
    
    $
    26,438
    
    
    $
    (216
    )
    Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Proceeds from sales
    
    $
    9,106
    
    
    $
    22,170
    
    
    $
    28,531
    
    
    $
    22,170Gross gains on sales
    
    
    408
    
    
    
    
    
    
    
    842
    
    
    
    Gross losses on sales
    
    
    
    
    
    
    1,396
    
    
    
    
    
    
    
    1,396Net gain (loss) on sales
    
    $
    408
    
    
    $
    (1,396
    )
    
    $
    842
    
    
    $
    (1,396
    )
  15




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##### Table of Contents



After 1
    
    
    After 5
    
    
    
    
    
    
    Non-Year
    
    
    Years
    
    
    
    
    
    
    MaturityWithin 1
    
    
    through 5
    
    
    through 10
    
    
    Over Ten
    
    
    EquityYear
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Investments
    
    
    Total(Dollars in Thousands)Available for Sale, at fair value:U.S. government and FederalAgency Obligations
    
    $
    4,972
    
    
    $
    
    
    
    $
    
    
    
    $
    4,776
    
    
    $
    
    
    
    $
    9,748Mutual fund
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,757
    
    
    
    2,757Other
    
    
    3,626
    
    
    
    
    
    
    
    
    
    
    
    1,146
    
    
    
    119
    
    
    
    4,891Total Investment Securities
    
    $
    8,598
    
    
    $
    
    
    
    $
    
    
    
    $
    5,922
    
    
    $
    2,876
    
    
    $
    17,396
 Note 6  Mortgage-Related Securities
   Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAt December 31, 2009:Mortgage-Related Securities Available for Sale:Agency CMOs and REMICs
    
    $
    2,275
    
    
    $
    18
    
    
    $
    
    
    
    $
    2,293Non-agency CMOs
    
    
    97,223
    
    
    
    54
    
    
    
    (8,559
    )
    
    
    88,718Residential mortgage-backed securities
    
    
    33,461
    
    
    
    1,497
    
    
    
    (67
    )
    
    
    34,891GNMA Securities
    
    
    326,127
    
    
    
    711
    
    
    
    (4,715
    )
    
    
    322,123$
    459,086
    
    
    $
    2,280
    
    
    $
    (13,341
    )
    
    $
    448,025Mortgage-Related Securities Held to Maturity:Residential mortgage-backed securities
    
    $
    42
    
    
    $
    1
    
    
    $
    
    
    
    $
    43$
    42
    
    
    $
    1
    
    
    $
    
    
    
    $
    43
 16




---



##### Table of Contents



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAt March 31, 2009:Mortgage-Related Securities Available for Sale:Agency CMOs and REMICs
    
    $
    142,692
    
    
    $
    1,732
    
    
    $
    (429
    )
    
    $
    143,995Non-agency CMOs
    
    
    119,503
    
    
    
    333
    
    
    
    (12,309
    )
    
    
    107,527Residential mortgage-backed securities
    
    
    97,562
    
    
    
    3,221
    
    
    
    (29
    )
    
    
    100,754GNMA Securities
    
    
    54,753
    
    
    
    417
    
    
    
    (145
    )
    
    
    55,025$
    414,510
    
    
    $
    5,703
    
    
    $
    (12,912
    )
    
    $
    407,301Mortgage-Related Securities Held to Maturity:Residential mortgage-backed securities
    
    $
    50
    
    
    $
    
    
    
    $
    
    
    
    $
    50$
    50
    
    
    $
    
    
    
    $
    
    
    
    $
    50
  At December 31, 2009Less than 12 months
    
    12 months or more
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    Loss(In Thousands)Agency CMO/REMICs
    
    $
    40
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    40
    
    
    $
    Non-Agency CMOs
    
    
    21,131
    
    
    
    (569
    )
    
    
    25,266
    
    
    
    (1,586
    )
    
    
    46,397
    
    
    
    (2,155
    )Residential Mortgage-backed securities
    
    
    1,335
    
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    1,335
    
    
    
    (67
    )GNMA Securities
    
    
    266,609
    
    
    
    (4,715
    )
    
    
    
    
    
    
    
    
    
    
    266,609
    
    
    
    (4,715
    )Total temporarily impaired securities
    
    $
    289,115
    
    
    $
    (5,351
    )
    
    $
    25,266
    
    
    $
    (1,586
    )
    
    $
    314,381
    
    
    $
    (6,937
    )Other than temporarily impaired
securities
    
    $
    3,832
    
    
    $
    (9
    )
    
    $
    29,038
    
    
    $
    (6,395
    )
    
    $
    32,870
    
    
    $
    (6,404
    )Total temporary and other than
temporarily impaired securities
    
    $
    292,947
    
    
    $
    (5,360
    )
    
    $
    54,304
    
    
    $
    (7,981
    )
    
    $
    347,251
    
    
    $
    (13,341
    )
 17




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##### Table of Contents



At March 31, 2009Less than 12 months
    
    12 months or more
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    Loss(In Thousands)Agency CMO/REMICs
    
    $
    43,931
    
    
    $
    (429
    )
    
    $
    
    
    
    $
    
    
    
    $
    43,931
    
    
    $
    (429
    )Non-Agency CMOs
    
    
    33,715
    
    
    
    (2,874
    )
    
    
    34,265
    
    
    
    (3,014
    )
    
    
    67,980
    
    
    
    (5,888
    )Residential Mortgage-backed securities
    
    
    3,892
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    3,892
    
    
    
    (29
    )GNMA Securities
    
    
    24,049
    
    
    
    (135
    )
    
    
    1,803
    
    
    
    (10
    )
    
    
    25,852
    
    
    
    (145
    )Total temporarily impaired securites
    
    $
    105,587
    
    
    $
    (3,467
    )
    
    $
    36,068
    
    
    $
    (3,024
    )
    
    $
    141,655
    
    
    $
    (6,491
    )Other than temporarily impaired
securities
    
    $
    8,892
    
    
    $
    (2,281
    )
    
    $
    11,211
    
    
    $
    (4,140
    )
    
    $
    20,103
    
    
    $
    (6,421
    )Total temporary and other than
temporarily impaired securities
    
    $
    114,479
    
    
    $
    (5,748
    )
    
    $
    47,279
    
    
    $
    (7,164
    )
    
    $
    161,758
    
    
    $
    (12,912
    )
     18




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##### Table of Contents



Total OTTI
    
    
    Total OTTIYear of Vintage
    
    
    Total Fair
    
    
    
    
    
    
    Related to
    
    
    Related toPrior to 2005
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    Value
    
    
    Total OTTI
    
    
    Credit Loss
    
    
    Other Factors(in thousands)Total OTTI Non-Agency CMOsRating:AAA
    
    $
    
    
    
    $
    
    
    
    $
    3,832
    
    
    $
    
    
    
    $
    7,610
    
    
    $
    (132
    )
    
    $
    (124
    )
    
    $
    (9
    )AA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,559
    
    
    
    7,814
    
    
    
    (1,101
    )
    
    
    (215
    )
    
    
    (886
    )A
    
    
    1,619
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,347
    
    
    
    (120
    )
    
    
    (18
    )
    
    
    (101
    )BBB
    
    
    1,303
    
    
    
    2,999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (667
    )
    
    
    (67
    )
    
    
    (600
    )BB and below
    
    
    
    
    
    
    5,732
    
    
    
    2,499
    
    
    
    12,328
    
    
    
    7,343
    
    
    
    (5,934
    )
    
    
    (1,126
    )
    
    
    (4,808
    )Total Non-Agency CMOs
    
    $
    2,922
    
    
    $
    8,731
    
    
    $
    6,330
    
    
    $
    14,887
    
    
    $
    32,870
    
    
    $
    (7,953
    )
    
    $
    (1,549
    )
    
    $
    (6,404
    )
   Three Months Ended
    
    
    Nine Months EndedDecember 31, 2009
    
    
    December 31, 2009Beginning balance of the amount of OTTI related to credit losses
    
    $
    1,203
    
    
    $
    805The credit portion of other-than-temporary-impairment not
previously recognized
    
    
    86
    
    
    
    169Additional increases to the amount related to the credit loss
for which OTTI was
previously recognized
    
    
    260
    
    
    
    576Ending balance of the amount of OTTI related to credit losses
    
    $
    1,549
    
    
    $
    1,549
 19




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Proceeds from sales
    
    $
    234,439
    
    
    $
    
    
    
    $
    363,084
    
    
    $
    Gross gains on sales
    
    
    5,375
    
    
    
    
    
    
    
    8,554
    
    
    
    Gross losses on sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net gain on sales
    
    $
    5,375
    
    
    $
    
    
    
    $
    8,554
    
    
    $
    
   After 1
    
    
    After 5Year
    
    
    YearsWithin 1
    
    
    through 5
    
    
    through 10
    
    
    Over TenYear
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(Dollars In Thousands)Mortgage-related securitiesAvailable for Sale, at fair value:Agency CMOs and REMICs
    
    $
    
    
    
    $
    
    
    
    $
    1,394
    
    
    $
    899
    
    
    $
    2,293Non-agency CMOs
    
    
    
    
    
    
    40
    
    
    
    19,791
    
    
    
    68,887
    
    
    
    88,718Residential Mortgage-backed securities
    
    
    824
    
    
    
    1,004
    
    
    
    16,931
    
    
    
    16,132
    
    
    
    34,891GNMA Secrurities
    
    
    
    
    
    
    
    
    
    
    4,482
    
    
    
    317,641
    
    
    
    322,123Total
    
    $
    824
    
    
    $
    1,044
    
    
    $
    42,598
    
    
    $
    403,559
    
    
    $
    448,025Held to Maturity, at fair value:Residential Mortgage-backed securities
    
    $
    
    
    
    $
    
    
    
    $
    43
    
    
    $
    
    
    
    $
    43Total
    
    $
    
    
    
    $
    
    
    
    $
    43
    
    
    $
    
    
    
    $
    43Total Mortgage-related securities
    
    $
    824
    
    
    $
    1,044
    
    
    $
    42,641
    
    
    $
    403,559
    
    
    $
    448,068Held to Maturity, at cost:Residential Mortgage-backed securities
    
    $
    
    
    
    $
    
    
    
    $
    42
    
    
    $
    
    
    
    $
    42
 20




---



##### Table of Contents



Note 7  Loans Receivable
  December 31,
    
    
    March 31,2009
    
    
    2009First mortgage loans:Single-family residential
    
    $
    786,225
    
    
    $
    843,482Multi-family residential
    
    
    619,365
    
    
    
    662,483Commercial real estate
    
    
    872,722
    
    
    
    1,020,981Construction
    
    
    144,345
    
    
    
    267,375Land
    
    
    238,305
    
    
    
    266,7562,660,962
    
    
    
    3,061,077Second mortgage loans
    
    
    365,739
    
    
    
    394,708Education loans
    
    
    351,855
    
    
    
    358,784Commercial business loans and leases
    
    
    178,191
    
    
    
    238,940Credit card and other consumer loans
    
    
    28,687
    
    
    
    56,3023,585,434
    
    
    
    4,109,811Contras to loans:Undisbursed loan proceeds*
    
    
    (33,656
    )
    
    
    (71,672
    )Allowance for loan losses
    
    
    (164,494
    )
    
    
    (137,165
    )Unearned loan fees
    
    
    (3,937
    )
    
    
    (4,441
    )Net discount on loans purchased
    
    
    (8
    )
    
    
    (10
    )Unearned interest
    
    
    (93
    )
    
    
    (84
    )(202,188
    )
    
    
    (213,372
    )$
    3,383,246
    
    
    $
    3,896,439
 
 *
    
    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 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars In Thousands)
    
    
    (Dollars In Thousands)Allowance at beginning of period
    
    $
    170,664
    
    
    $
    64,614
    
    
    $
    137,165
    
    
    $
    38,285Provision
    
    
    10,456
    
    
    
    92,970
    
    
    
    141,756
    
    
    
    149,334Charge-offs
    
    
    (17,131
    )
    
    
    (35,228
    )
    
    
    (116,792
    )
    
    
    (66,210
    )Recoveries
    
    
    505
    
    
    
    215
    
    
    
    2,365
    
    
    
    1,162Allowance at end of period
    
    $
    164,494
    
    
    $
    122,571
    
    
    $
    164,494
    
    
    $
    122,571
  21




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##### Table of Contents



At December 31,
    
    
    At March 31,2009
    
    
    2009
    
    
    2008
    
    
    2007(In Thousands)Impaired loans with valuation
reserve required
    
    $
    79,053
    
    
    $
    124,179
    
    
    $
    52,866
    
    
    $
    2,130Impaired loans without a
specific reserve
    
    
    354,367
    
    
    
    103,635
    
    
    
    51,192
    
    
    
    45,718Total impaired loans
    
    
    433,420
    
    
    
    227,814
    
    
    
    104,058
    
    
    
    47,848Less:Specific valuation allowance
    
    
    (19,067
    )
    
    
    (30,799
    )
    
    
    (17,639
    )
    
    
    (517
    )$
    414,353
    
    
    $
    197,015
    
    
    $
    86,419
    
    
    $
    47,331Average impaired loans
    
    $
    347,726
    
    
    $
    194,923
    
    
    $
    67,138
    
    
    $
    26,458Interest income recognized
on impaired loans
    
    $
    10,858
    
    
    $
    9,484
    
    
    $
    107
    
    
    $
    44Loans on non-accrual status
    
    $
    250,994
    
    
    $
    166,354
    
    
    $
    101,241
    
    
    $
    47,040Troubled debt restructurings  accrual
    
    $
    129,478
    
    
    $
    
    
    
    $
    
    
    
    $
    Troubled debt restructurings  non-accrual
    
    $
    52,948
    
    
    $
    61,460
    
    
    $
    400
    
    
    $
    400Loans past due ninety days or more and
still accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    22




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##### Table of Contents



Note 8  Other Intangible Assets
   For the
    
    
    For theNine Months Ended
    
    
    Year EndedDecember 31,
    
    
    March 31,2009
    
    
    2009(In Thousands)Balance at beginning of period
    
    $
    4,725
    
    
    $
    5,359Amortization expense
    
    
    (475
    )
    
    
    (634
    )Balance at end of period
    
    $
    4,250
    
    
    $
    4,725
 December 31,
    
    
    March 31,2009
    
    
    2009(In Thousands)Gross carrying amount
    
    $
    5,517
    
    
    $
    5,517Accumulated amortization
    
    
    (1,267
    )
    
    
    (792
    )Net book value
    
    $
    4,250
    
    
    $
    4,725
    23




---



##### Table of Contents



Residential
    
    
    Other(In Thousands)Mortgage servicing rights as of March 31, 2008
    
    $
    11,698
    
    
    $
    1,478Additions
    
    
    10,087
    
    
    
    142Amortization
    
    
    (4,623
    )
    
    
    (362
    )Mortgage servicing rights before valuation allowance at end of period
    
    
    17,162
    
    
    
    1,258Valuation allowance
    
    
    (2,407
    )
    
    
    Net mortgage servicing rights as of March 31, 2009
    
    $
    14,755
    
    
    $
    1,258Fair market value at the end of the period
    
    $
    15,292
    
    
    $
    1,662Key assumptions:Weighted average discount
    
    
    11.14
    %
    
    
    21.12
    %Weighted average prepayment speed assumption
    
    
    17.99
    %
    
    
    24.39
    %Mortgage servicing rights as of March 31, 2009
    
    $
    17,162
    
    
    $
    1,258Additions
    
    
    10,822
    
    
    
    1Amortization
    
    
    (4,708
    )
    
    
    (193
    )Mortgage servicing rights before valuation allowance at end of period
    
    
    23,276
    
    
    
    1,066Valuation allowance
    
    
    (642
    )
    
    
    Net mortgage servicing rights as of December 31, 2009
    
    $
    22,634
    
    
    $
    1,066Fair market value at the end of the period
    
    $
    22,637
    
    
    $
    1,719Key assumptions:Weighted average discount
    
    
    10.69
    %
    
    
    18.91
    %Weighted average prepayment speed assumption
    
    
    11.48
    %
    
    
    25.80
    %
  24




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##### Table of Contents



Residential
    
    
    Other
    
    
    CoreMortgage
    
    
    Mortgage
    
    
    DepositServicing Rights
    
    
    Servicing Rights
    
    
    Premium
    
    
    Total(In Thousands)Quarter ended December 31, 2009 (actual)
    
    $
    1,154
    
    
    $
    58
    
    
    $
    158
    
    
    $
    1,370Estimate for the year ended March 31,2010
    
    $
    6,277
    
    
    $
    257
    
    
    $
    634
    
    
    $
    7,1682011
    
    
    6,277
    
    
    
    257
    
    
    
    634
    
    
    
    7,1682012
    
    
    6,277
    
    
    
    257
    
    
    
    634
    
    
    
    7,1682013
    
    
    3,803
    
    
    
    257
    
    
    
    634
    
    
    
    4,694Thereafter
    
    
    
    
    
    
    38
    
    
    
    1,714
    
    
    
    1,752$
    22,634
    
    
    $
    1,066
    
    
    $
    4,250
    
    
    $
    27,950
 Note 9  Federal Home Loan Bank Stock
   25




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##### Table of Contents



Note 10  Regulatory Capital
  Actual
    
    Adequacy Purposes
    
    OTS RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars In Thousands)At December 31, 2009 (Restated):Tier 1 capital
(to adjusted tangible assets)
    
    $
    183,833
    
    
    
    4.12
    %
    
    $
    133,864
    
    
    
    3.00
    %
    
    $
    223,107
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    221,956
    
    
    
    7.59
    
    
    
    233,880
    
    
    
    8.00
    
    
    
    292,351
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    183,833
    
    
    
    4.12
    
    
    
    66,932
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/AAt March 31, 2009 (Restated):Tier 1 capital
(to adjusted tangible assets)
    
    $
    321,774
    
    
    
    6.13
    %
    
    $
    157,498
    
    
    
    3.00
    %
    
    $
    262,497
    
    
    
    5.00
    %Risk-based capital
(to risk-based assets)
    
    
    368,312
    
    
    
    10.14
    
    
    
    290,594
    
    
    
    8.00
    
    
    
    363,242
    
    
    
    10.00Tangible capital
(to tangible assets)
    
    
    321,774
    
    
    
    6.13
    
    
    
    78,749
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
  December 31,
    
    
    March 31,2009
    
    
    2009(Restated)
    
    
    (Restated)(In Thousands)Stockholders equity of the Bank
    
    $
    178,348
    
    
    $
    320,149Less: Goodwill and intangible assets
    
    
    (4,250
    )
    
    
    (4,725
    )Disallowed servicing assets
    
    
    (1,617
    )
    
    
    Accumulated other comprehensive income
    
    
    11,352
    
    
    
    6,350Tier 1 and tangible capital
    
    
    183,833
    
    
    
    321,774Plus: Allowable general valuation allowances
    
    
    38,123
    
    
    
    46,538Risk-based capital
    
    $
    221,956
    
    
    $
    368,312
 26




---



##### Table of Contents



Note 11  Earnings Per Share
  Three Months Ended December 31,2009
    
    
    2008(Restated)(in thousands)Numerator:Numerator for basic and diluted earnings
per shareloss available to common
stockholders
    
    $
    (13,428
    )
    
    $
    (167,258
    )Denominator:Denominator for basic earnings per
shareweighted-average shares
    
    
    21,205
    
    
    
    21,000Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    Management Recognition Plans
    
    
    
    
    
    
    Denominator for diluted earnings per
shareadjusted weighted-average
shares and assumed conversions
    
    
    21,205
    
    
    
    21,000Basic loss per common share
    
    $
    (0.63
    )
    
    $
    (7.96
    )Diluted loss per common share
    
    $
    (0.63
    )
    
    $
    (7.96
    )
 27




---



##### Table of Contents



Nine Months Ended December 31,2009
    
    
    2008(Restated)(in thousands)Numerator:Numerator for basic and diluted earnings
per shareloss available to common
stockholders
    
    $
    (160,132
    )
    
    $
    (185,045
    )Denominator:Denominator for basic earnings per
shareweighted-average shares
    
    
    21,168
    
    
    
    20,971Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    Management Recognition Plans
    
    
    
    
    
    
    Denominator for diluted earnings per
shareadjusted weighted-average
shares and assumed conversions
    
    
    21,168
    
    
    
    20,971Basic loss per common share
    
    $
    (7.56
    )
    
    $
    (8.82
    )Diluted loss per common share
    
    $
    (7.56
    )
    
    $
    (8.82
    )
  Note 12  Commitments and Contingent Liabilities
  28




---



##### Table of Contents



December 31,
    
    March 31,2009
    
    2009Commitments to extend credit:
    
    $
    15,674
    
    
    $
    52,427Unused lines of credit:Home equity
    
    
    141,728
    
    
    
    144,662Credit cards
    
    
    38,210
    
    
    
    37,602Commercial
    
    
    46,004
    
    
    
    89,300Letters of credit
    
    
    16,635
    
    
    
    20,694Credit enhancement under the FederalHome Loan Bank of Chicago MortgagePartnership Finance Program
    
    
    21,602
    
    
    
    23,527IDI borrowing guarantees unfunded
    
    
    371
    
    
    
    1,936
      Note 13  Fair Value of Financial Instruments
  29




---



##### Table of Contents



Cash and cash equivalents and accrued interest:
 Investment and mortgage-related securities:
 Loans receivable:
 Federal Home Loan Bank stock:
 Deposits:
 Other Borrowed Funds:
 Off-balance-sheet instruments:
  30




---



##### Table of Contents



December 31, 2009
    
    March 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    332,288
    
    
    $
    332,288
    
    
    $
    433,826
    
    
    $
    433,826Investment securities
    
    
    17,396
    
    
    
    17,396
    
    
    
    77,684
    
    
    
    77,684Mortgage-related securities (available-for-sale and held-to-maturity)
    
    
    448,067
    
    
    
    448,068
    
    
    
    407,351
    
    
    
    407,351Loans held for sale
    
    
    35,640
    
    
    
    35,715
    
    
    
    161,964
    
    
    
    164,124Loans receivable
    
    
    3,383,246
    
    
    
    3,375,496
    
    
    
    3,896,439
    
    
    
    3,981,442Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    54,829
    
    
    
    54,829
    
    
    
    54,829Accrued interest receivable
    
    
    22,064
    
    
    
    22,064
    
    
    
    25,375
    
    
    
    25,375Financial liabilities:Deposits
    
    
    3,585,531
    
    
    
    3,564,263
    
    
    
    3,909,391
    
    
    
    3,921,802Other borrowed funds
    
    
    759,479
    
    
    
    745,995
    
    
    
    1,078,392
    
    
    
    1,079,556Accrued interest payableborrowings
    
    
    7,090
    
    
    
    7,090
    
    
    
    2,833
    
    
    
    2,833Accrued interest payabledeposits
    
    
    12,654
    
    
    
    12,654
    
    
    
    14,436
    
    
    
    14,436
   
    
    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 assumptions and projections in determining the fair value
assigned to such assets.
 31




---



##### Table of Contents



Fair Value on a Recurring Basis
  Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investment securities available for sale
    
    $
    17,396
    
    
    $
    765
    
    
    $
    16,631
    
    
    $
    Mortgage-related securities available for sale
    
    
    448,025
    
    
    
    
    
    
    
    
    
    
    
    448,025Total assets at fair value
    
    $
    465,421
    
    
    $
    765
    
    
    $
    16,631
    
    
    $
    448,025
  Three Months Ended
    
    
    Nine Months EndedDecember 31, 2009
    
    
    December 31, 2009Mortgage-Related Securities
    
    
    Mortgage-Related SecuritiesAvailable for Sale
    
    
    Available for SaleBalance at beginning of period
    
    $
    449,177
    
    
    $
    407,301Total gains (losses) (realized/unrealized)Included in earnings
    
    
    4,338
    
    
    
    6,753Included in other comprehensive income
    
    
    (9,159
    )
    
    
    (3,851
    )Included in earnings as other than temporary impairment
    
    
    (346
    )
    
    
    (745
    )Purchases
    
    
    265,383
    
    
    
    437,141Securitization of mortgage loansheld for sale to mortgage-related securities
    
    
    
    
    
    
    48,878Principal repayments
    
    
    (26,929
    )
    
    
    (84,368
    )Sales
    
    
    (234,439
    )
    
    
    (363,084
    )Transfers in and/or out of level 3
    
    
    
    
    
    
    Balance at December 31, 2009
    
    $
    448,025
    
    
    $
    448,025
   32




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##### Table of Contents



Fair Value on a Nonrecurring Basis
  Fair Value Measurements UsingQuoted Pricesin Active
    
    
    Significant Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired loans
    
    $
    59,986
    
    
    $
    
    
    
    $
    
    
    
    $
    59,986Loans held for sale
    
    
    26,564
    
    
    
    
    
    
    
    26,564
    
    
    
    Mortgage servicing rights
    
    
    21,227
    
    
    
    
    
    
    
    
    
    
    
    21,227Foreclosed properties and repossessed assets
    
    
    40,420
    
    
    
    
    
    
    
    
    
    
    
    40,420Total assets at fair value
    
    $
    148,197
    
    
    $
    
    
    
    $
    26,564
    
    
    $
    121,633
     33




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##### Table of Contents



Note 14  Income Taxes
   At December 31,
    
    
    At March 31,2009
    
    
    2009Deferred tax assets:Allowances for loan losses
    
    $
    70,885
    
    
    $
    58,442Other loss reserves
    
    
    2,945
    
    
    
    4,822Federal NOL carryforwards
    
    
    26,227
    
    
    
    State NOL carryforwards
    
    
    9,863
    
    
    
    3,604Unrealized gains/(losses)
    
    
    4,414
    
    
    
    2,695Other
    
    
    9,964
    
    
    
    11,773Total deferred tax assets
    
    
    124,298
    
    
    
    81,336Valuation allowance
    
    
    (106,237
    )
    
    
    (49,981
    )Adjusted deferred tax assets
    
    
    18,061
    
    
    
    31,355Deferred tax liabilities:FHLB stock dividends
    
    
    (3,976
    )
    
    
    (3,997
    )Mortgage servicing rights
    
    
    (9,235
    )
    
    
    (6,094
    )Purchase accounting
    
    
    (3,008
    )
    
    
    (3,348
    )Other
    
    
    (1,842
    )
    
    
    (1,714
    )Total deferred tax liabilities
    
    
    (18,061
    )
    
    
    (15,153
    )Net deferred tax assets
    
    $
    
    
    
    $
    16,202
  34




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##### Table of Contents



Note 15  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, including that certain Stock Purchase Agreement and Loan
Agreement between the Corporation and Badger Anchor Holdings, LLC; or
    
    Any pending or threatened litigation or certain administrative proceedings.
  
    
    The Bank shall maintain a Tier 1 Leverage Ratio of not less than (i) 4.00% at
all times during the period ending February 28, 2010 and (ii) 4.25% at all times
thereafter.
    
    The Bank shall maintain a Total Risk Based Capital ratio of not less than (i)
7.25% at all times during the period ending February 28, 2010 and (ii) 7.50% at all
times thereafter.
    
    The ratio of Non-Performing Loans to Gross Loans shall not exceed (i) 13.75% at
all times during the period ending January 31, 2010 and (ii) 14.50% at all times
thereafter.
 35




---



##### Table of Contents



Note 16  Capital Purchase Program
  Note 17  Regulatory Matters
    36




---



##### Table of Contents



Note 18  Recent Developments
      37




---



##### Table of Contents



Note 19  Restatement of Previously Issued Financial Statements
   Consolidated Balance Sheets
 As of December 31, 2009AsReported
    
    Adjustment
    
    Restated(In Thousands)Accrued interest and other assets
    
    $
    98,552
    
    
    $
    (4,612
    )
    
    $
    93,940Total assets
    
    
    4,458,587
    
    
    
    (4,612
    )
    
    
    4,453,975Other liabilities
    
    
    39,768
    
    
    
    4,300
    
    
    
    44,068Total liabilities
    
    
    4,397,432
    
    
    
    4,300
    
    
    
    4,401,732Retained deficit
    
    
    (22,543
    )
    
    
    (8,912
    )
    
    
    (31,455
    )Stockholders equity
    
    
    61,155
    
    
    
    (8,912
    )
    
    
    52,243
 As of March 31, 2009AsReported
    
    Adjustment
    
    Restated(In Thousands)Accrued interest and other assets
    
    $
    107,954
    
    
    $
    (945
    )
    
    $
    107,009Total assets
    
    
    5,273,055
    
    
    
    (945
    )
    
    
    5,272,110Other liabilities
    
    
    56,704
    
    
    
    1,411
    
    
    
    58,115Total liabilities
    
    
    5,058,923
    
    
    
    1,411
    
    
    
    5,060,334Retained earnings
    
    
    134,234
    
    
    
    (2,356
    )
    
    
    131,878Stockholders equity
    
    
    213,721
    
    
    
    (2,356
    )
    
    
    211,365
 38




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##### Table of Contents



Consolidated Statement of Operations
 For the three months ended December 31, 2009AsReported
    
    Adjustment
    
    Restated(In Thousands)Federal insurance premiums
    
    $
    3,093
    
    
    $
    1,207
    
    
    $
    4,300Total non-interest expense
    
    
    36,488
    
    
    
    1,207
    
    
    
    37,695Loss before income taxes
    
    
    (8,990
    )
    
    
    (1,207
    )
    
    
    (10,197
    )Net loss
    
    
    (8,993
    )
    
    
    (1,207
    )
    
    
    (10,200
    )Net loss available to common equity
    
    
    (12,221
    )
    
    
    (1,207
    )
    
    
    (13,428
    )Comprehensive loss
    
    
    (18,894
    )
    
    
    (1,207
    )
    
    
    (20,101
    )Earnings (loss) per share:Basic
    
    
    (0.58
    )
    
    
    (0.05
    )
    
    
    (0.63
    )Diluted
    
    
    (0.58
    )
    
    
    (0.05
    )
    
    
    (0.63
    )
 For the nine months ended December 31, 2009AsReported
    
    Adjustment
    
    Restated(In Thousands)Federal insurance premiums
    
    $
    7,930
    
    
    $
    6,556
    
    
    $
    14,486Total non-interest expense
    
    
    114,343
    
    
    
    6,556
    
    
    
    120,899Loss before income taxes
    
    
    (143,873
    )
    
    
    (6,556
    )
    
    
    (150,429
    )Net loss
    
    
    (143,876
    )
    
    
    (6,556
    )
    
    
    (150,432
    )Net loss available to common equity
    
    
    (153,576
    )
    
    
    (6,556
    )
    
    
    (160,132
    )Comprehensive loss
    
    
    (148,806
    )
    
    
    (6,556
    )
    
    
    (155,362
    )Earnings (loss) per share:Basic
    
    
    (7.26
    )
    
    
    (0.30
    )
    
    
    (7.56
    )Diluted
    
    
    (7.26
    )
    
    
    (0.30
    )
    
    
    (7.56
    )
 Consolidated Statement of Cash Flows
 For the nine months ended December 31, 2009AsReported
    
    Adjustment
    
    Restated(In Thousands)Operating ActivitiesNet loss
    
    $
    (143,876
    )
    
    $
    (6,556
    )
    
    $
    (150,432
    )(Increase) decrease in prepaid expense and other assets
    
    
    20,350
    
    
    
    3,667
    
    
    
    24,017Increase (decrease) in other liabilities
    
    
    (21,068
    )
    
    
    2,889
    
    
    
    (18,179
    )
 39




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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
  
    
    On June 14, 2010, the Corporation restated results for the third quarter ended December
31, 2010 due to a systematic error in the recognition of federal insurance premium expense.
 
    
    Diluted loss per common share decreased to $(0.63) for the quarter ended December 31,
2009 compared to $(7.96) per share for the quarter ended December 31, 2008, primarily due
to a $82.5 million decrease in the provision for loan losses and a $80.6 million decrease
in non-interest expense;
 
    
    The interest rate spread decreased to 2.13% for the quarter ended December 31, 2009
compared to 2.88% for the quarter ended December 31, 2008;
 
    
    Loans receivable decreased $639.5 million, or 15.8%, since March 31, 2009;
 
    
    Deposits and accrued interest decreased $325.6 million, or 8.3%, since March 31, 2009;
 
    
    Book value per common share was $(2.66) at December 31, 2009 compared to $4.70 at March
31, 2009 and $6.80 at December 31, 2008;
 
    
    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 other assets owned by the Bank)
increased $64.0 million, or 22.8%, to $344.4 million at December 31, 2009 from $280.4
million at March 31, 2009, and 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) increased $76.1
million, or 33.4% to $303.9 million at December 31, 2009 from $227.8 million at March 31,
2009; and
 
    
    Provision for loan losses decreased $82.5 million, or 88.8%, to $10.5 million for the
three months ended December 31, 2009 from $93.0 million for the three months ended December
31, 2008 and $50.4 million, or 82.8%, from $60.9 million for the three months ended
September 30, 2009.
 40




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##### Table of Contents



Three Months Ended12/31/2009
    
    9/30/2009
    
    6/30/2009
    
    3/31/2009(Dollars in thousands  except per share amounts)
    
    (restated)
    
    (restated)
    
    (restated)
    
    (restated)Operations Data:Net interest income
    
    $
    22,333
    
    
    $
    18,939
    
    
    $
    24,915
    
    
    $
    28,708Provision for loan losses
    
    
    10,456
    
    
    
    60,900
    
    
    
    70,400
    
    
    
    56,385Net gain on sale of loans
    
    
    2,805
    
    
    
    1,062
    
    
    
    11,403
    
    
    
    7,858Real estate investment partnership revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310Other non-interest income
    
    
    12,816
    
    
    
    9,796
    
    
    
    8,157
    
    
    
    7,794Real estate investment partnership cost of sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    545Other non-interest expense
    
    
    37,695
    
    
    
    43,992
    
    
    
    39,212
    
    
    
    49,755Loss before income taxes
    
    
    (10,197
    )
    
    
    (75,095
    )
    
    
    (65,137
    )
    
    
    (62,015
    )Income taxes
    
    
    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 earnings (loss) per common share
    
    $
    (0.63
    )
    
    $
    (3.71
    )
    
    $
    (3.23
    )
    
    $
    (2.26
    )Diluted earnings (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)
    
    
    344,362
    
    
    
    453,510
    
    
    
    347,795
    
    
    
    280,377
 
 (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 other assets owned by the Bank. 41




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##### Table of Contents



Three Months Ended(Dollars in thousands  except per share amounts)
    
    12/31/2008
    
    9/30/2008
    
    6/30/2008
    
    3/31/2008Operations Data:Net interest income
    
    $
    32,707
    
    
    $
    29,954
    
    
    $
    33,421
    
    
    $
    35,066Provision for loan losses
    
    
    92,970
    
    
    
    46,964
    
    
    
    9,400
    
    
    
    10,393Net gain (loss) on sale of loans
    
    
    (228
    )
    
    
    808
    
    
    
    2,243
    
    
    
    2,984Real estate investment partnership revenue
    
    
    1,836
    
    
    
    
    
    
    
    
    
    
    
    457Other non-interest income
    
    
    7,905
    
    
    
    7,439
    
    
    
    9,566
    
    
    
    10,121Real estate investment partnership cost of sales
    
    
    1,191
    
    
    
    
    
    
    
    
    
    
    
    548Other non-interest expense
    
    
    117,066
    
    
    
    30,167
    
    
    
    26,791
    
    
    
    29,249Income (loss) before income taxes
    
    
    (169,007
    )
    
    
    (38,930
    )
    
    
    9,039
    
    
    
    8,438Income taxes (benefit)
    
    
    (1,899
    )
    
    
    (15,618
    )
    
    
    3,566
    
    
    
    2,838Net income (loss)
    
    
    (167,108
    )
    
    
    (23,312
    )
    
    
    5,473
    
    
    
    5,600Income (loss) attributable to non-controlling
interest in real estate partnerships
    
    
    150
    
    
    
    (13
    )
    
    
    (39
    )
    
    
    (43
    )Preferred stock dividends and discount accretionNet income (loss) available to common equity of
Anchor BanCorp
    
    
    (167,258
    )
    
    
    (23,299
    )
    
    
    5,512
    
    
    
    5,643Selected Financial Ratios(1):Yield on earning assets
    
    
    5.69
    %
    
    
    5.59
    %
    
    
    6.05
    %
    
    
    6.10
    %Cost of funds
    
    
    2.81
    
    
    
    3.00
    
    
    
    3.22
    
    
    
    3.31Interest rate spread
    
    
    2.88
    
    
    
    2.59
    
    
    
    2.83
    
    
    
    2.79Net interest margin
    
    
    2.88
    
    
    
    2.62
    
    
    
    2.87
    
    
    
    2.84Return on average assets
    
    
    (13.72
    )
    
    
    (1.89
    )
    
    
    0.44
    
    
    
    0.43Return on average equity
    
    
    (242.66
    )
    
    
    (27.69
    )
    
    
    6.37
    
    
    
    6.56Average equity to average assets
    
    
    5.66
    
    
    
    6.84
    
    
    
    6.93
    
    
    
    6.55Non-interest expense to average assets
    
    
    9.70
    
    
    
    2.45
    
    
    
    2.15
    
    
    
    2.27Per Share:Basic earnings (loss) per common share
    
    $
    (7.96
    )
    
    $
    (1.11
    )
    
    $
    0.26
    
    
    $
    0.27Diluted earnings (loss) per common share
    
    
    (7.96
    )
    
    
    (1.11
    )
    
    
    0.26
    
    
    
    0.27Dividends per common share
    
    
    0.01
    
    
    
    0.10
    
    
    
    0.18
    
    
    
    0.18Book value per common share
    
    
    6.80
    
    
    
    14.76
    
    
    
    16.00
    
    
    
    16.17Financial Condition:Total assets
    
    $
    4,798,847
    
    
    $
    4,928,074
    
    
    $
    4,949,335
    
    
    $
    5,149,557Loans receivable, netHeld for sale
    
    
    32,139
    
    
    
    4,099
    
    
    
    6,619
    
    
    
    9,669Held for investment
    
    
    3,948,065
    
    
    
    4,069,369
    
    
    
    4,129,075
    
    
    
    4,202,833Deposits and accrued interest
    
    
    3,413,449
    
    
    
    3,349,335
    
    
    
    3,406,975
    
    
    
    3,539,994Other borrowed funds
    
    
    1,152,112
    
    
    
    1,210,562
    
    
    
    1,147,329
    
    
    
    1,206,761Stockholders equity
    
    
    146,662
    
    
    
    317,501
    
    
    
    343,599
    
    
    
    345,116Allowance for loan losses
    
    
    122,571
    
    
    
    64,614
    
    
    
    40,265
    
    
    
    38,285Non-performing assets(2)
    
    
    410,695
    
    
    
    184,754
    
    
    
    147,036
    
    
    
    112,305
 
 (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 other assets owned by the Bank. 42




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##### Table of Contents



Critical Accounting Policies
  
    
    Declines in the fair value of held-to-maturity and available-for-sale securities below
their amortized cost that are deemed to be other than temporary due to credit loss are
reflected in earnings as realized losses. In estimating other-than-temporary impairment
losses on debt securities, management considers many factors which include: (1) the length
of time and the extent to which the fair value has been less than cost, (2) the financial
condition and near-term prospects of the issuer, and (3) the intent and ability of the
Corporation to retain its investment in the issuer for a period of time sufficient to allow
for any anticipated recovery in fair value. To determine if an other-than-temporary
impairment exists on a debt security, the Corporation first determines if (a) it intends to
sell the security or (b) it is more likely than not that it will be required to sell the
security before its anticipated recovery. If either of the conditions is met, the
Corporation will recognize an other-than-temporary impairment in earnings equal to the
difference between the fair value of the security and its adjusted cost. If neither of the
conditions is met, the Corporation determines (a) the amount of the impairment related to
credit loss and (b) the amount of the impairment due to all other factors. The difference
between the present values of the cash flows expected to be collected and the amortized
cost basis is the credit loss. The credit loss is the amount of the other-than-temporary
impairment that is recognized in earnings and is a reduction to the cost basis of the
security. The amount of total impairment related to all other factors is included in other
comprehensive income (loss).
 
    
    The allowance for loan losses is a valuation allowance for probable and inherent losses
incurred in the loan portfolio. The allowance is comprised of both a specific and general
component. Specific allowances are provided on impaired loans pursuant to accounting
standards. The general allowance is based on historical loss experience, adjusted for
qualitative and environmental factors pursuant to ASC 450-2 Loss Contingencies and other
related regulatory guidance. At least quarterly, we review the assumptions and methodology
related to the general allowance in an effort to update and refine the estimate.
 In determining the general allowance we have segregated the loan portfolio by collateral
type. By doing so we are better able to identify trends in borrower behavior and loss
severity. For each collateral type, we compute a historical loss factor. In determining the
appropriate period of activity to use in computing the historical loss factor we look at
trends in quarterly net charge-off ratios. It is our intention to utilize a period of
activity that we believe to be most reflective of current experience. Changes in the
historical period are made when there is a distinct change in the trend of net charge-off
experience.
 In addition to the historical loss factor, we consider the impact of the following
qualitative factors: changes in lending policies, procedures and practices, economic and
industry trends and conditions, experience, ability and depth of lending management, level
of and trends in past dues and delinquent loans, changes in the quality of the loan review
system, changes in the value of the underlying collateral for collateral dependent loans,
changes in credit concentrations, and other external factors such as legal and regulatory.
In determining the impact, if any, of an individual qualitative factor, we compare the
current underlying facts and circumstances surrounding a particular factor with those in the
historical periods, adjusting the historical loss factor in a directionally consistent
manner with changes in the qualitative factor. We will continue to analyze the qualitative
factors on a quarterly basis, adjusting the historical loss factor both up and down, to a
factor we believe is appropriate for the probable and inherent risk of loss in our
portfolio.
 Specific allowances are determined as a result of our loan review process. When a loan is
identified as impaired it is evaluated for loss using either the fair value of collateral
less selling costs or a discounted cash flow analysis as a determinant of fair value. If
fair value exceeds the Banks carrying value of the loan no loss is anticipated and no
specific reserve is established. However, if the Banks carrying value of the loan is
greater than fair value a specific reserve is established. In either situation, loans
identified as impaired are excluded from the calculation of the general reserve.
 43




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##### Table of Contents



We consider the allowance for loan losses at December 31, 2009 to be at an acceptable level.
Although we believe that we have established and maintained the allowance for loan losses at
an adequate level, changes may be necessary if future economic and other conditions differ
substantially from the current environment. Although we use the best information available,
the level of the allowance for loan losses remains an estimate that is subject to
significant judgment and short-term change.
 
    
    Mortgage servicing rights are established on loans that are originated and subsequently
sold with servicing retained. A portion of the loans book basis is allocated to mortgage
servicing rights at the time of sale. The fair value of mortgage servicing rights is the
present value of estimated future net cash flows from the servicing relationship using
current market participant assumptions for prepayments or defaults, servicing costs and
other factors. As the loans are repaid and net servicing revenue is earned, mortgage
servicing rights are amortized into expense. Net servicing revenues are expected to exceed
this amortization expense. However, if actual prepayment experience or defaults exceed what
was originally anticipated, net servicing revenues may be less than expected and mortgage
servicing rights may be impaired. Mortgage servicing rights are carried at the lower of
amortized cost or fair value.
 
    
    The Corporation provides for federal income taxes with a deferred tax liability or
deferred tax asset computed by applying the current statutory tax rates to net taxable or
deductible differences between the tax basis of an asset or liability and its reported
amount in the consolidated financial statements that will result in taxable or deductible
amounts in future periods. The Corporation regularly reviews the carrying amount of its
deferred tax assets to determine if the establishment of a valuation allowance is
necessary. If based on the available evidence, it is more likely than not that all or a
portion of the Corporations deferred tax assets will not be realized in future periods, a
deferred tax valuation allowance would be established. Consideration is given to various
positive and negative factors that could affect the realization of the deferred tax assets.
 In evaluating this available evidence, management considers, among other things, historical
financial performance, expectation of future earnings, the ability to carry back losses to
recoup taxes previously paid, length of statutory carry forward periods, experience with
operating loss and tax credit carry forwards not expiring unused, tax planning strategies
and timing of reversals of temporary differences. Significant judgment is required in
assessing future earning trends and the timing of reversals of temporary differences. The
Corporations evaluation is based on current tax laws as well as managements expectations
of future performance.
 As a result of its evaluation, the Corporation has recorded a full valuation allowance on
its net deferred tax asset.
 44




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##### Table of Contents



RESULTS OF OPERATIONS
 General.
 Net Interest Income.
   45




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##### Table of Contents



Provision for Loan Losses.
 Average Interest-Earning Assets, Average Interest-Bearing Liabilities and Interest Rate
Spread.
 46




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##### Table of Contents



Three Months Ended December 31,2009
    
    
    2008(Restated)Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost(1)
    
    
    Balance
    
    
    Interest
    
    
    Cost(1)(Dollars In Thousands)Interest-Earning AssetsMortgage loans
    
    $
    2,579,901
    
    
    $
    36,293
    
    
    
    5.63
    %
    
    $
    3,043,654
    
    
    $
    44,779
    
    
    
    5.88
    %Consumer loans
    
    
    749,605
    
    
    
    9,433
    
    
    
    5.03
    
    
    
    783,251
    
    
    
    11,733
    
    
    
    5.99Commercial business loans
    
    
    160,362
    
    
    
    2,819
    
    
    
    7.03
    
    
    
    243,317
    
    
    
    3,530
    
    
    
    5.80Total loans receivable (2) (3)
    
    
    3,489,868
    
    
    
    48,545
    
    
    
    5.56
    
    
    
    4,070,222
    
    
    
    60,042
    
    
    
    5.90Mortgage-related securities (4)
    
    
    455,290
    
    
    
    4,617
    
    
    
    4.06
    
    
    
    273,161
    
    
    
    3,743
    
    
    
    5.48Investment securities (4)
    
    
    22,504
    
    
    
    184
    
    
    
    3.27
    
    
    
    96,607
    
    
    
    818
    
    
    
    3.39Interest-bearing deposits
    
    
    333,038
    
    
    
    208
    
    
    
    0.25
    
    
    
    51,048
    
    
    
    70
    
    
    
    0.55Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    
    
    
    
    0.00
    
    
    
    54,829
    
    
    
    
    
    
    
    0.00Total interest-earning assets
    
    
    4,355,529
    
    
    
    53,554
    
    
    
    4.92
    
    
    
    4,545,867
    
    
    
    64,673
    
    
    
    5.69Non-interest-earning assets
    
    
    217,200
    
    
    
    
    
    
    
    
    
    
    
    329,137Total assets
    
    $
    4,572,729
    
    
    
    
    
    
    
    
    
    
    $
    4,875,004Interest-Bearing LiabilitiesDemand deposits
    
    $
    954,070
    
    
    
    1,264
    
    
    
    0.53
    
    
    $
    1,008,069
    
    
    
    1,965
    
    
    
    0.78Regular passbook savings
    
    
    250,920
    
    
    
    189
    
    
    
    0.30
    
    
    
    231,909
    
    
    
    191
    
    
    
    0.33Certificates of deposit
    
    
    2,505,292
    
    
    
    19,825
    
    
    
    3.17
    
    
    
    2,141,593
    
    
    
    19,446
    
    
    
    3.63Total deposits and accrued interest
    
    
    3,710,282
    
    
    
    21,278
    
    
    
    2.29
    
    
    
    3,381,571
    
    
    
    21,602
    
    
    
    2.56Other borrowed funds
    
    
    759,479
    
    
    
    9,943
    
    
    
    5.24
    
    
    
    1,162,451
    
    
    
    10,364
    
    
    
    3.57Total interest-bearing liabilities
    
    
    4,469,761
    
    
    
    31,221
    
    
    
    2.79
    
    
    
    4,544,022
    
    
    
    31,966
    
    
    
    2.81Non-interest-bearing liabilities
    
    
    39,264
    
    
    
    
    
    
    
    
    
    
    
    55,277Total liabilities
    
    
    4,509,025
    
    
    
    
    
    
    
    
    
    
    
    4,599,299Stockholders equity
    
    
    63,704
    
    
    
    
    
    
    
    
    
    
    
    275,705Total liabilities and stockholders equity
    
    $
    4,572,729
    
    
    
    
    
    
    
    
    
    
    $
    4,875,004Net
interest income/interest rate spread (5)
    
    
    
    
    
    $
    22,333
    
    
    
    2.13
    %
    
    
    
    
    
    $
    32,707
    
    
    
    2.88
    %Net interest-earning assets
    
    $
    (114,232
    )
    
    
    
    
    
    
    
    
    
    $
    1,845Net interest margin (6)
    
    
    
    
    
    
    
    
    
    
    2.05
    %
    
    
    
    
    
    
    
    
    
    
    2.88
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    0.97
    
    
    
    
    
    
    
    
    
    
    
    1.00
 
 (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. 47




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Nine Months Ended December 31,2009
    
    
    2008(Restated)Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost(1)
    
    
    Balance
    
    
    Interest
    
    
    Cost(1)(Dollars In Thousands)Interest-Earning AssetsMortgage loans
    
    $
    2,753,635
    
    
    $
    113,642
    
    
    
    5.50
    %
    
    $
    3,113,820
    
    
    $
    139,223
    
    
    
    5.96
    %Consumer loans
    
    
    767,899
    
    
    
    29,764
    
    
    
    5.17
    
    
    
    755,014
    
    
    
    34,848
    
    
    
    6.15Commercial business loans
    
    
    183,853
    
    
    
    8,480
    
    
    
    6.15
    
    
    
    256,696
    
    
    
    11,132
    
    
    
    5.78Total loans receivable(2) (3)
    
    
    3,705,387
    
    
    
    151,886
    
    
    
    5.47
    
    
    
    4,125,530
    
    
    
    185,203
    
    
    
    5.99Mortgage-related securities (4)
    
    
    445,838
    
    
    
    15,367
    
    
    
    4.60
    
    
    
    273,218
    
    
    
    11,099
    
    
    
    5.42Investment securities (4)
    
    
    42,578
    
    
    
    954
    
    
    
    2.99
    
    
    
    99,722
    
    
    
    2,398
    
    
    
    3.21Interest-bearing deposits
    
    
    459,167
    
    
    
    838
    
    
    
    0.24
    
    
    
    44,614
    
    
    
    469
    
    
    
    1.40Federal Home Loan Bank stock
    
    
    54,829
    
    
    
    
    
    
    
    0.00
    
    
    
    54,829
    
    
    
    
    
    
    
    0.00Total interest-earning assets
    
    
    4,707,799
    
    
    
    169,045
    
    
    
    4.79
    
    
    
    4,597,913
    
    
    
    199,169
    
    
    
    5.78Non-interest-earning assets
    
    
    251,304
    
    
    
    
    
    
    
    
    
    
    
    329,397Total assets
    
    $
    4,959,103
    
    
    
    
    
    
    
    
    
    
    $
    4,927,310Interest-Bearing LiabilitiesDemand deposits
    
    $
    948,146
    
    
    
    3,967
    
    
    
    0.56
    
    
    $
    1,056,013
    
    
    
    8,035
    
    
    
    1.01Regular passbook savings
    
    
    246,178
    
    
    
    535
    
    
    
    0.29
    
    
    
    232,930
    
    
    
    740
    
    
    
    0.42Certificates of deposit
    
    
    2,657,762
    
    
    
    63,949
    
    
    
    3.21
    
    
    
    2,117,346
    
    
    
    63,567
    
    
    
    4.00Total deposits and accrued interest
    
    
    3,852,086
    
    
    
    68,451
    
    
    
    2.37
    
    
    
    3,406,289
    
    
    
    72,342
    
    
    
    2.83Other borrowed funds
    
    
    937,506
    
    
    
    34,407
    
    
    
    4.89
    
    
    
    1,158,941
    
    
    
    30,745
    
    
    
    3.54Total interest-bearing liabilities
    
    
    4,789,592
    
    
    
    102,858
    
    
    
    2.86
    
    
    
    4,565,230
    
    
    
    103,087
    
    
    
    3.01Non-interest-bearing liabilities
    
    
    37,716
    
    
    
    
    
    
    
    
    
    
    
    44,938Total liabilities
    
    
    4,827,308
    
    
    
    
    
    
    
    
    
    
    
    4,610,168Stockholders equity
    
    
    131,795
    
    
    
    
    
    
    
    
    
    
    
    317,142Total liabilities and stockholders equity
    
    $
    4,959,103
    
    
    
    
    
    
    
    
    
    
    $
    4,927,310Net interest income/interest rate spread(5)
    
    
    
    
    
    $
    66,187
    
    
    
    1.93
    %
    
    
    
    
    
    $
    96,082
    
    
    
    2.77
    %Net interest-earning assets
    
    $
    (81,793
    )
    
    
    
    
    
    
    
    
    
    $
    32,683Net interest margin (6)
    
    
    
    
    
    
    
    
    
    
    1.87
    %
    
    
    
    
    
    
    
    
    
    
    2.79
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    0.98
    
    
    
    
    
    
    
    
    
    
    
    1.01
 
 (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. 48




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Non-Interest Income.
 Non-Interest Expense.
 49




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Income Taxes.
   
 FINANCIAL CONDITION
        50




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51




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ASSET QUALITY
  December 31, 2009
    
    
    March 31, 2009Non-
    
    
    
    
    
    
    Percent of
    
    
    Non-
    
    
    
    
    
    
    Percent ofPerforming
    
    
    %
    
    
    Total Loans
    
    
    Performing
    
    
    %
    
    
    Total Loans(Dollars in Thousands)Single-family residential
    
    $
    48,594
    
    
    
    16.0
    %
    
    
    1.36
    %
    
    $
    31,868
    
    
    
    14.0
    %
    
    
    0.78
    %Multi-family residential
    
    
    38,191
    
    
    
    12.6
    %
    
    
    1.07
    %
    
    
    50,090
    
    
    
    22.0
    %
    
    
    1.22
    %Commercial real estate
    
    
    78,260
    
    
    
    25.7
    %
    
    
    2.18
    %
    
    
    56,972
    
    
    
    25.0
    %
    
    
    1.39
    %Construction and land
    
    
    112,554
    
    
    
    37.0
    %
    
    
    3.14
    %
    
    
    70,536
    
    
    
    31.0
    %
    
    
    1.72
    %Consumer
    
    
    6,367
    
    
    
    2.1
    %
    
    
    0.18
    %
    
    
    3,525
    
    
    
    1.5
    %
    
    
    0.09
    %Commercial business
    
    
    19,976
    
    
    
    6.6
    %
    
    
    0.56
    %
    
    
    14,823
    
    
    
    6.5
    %
    
    
    0.36
    %Total Non-Performing Loans
    
    $
    303,942
    
    
    
    100.0
    %
    
    
    8.48
    %
    
    $
    227,814
    
    
    
    100.0
    %
    
    
    5.54
    %
  At December 31,
    
    
    At March 31,2009
    
    
    2009(Dollars in thousands)Total non-accrual loans
    
    $
    250,994
    
    
    $
    166,354Troubled debt restructurings  non-accrual (2)
    
    
    52,948
    
    
    
    61,460Other real estate owned (OREO)
    
    
    40,420
    
    
    
    52,563Total non-performing assets
    
    $
    344,362
    
    
    $
    280,377Total non-performing loans to total loans (1)
    
    
    8.48
    %
    
    
    5.54
    %Total non-performing assets to total assets
    
    
    7.73
    
    
    
    5.32Allowance for loan losses to total loans (1)
    
    
    4.59
    
    
    
    3.34Allowance for loan losses to total non-performing loans
    
    
    54.12
    
    
    
    60.21Allowance for loan and foreclosure losses to total
non-performing assets
    
    
    51.55
    
    
    
    52.08
 
 (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.  52




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1.
    
    Realigned corporate structure to ensure that risk is adequately and appropriately identified,
mitigated and where possible, eliminated:
 
    
    Appointed a Chief Credit Risk Officer responsible for overseeing all
aspects of corporate risk.
    
    Created a Special Assets Group to properly assess potential collateral
shortfall exposure and to develop workout plans.
 2.
    
    Created and implemented a new loan risk rating system using qualitative metrics to identify
loans with potential risk so they could be properly classified and monitored.3.
    
    Implemented a new enhanced impairment analysis to evaluate all classified loans.4.
    
    Introduced a new Allowance for Loan and Lease Policy that improves the timeliness of specific
reserves taken for the allowance for loan and lease calculation.5.
    
    Analyzed the population of recent appraisals received and developed a specific reserve amount
to capture the probable deterioration in value.6.
    
    Established an independent underwriting group that evaluates the total borrowing relationship
using a global cash flow methodology.7.
    
    Began proactive monitoring of matured and delinquent loans.8.
    
    Proactively reviewing the performing (non-impaired) portfolio for performance issues.9.
    
    Classified assets are reviewed on a monthly basis.
  53




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MostCarrying
    
    
    Date
    
    
    RecentValue
    
    
    Placed in
    
    
    AppraisalDescription
    
    Location
    
    
    (in millions)
    
    
    OREO
    
    
    DateConstruction company/equipment
    
    Southern Wisconsin
    
    $
    2.9
    
    
    
    1/29/2009
    
    
    
    N/ACommercial building/various properties
    
    Northeast Wisconsin
    
    
    1.2
    
    
    
    11/25/2009
    
    
    
    12/11/2009Partially constructed condominium and retail complex
    
    Southern Wisconsin
    
    
    5.6
    
    
    
    12/31/2008
    
    
    
    11/1/2008Condo units/single family residence
    
    Northeast Wisconsin
    
    
    1.5
    
    
    
    12/30/2009
    
    
    
    3/1/2009Commercial building/vacant land
    
    Northeast Wisconsin
    
    
    1.5
    
    
    
    12/29/2009
    
    
    
    9/1/2009Partially constructed condominium project
    
    Central Wisconsin
    
    
    13.0
    
    
    
    3/31/2009
    
    
    
    1/1/2006Property secured by CBRF
    
    Northeast Wisconsin
    
    
    4.2
    
    
    
    12/31/2008
    
    
    
    3/1/2009Several single family properties
    
    Minnesota
    
    
    4.6
    
    
    
    9/16/2008
    
    
    
    11/1/2009Commercial building
    
    Southern Wisconsin
    
    
    1.3
    
    
    
    4/27/2009
    
    
    
    7/11/2008Commercial/various properties
    
    Central Wisconsin
    
    
    2.9
    
    
    
    11/3/2009
    
    
    
    4/1/2009Commercial building
    
    Central Wisconsin
    
    
    1.0
    
    
    
    8/31/2009
    
    
    
    2/26/2009Other properties individually less than $1 million
    
    
    
    
    
    
    13.7Valuation allowance on OREO
    
    
    
    
    
    
    (13.0
    )$
    40.4
    54




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##### Table of Contents



At December 31,
    
    
    At March 31,2009
    
    
    2009
    
    
    2008
    
    
    2007(In Thousands)Impaired loans with valuation
reserve required
    
    $
    79,053
    
    
    $
    124,179
    
    
    $
    52,866
    
    
    $
    2,130Impaired loans without a
specific reserve
    
    
    354,367
    
    
    
    103,635
    
    
    
    51,192
    
    
    
    45,718Total impaired loans
    
    
    433,420
    
    
    
    227,814
    
    
    
    104,058
    
    
    
    47,848Less:Specific valuation allowance
    
    
    (19,067
    )
    
    
    (30,799
    )
    
    
    (17,639
    )
    
    
    (517
    )$
    414,353
    
    
    $
    197,015
    
    
    $
    86,419
    
    
    $
    47,331Average impaired loans
    
    $
    347,726
    
    
    $
    194,923
    
    
    $
    67,138
    
    
    $
    26,458Interest income recognized
on impaired loans
    
    $
    10,858
    
    
    $
    9,484
    
    
    $
    107
    
    
    $
    44Loans on non-accrual status
    
    $
    250,994
    
    
    $
    166,354
    
    
    $
    101,241
    
    
    $
    47,040Troubled debt
restructurings  accrual
    
    $
    129,478
    
    
    $
    
    
    
    $
    
    
    
    $
    Troubled
debt restructurings  non-accrual
    
    $
    52,948
    
    
    $
    61,460
    
    
    $
    400
    
    
    $
    400Loans past due ninety days
or more and
still accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  At December 31,
    
    
    At March 31,2009
    
    
    2009
    
    
    2008
    
    
    2007(In Thousands)30 to 59 days
    
    $
    44,891
    
    
    $
    57,746
    
    
    $
    66,617
    
    
    $
    12,77660 to 89 days
    
    
    26,977
    
    
    
    20,927
    
    
    
    12,928
    
    
    
    5,414Total
    
    $
    71,868
    
    
    $
    78,673
    
    
    $
    79,545
    
    
    $
    18,190
   55




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars In Thousands)Allowance at beginning of period
    
    $
    170,664
    
    
    $
    64,614
    
    
    $
    137,165
    
    
    $
    38,285Charge-offs:Single-family residential
    
    
    (1,966
    )
    
    
    (1,217
    )
    
    
    (5,447
    )
    
    
    (6,046
    )Multi-family residential
    
    
    (689
    )
    
    
    (2,888
    )
    
    
    (9,692
    )
    
    
    (4,215
    )Commercial real estate
    
    
    (5,541
    )
    
    
    (11,358
    )
    
    
    (33,187
    )
    
    
    (20,513
    )Construction and land
    
    
    (3,698
    )
    
    
    (11,512
    )
    
    
    (43,080
    )
    
    
    (12,989
    )Consumer
    
    
    (563
    )
    
    
    (802
    )
    
    
    (1,798
    )
    
    
    (1,282
    )Commercial business
    
    
    (4,674
    )
    
    
    (7,451
    )
    
    
    (23,588
    )
    
    
    (21,165
    )Total charge-offs
    
    
    (17,131
    )
    
    
    (35,228
    )
    
    
    (116,792
    )
    
    
    (66,210
    )Recoveries:Single-family residential
    
    
    18
    
    
    
    1
    
    
    
    138
    
    
    
    82Multi-family residential
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    Commercial real estate
    
    
    3
    
    
    
    181
    
    
    
    585
    
    
    
    Construction and land
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    690Consumer
    
    
    3
    
    
    
    16
    
    
    
    28
    
    
    
    26Commercial business
    
    
    481
    
    
    
    17
    
    
    
    1,440
    
    
    
    364Total recoveries
    
    
    505
    
    
    
    215
    
    
    
    2,365
    
    
    
    1,162Net (charge-offs) recoveries
    
    
    (16,626
    )
    
    
    (35,013
    )
    
    
    (114,427
    )
    
    
    (65,048
    )Provision for loan losses
    
    
    10,456
    
    
    
    92,970
    
    
    
    141,756
    
    
    
    149,334Allowance at end of period
    
    $
    164,494
    
    
    $
    122,571
    
    
    $
    164,494
    
    
    $
    122,571Net charge-offs to average loans
    
    
    (1.91
    )%
    
    
    (3.44
    )%
    
    
    (4.12
    )%
    
    
    (2.10
    )%
  
 LIQUIDITY AND CAPITAL RESOURCES
  56




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57




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58




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Actual
    
    Adequacy Purposes
    
    OTS RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars In Thousands)At December 31, 2009 (Restated):Tier 1 capital(to adjusted tangible assets)
    
    $
    183,833
    
    
    
    4.12
    %
    
    $
    133,864
    
    
    
    3.00
    %
    
    $
    223,107
    
    
    
    5.00
    %Risk-based capital(to risk-based assets)
    
    
    221,956
    
    
    
    7.59
    
    
    
    233,880
    
    
    
    8.00
    
    
    
    292,351
    
    
    
    10.00Tangible capital(to tangible assets)
    
    
    183,833
    
    
    
    4.12
    
    
    
    66,932
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/AAt March 31, 2009 (Restated):Tier 1 capital(to adjusted tangible assets)
    
    $
    321,774
    
    
    
    6.13
    %
    
    $
    157,498
    
    
    
    3.00
    %
    
    $
    262,497
    
    
    
    5.00
    %Risk-based capital(to risk-based assets)
    
    
    368,312
    
    
    
    10.14
    
    
    
    290,594
    
    
    
    8.00
    
    
    
    363,242
    
    
    
    10.00Tangible capital(to tangible assets)
    
    
    321,774
    
    
    
    6.13
    
    
    
    78,749
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
 59




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December 31,
    
    
    March 31,2009
    
    
    2009(Restated)
    
    
    (Restated)(In Thousands)Stockholders equity of the Bank
    
    $
    178,348
    
    
    $
    320,149Less: Goodwill and intangible assets
    
    
    (4,250
    )
    
    
    (4,725
    )Disallowed servicing assets
    
    
    (1,617
    )
    
    
    Accumulated other comprehensive income
    
    
    11,352
    
    
    
    6,350Tier 1 and tangible capital
    
    
    183,833
    
    
    
    321,774Plus: Allowable general valuation allowances
    
    
    38,123
    
    
    
    46,538Risk-based capital
    
    $
    221,956
    
    
    $
    368,312
 Credit Agreement
     
    
    The Bank shall maintain a Tier 1 Leverage Ratio of not less than (i) 4.00% at
all times during the period ending February 28, 2010 and (ii) 4.25% at all times
thereafter.
    
    The Bank shall maintain a Total Risk Based Capital ratio of not less than (i)
7.25% at all times during the period ending February 28, 2010 and (ii) 7.50% at all
times thereafter.
    
    The ratio of Non-Performing Loans to Gross Loans shall not exceed (i) 13.75% at
all times during the period ending January 31, 2010 and (ii) 14.50% at all times
thereafter.
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GUARANTEES
   Amount
    
    
    Amount
    
    
    Amount
    
    
    AmountSubsidiary
    
    Partnership
    
    
    Guaranteed
    
    
    Outstanding
    
    
    Guaranteed
    
    
    Outstandingof IDI
    
    Entity
    
    
    at 3/31/09
    
    
    at 3/31/09
    
    
    at 12/31/09
    
    
    at 12/31/09(Dollars in thousands)N/A
    
    Canterbury Inn Shakopee, LLC
    
    $
    
    
    
    $
    
    
    
    $
    4,750
    
    
    $
    4,379Davsha III
    
    Indian Palms 147, LLC
    
    
    1,000
    
    
    
    476
    
    
    
    
    
    
    
    Davsha V
    
    Villa Santa Rosa, LLC
    
    
    500
    
    
    
    346
    
    
    
    
    
    
    
    Davsha VII
    
    La Vista Grande 121, LLC
    
    
    15,000
    
    
    
    13,742
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    $
    16,500
    
    
    $
    14,564
    
    
    $
    4,750
    
    
    $
    4,379
 61




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ASSET/LIABILITY MANAGEMENT
     62




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REGULATORY DEVELOPMENTS
 Temporary Liquidity Guarantee Program
  Emergency Economic Stabilization Act of 2008
  
    
    Capital Purchase Program (CPP). Pursuant to this program, Treasury, on behalf of the US
government, will purchase 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 will have 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
this program also imposes certain restrictions upon an institutions dividends to common
shareholders and stock repurchase activities. We elected to participate in the CPP and
received $110 million pursuant to the program.
 
    
    Temporary Liquidity Guarantee Program. This program contained 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 June 30, 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 participation or opting out of this program was December 5, 2008. We elected
not to opt out of the program.
 
    
    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, except for IRAs and other certain retirement accounts (including
IRAs) which will remain at $250,000 per depositor.
 The American Recovery and Reinvestment Act of 2009
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
    
    the development of a public/private investment fund essentially structured as a
government sponsored enterprise with the mission to purchase troubled assets from banks
with an initial capitalization from government funds;
    
    the Capital Assistance Program under which the Treasury will purchase
additional preferred stock available only for banks that have undergone a new stress
test given by their regulator;
    
    an expansion of the Federal Reserves term asset-backed liquidity facility to
support the purchase of up to $1 trillion in AAA  rated asset backed securities
backed by consumer, student, and small business loans, and possible other types of
loans; and
    
    the establishment of a mortgage loan modification program with $50 billion in
federal funds further detailed in the HASP.
   OTS Order to Cease and Desist
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FORWARD-LOOKING STATEMENTS
  65




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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, 2009.
See Item 7A in the Corporations Annual Report on Form 10-K for the year ended March
31, 2009. 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 10K for the fiscal year ended March 31, 2009, the Corporation identified
material weaknesses 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:
 1.
    
    Our Internal Control over Financial Reporting related to the
allowance for loan losses and the completeness and accuracy of the provision
for loan losses contained multiple deficiencies that represent material
weaknesses. Specifically the Corporation failed to:
 
    
    Maintain policies and procedures to ensure that loan personnel performed
an analysis adequate to risk classify the loan portfolio.
    
    Effectively monitor the loan portfolio and identify problem loans in a
timely manner.
    
    Maintain policies and procedures to ensure that ASC 310-10-35
Receivables documentation is prepared timely, accurately and subject to
supervisory review.
    
    Receive current financial information on problem loans, in a timely
manner, to ensure that these loans were evaluated for impairment under ASC
310-10-35.
    
    Establish policies and procedures to ensure that an impairment
calculation is prepared for all loans identified as impaired and that the
impairment calculation is updated on a quarterly basis.
    
    Effectively monitor problem loans to ensure that recent appraisals are
used to support collateral valuation utilized in the impairment analysis.
    
    Maintain policies and procedures to ensure that the supporting
documentation for the allowance for loan loss calculation is reviewed and
tested by an individual independent of the allowance for loan loss process.
    
    Re-evaluate the qualitative factors used in the allowance calculation on
a quarterly basis to assess the continued decline in the local and national
economy; exacerbation of certain negative trends in real estate values;
increasing regional unemployment levels; slowed
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demand for both new and existing housing; and the resulting stress on the
Banks real estate and development portfolios.
 
    
    Properly review subsequent events and therefore had to restate its first
quarter financial statements.
    
    Apply consistent discounts in its impairment analysis.
 2.
    
    The Corporation did not maintain effective controls over
financial reporting over impairment charges, related to Other Real Estate Owned
(OREO). The existing policies and procedures did not provide for sufficient
supervisory controls around the valuation and recording of impairment charges
for other real estate owned to ensure impairment charges were properly
recognized and recorded.3.
    
    The Corporation did not maintain effective entity-level
controls to ensure that the financial statements were prepared in accordance
with generally accepted accounting principles. This material weakness was
identified by our auditors when they reviewed the financial statements and
identified disclosures that either required significant modification or were
missing altogether. The weakness relates primarily to disclosures required as a
result of changing economic conditions, adoption of new accounting standards,
and disclosure of unusual significant transactions. This material weakness was
evidenced by the ineffective preparation of the financial statements and
resulted from the lack of the necessary supervisory review to ensure accurate
presentation and disclosure in the financial statements.
 The Corporations principal executive officer and principal financial officer
concluded that the disclosure controls and procedures are not operating in an
effective manner. 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. The
Corporations internal control processes and procedures were inadequate to ensure
that appraisals were reviewed and incorporated into the calculation of the specific
reserves on impaired loans by the time the Form 10-Q was issued. Following its
identification of the weakness, the Corporation determined that an additional
adjustment to the allowance for loan losses was necessary.
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Changes in Internal Control Over Financial Reporting
 During the nine months ended December 31, 2009, we have implemented a number changes
in our internal control structure to address the material weaknesses described
above. Following is a description of those changes.
 1.
    
    Our Internal Control over Financial Reporting related to the
allowance for loan losses and the completeness and accuracy of the provision
for loan losses contained multiple deficiencies that represented material
weaknesses. In addition to the hiring of a Chief Credit Risk Officer, the
following changes were made to address these material weaknesses:To ensure early detection of and timely communication to the Board of Directors
regarding deteriorating assets, the Corporation:
 
    
    Created and implemented a new loan risk rating system based on
qualitative metrics to proactively identify loans with potential risk and
move them to a substandard list.
    
    Developed a dedicated team to underwrite all new loans, modifications
and renewals using the new loan risk rating system.
    
    Implemented procedural changes, including a material change form to
ensure all downgrades are communicated and escalated to management on a
timely basis.
    
    Began conducting monthly watch list, delinquencies and matured/maturing
loan meetings as well as quarterly Portfolio Review meetings.
 The Corporation did not have a dedicated team to address loans identified as
problem loans. The Corporation created a Special Assets Group to oversee problem
loans. The Special Assets Group is responsible for collecting the information to
perform analysis in accordance with ASC 310-10-35, assessing potential shortfall
exposure, developing workout plans, and making recommendations for the
impairment calculation. In addition:
 
    
    Problem loans over $300,000 in total exposure are assigned to a special
asset officer that is determined by collateral type.
    
    Regular meetings are being held to assess resolution plans for problem
loans.
    
    Proactive and aggressive steps are being taken to resolve the problem
loan, including the obtainment of additional collateral, a loan
restructuring or a pay down.
 To improve asset tracking and ensure application of a consistent accounting
approach for all classified assets the Corporation implemented a new impairment
analysis format and reevaluated all classified relationships over $500,000 in
order to:
 
    
    Establish standard discount rates for all collateral types.
    
    Identify all related entities associated with existing impaired loans
thereby ensuring a complete evaluation.
    
    Update the impairment evaluation procedure where collateral is the
primary repayment source, so that collateral is now evaluated on a
loan-by-loan basis.
    
    Define the appropriate calculation method for the impairment, collateral
or cash flow.
    
    Establish a quarterly, independent review by internal audit to validate
the impairment analysis
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The Corporation did not have a formal process for evaluating loan
modifications for the accurate identification of Troubled Debt Restructures. A
formal Trouble Debt Restructures (TDR) Policy has been developed and
implemented as follows:
 
    
    The TDR Policy is incorporated within the ALLL Policy for ease of use
and assurance of compliance.
    
    The TDR Policy clearly identifies the criteria for designating a loan
modification as a TDR and outlines the appropriate measures for those
classified as such.
    
    TDR Procedures have been developed to support the TDR Policy and ensure
its accurate implementation.
 To improve the process of computing the allowance for loan and lease loss
(ALLL) in accordance with ASC 450-2 the Corporation implemented an improved
ALLL Policy. The ALLL Policy is designed to streamline and improve the
timeliness of specific reserves taken within the ALLL calculation and ensure the
historical and qualitative factors used in determining the general reserve are
appropriate based on the underlying facts and circumstance within the loan
portfolio. Specific changes in the process include the following:
 
    
    Identified specific risk concentrations within the loan portfolio to
better track and understand borrower behavior.
    
    Developed and analyzed historical charge-off information by risk
concentration to identify an appropriate historical look back period to
serve as the basis for the historical loss component of the ALLL
calculation.
    
    Developed qualitative factors using guidance from the December 2006
Interagency Statement on the Allowance for Loan Loss and current
informational sources.
    
    Developed proper segregation of duties between those individuals
responsible for preparing the general reserve portion of the ALLL and the
specific reserve portion of the ALLL and those reviewing the overall
adequacy of the ALLL.
    
    Developed a process to consistently document the ALLL calculation and
the underlying support.
 2.
    
    Our existing policies and procedures relating to OREO did not
provide for sufficient supervisory controls around the valuation and recording
of impairment charges for other real estate owned to ensure impairment charges
were properly recognized and recorded. The following changes were made to
correct these material weaknesses:
 
    
    An asset account has been set up for legal and miscellaneous expenses
related to loans that have not completed the foreclosure process and been
transferred to OREO but for which the Corporation believes they will be
able to recover. This account is now reconciled on a monthly basis and
reviewed for collectability in accordance with ASC 450-2.
    
    The OREO Policy was improved and implemented. Improvements include
ordering appraisals on all OREO at the earlier of in-substance foreclosure
or transfer to OREO and subsequently as deemed necessary by management,
development of a standard form to determine values for all OREO,
development of a checklist to determine the appropriate accounting entries
for OREO, including entries related to OREO sales financed by the Bank,
reconciliation of OREO accounts monthly and guidelines for accepting or
declining offers to purchase.
 3.
    
    Our controls over the preparation of consolidated financial
statements in accordance with generally accepted accounting principles (GAAP)
were not effective. We have made changes to the financial statement close
process as follows to enable us to prepare timely, accurate financial
statements in accordance with GAAP:
 69




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##### Table of Contents




    
    Completion of a GAAP Disclosure Checklist provided by a nationally
recognized accounting support vendor on a quarterly basis. This has
enabled us to ensure that all required disclosures have been identified
and included as deemed necessary.
    
    Developed a responsibility matrix and production calendar. The
responsibility matrix identifies the preparer, reviewer and backup
reviewer as well as a due date, which is determined by the production
calendar.
    
    Engaged a regional public accounting firm to assist in the
preparation of technical accounting memos and oversight of the
financial statement production process.
 Other than the actions mentioned above, 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.Management believes that the changes to the Corporations internal control over
financial reporting identified above will remediate the material weaknesses in
internal control described above. However, since testing of the operating
effectiveness of these changes is still in process, management has concluded that as
of December 31, 2009, the disclosure controls and procedures are not operating in an
effective manner.
 70




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##### Table of Contents



Part II  Other Information
 
 Item 1 Legal Proceedings.
  
 Item 1A Risk Factors.
  Risks Related to Our Business
 We experienced a net loss in the third quarter of fiscal 2010 directly attributable
to a substantial deterioration in our land and construction loan portfolio and the
resulting increase in our provision for loan losses.
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Our business is subject to liquidity risk, and changes in our source of funds may
adversely affect our performance and financial condition by increasing our cost of
funds.
   Additional increases in our level of non-performing assets will have an adverse
effect on our financial condition and results of operations.
  Future sales or other dilution of the Corporations equity may adversely affect the
market price of the Corporations common stock.
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Holders of our common stock have no preemptive rights and are subject to potential
dilution.
  On June 26, 2009, the Corporation and the Bank each consented to the issuance of an
Order to Cease and Desist by the Office of Thrift Supervision. If we do not raise
additional capital, we may not be in compliance with the capital requirements of the
Banks Cease and Desist Order, which could have a material adverse effect upon us.
   Anchor Bancorp and the Bank are no longer considered adequately
capitalized for regulatory which will cause us to incur increased premiums for
deposit insurance, limits the Banks ability to gather brokered deposits, and will
trigger acceleration of certain of our brokered deposits.
  73




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Our allowance for losses on loans and leases may not be adequate to cover probable
losses.
  Future Federal Deposit Insurance Corporation assessments will hurt our earnings.
  74




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We are not paying dividends on our common stock and are deferring distributions on
our preferred stock, and are otherwise restricted from paying cash dividends on our
common stock. The failure to resume paying dividends on our preferred stock may
adversely affect us.
   Risks Related to Our Credit Agreement
 We are party to a credit agreement that requires us to observe certain covenants
that limit our flexibility in operating our business.
  
    
    incur additional indebtedness or issue certain preferred shares;
    
    pay dividends on, repurchase or make distributions in respect of our capital
stock or make other restricted payments;
    
    make certain investments;
    
    sell certain assets; and
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of
the Corporations assets.
  75




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We must pay in full the outstanding balance under the Credit Agreement by the
earlier of May 31, 2010 or the receipt of net proceeds of a financing transaction
from the sale of equity securities.
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Risks Related to Recent Market, Legislative and Regulatory Events
 The TARP CPP and the ARRA impose certain executive compensation and corporate
governance requirements that may adversely affect us and our business, including our
ability to recruit and retain qualified employees.
  
    
    ensuring that incentive compensation for senior executives does not
encourage unnecessary and excessive risks that threaten the value of the
financial institution;
    
    required clawback of any bonus or incentive compensation paid to a
senior executive based on statements of earnings, gains or other criteria
that are later proven to be materially inaccurate;
    
    prohibition on making golden parachute payments to senior executives;
and
    
    agreement not to deduct for tax purposes executive compensation in
excess of $500,000 for each senior executive.
   
    
    a prohibition on making any golden parachute payment to a senior
executive officer or any of our next five most highly compensated
employees;
    
    a prohibition on any compensation plan that would encourage manipulation
of the reported earnings to enhance the compensation of any of its
employees; and
    
    a prohibition of the five highest paid executives from receiving or
accruing any bonus, retention award, or incentive compensation, or bonus
except for long-term restricted stock with a value not greater than
one-third of the total amount of annual compensation of the employee
receiving the stock.
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TARP lending goals may not be attainable.
  78




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Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3 Defaults upon Senior Securities.
  
 Item 4 Submission of Matters to a Vote of Security Holders.
  
 Item 5 Other Information.
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Item 6 Exhibits.
  Exhibit 31.1
    
    Certification of Chief Executive Officer Pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934 and Section 302 of the
Sarbanes-Oxley Act of 2002 is included herein as an exhibit to this Report.Exhibit 31.2
    
    Certification of Chief Financial Officer Pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934 and Section 302 of the
Sarbanes-Oxley Act of 2002 is included as an exhibit to this Report.Exhibit 32.1
    
    Certification of the Chief Executive Officer pursuant to Section 906 of
the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) is included herein as an
exhibit to this Report.Exhibit 32.2
    
    Certification of the Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) is included herein as an
exhibit to this Report.
 80




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SIGNATURES
  ANCHOR BANCORP WISCONSIN INC.Date: June 14, 2010
    By:
    /s/ Chris BauerChris Bauer, President and Chief Executive OfficerDate: June 14, 2010
    By:
    /s/ Dale C. RinggenbergDale C. Ringgenberg, Treasurer andChief Financial Officer 81