• Diluted earnings per share decreased to $(2.97) for the quarter ended June 30, 2009 compared to $0.26 per share for the quarter ended June 30, 2008, primarily due to a $61.0 million increase in the provision for loan losses;

• The interest rate spread decreased to 2.01% for the quarter ended June 30, 2009 compared to 2.83% for the quarter ended June 30, 2008;

• Loans receivable decreased $301.4 million, or 7.43%, since March 31, 2009;

• Deposits and accrued interest increased $64.1 million, or 1.63%, since March 31, 2009;

• Book value per common share was $1.92 at June 30, 2009 compared to $4.81 at March 31, 2009 and $16.00 at June 30, 2008;

• Total non-performing assets (loans past due more than ninety days, non-performing real estate held for development and sale, foreclosed properties and repossessed assets) decreased $8.3 million, or 4.19%, to $190.4 million at June 30, 2009 from $198.7 million at March 31, 2009, and total non-performing loans decreased $5.9 million, or 4.0% to $140.2 million at June 30, 2009 from $146.2 million at March 31, 2009; and

• Net loss from the real estate investment segment was $566,000 and $632,000 for the three months ended June 30, 2009 and 2008, respectively. These losses were mainly due to the impairment of property at one of the real estate investment subsidiaries. The partnerships currently have approximately 43 single family housing units and approximately 100 individual lots for sale. Management anticipates continued lower sales activity for the remainder of the fiscal year.

Selected quarterly data are set forth in the following tables.

                                                                                      Three Months Ended
                                                           6/30/2009            3/31/2009           12/31/2008            9/30/2008
(Dollars in thousands - except per share amounts)         (Restated)
Operations Data:
Net interest income                                      $    24,915          $    28,708          $    32,707          $    29,954
Provision for loan losses                                     70,400               56,385               92,970               46,964
Net gain (loss) on sale of loans                              11,403                7,858                 (228 )                808
Real estate investment partnership revenue                         -                  310                1,836                    -
Other non-interest income                                      8,157                7,794                7,905                7,439
Real estate investment partnership cost of sales                   -                  545                1,191                    -
Other non-interest expense                                    37,064               47,399              117,066               30,167
Minority interest in income (loss) of real estate
partnership operations                                           (85 )               (246 )                150                  (13 )
Loss before income taxes                                     (62,904 )            (59,413 )           (169,157 )            (38,917 )
Income taxes                                                       -              (16,147 )             (1,899 )            (15,618 )
Net loss                                                     (62,904 )            (43,266 )           (167,258 )            (23,299 )

Selected Financial Ratios (1):
Yield on earning assets                                         4.80 %               5.22 %               5.69 %               5.59 %
Cost of funds                                                   2.79                 2.72                 2.81                 3.00
Interest rate spread                                            2.01                 2.50                 2.88                 2.59
Net interest margin                                             1.99                 2.45                 2.88                 2.62
Return on average assets                                       (4.76 )              (3.44 )             (13.72 )              (1.89 )
Return on average equity                                     (126.04 )             (79.64 )            (242.66 )             (27.69 )
Average equity to average assets                                3.77                 4.32                 5.66                 6.84
Non-interest expense to average assets                          2.80                 3.81                 9.70                 2.45

Per Share:

Basic earnings per share                                 $     (2.97 )        $     (2.05 )        $     (7.96 )        $     (1.11 )
Diluted earnings per share                                     (2.97 )              (2.05 )              (7.96 )              (1.11 )
Dividends per common share                                         -                    -                 0.01                 0.10
Book value per common share                                     1.92                 4.81                 6.80                14.76

Financial Condition:
Total assets                                             $ 5,238,320          $ 5,273,055          $ 4,798,847          $ 4,928,074
Loans receivable, net
Held for sale                                                115,340              161,964               32,139                4,099
Held for investment                                        3,641,708            3,896,439            3,948,065            4,069,369
Deposits and accrued interest                              3,987,906            3,923,827            3,413,449            3,349,335
Other borrowed funds                                       1,041,049            1,078,392            1,152,112            1,210,562
Stockholders' equity                                         151,422              213,721              146,662              317,501
Allowance for loan losses                                    139,455              137,165              122,571               64,614
Non-performing assets(2)                                     190,381              198,714              166,382              169,062

(1) Annualized when appropriate.

(2) Non-performing assets consist of loans past due more than ninety days, non-performing real estate held for development and sale, foreclosed properties and repossessed assets.

                                                                                      Three Months Ended
(Dollars in thousands - except per share amounts)          6/30/2008            3/31/2008           12/31/2007            9/30/2007

Operations Data:
Net interest income                                      $    33,421          $    35,066          $    31,338          $    31,584
Provision for loan losses                                      9,400               10,393                7,792                2,095
Net gain on sale of loans                                      2,243                2,984                1,468                  814
Real estate investment partnership revenue                         -                  457                1,012                2,428
Other non-interest income                                      9,566               10,121                9,430                7,696
Real estate investment partnership cost of sales                   -                  548                  932                2,669
Other non-interest expense                                    26,791               29,249               24,180               22,659
Minority interest in loss of real estate
partnership operations                                           (39 )                (43 )                (81 )               (203 )
Income before income taxes                                     9,078                8,481               10,425               15,302
Income taxes                                                   3,566                2,838                4,096                6,028
Net income                                                     5,512                5,643                6,329                9,274

Selected Financial Ratios (1):
Yield on earning assets                                         6.05 %               6.10 %               6.68 %               6.90 %
Cost of funds                                                   3.22                 3.31                 4.01                 4.13
Interest rate spread                                            2.83                 2.79                 2.67                 2.77
Net interest margin                                             2.87                 2.84                 2.83                 2.92
Return on average assets                                        0.44                 0.43                 0.54                 0.82
Return on average equity                                        6.37                 6.56                 7.44                11.07
Average equity to average assets                                6.93                 6.55                 7.31                 7.37
Non-interest expense to average assets                          2.15                 2.27                 2.16                 2.23

Per Share:
Basic earnings per share                                 $      0.26          $      0.27          $      0.30          $      0.44
Diluted earnings per share                                      0.26                 0.27                 0.30                 0.44
Dividends per common share                                      0.18                 0.18                 0.18                 0.18
Book value per common share                                    16.00                16.17                15.98                15.88

Financial Condition:
Total assets                                             $ 4,949,335          $ 5,149,557          $ 4,725,773          $ 4,611,526
Loans receivable, net
Held for sale                                                  6,619                9,669                6,170                5,403
Held for investment                                        4,129,075            4,202,833            3,941,891            3,944,980
Deposits and accrued interest                              3,406,975            3,539,994            3,145,551            3,178,588
Other borrowed funds                                       1,147,329            1,206,761            1,150,914            1,039,540
Stockholders' equity                                         343,599              345,116              341,084              338,907
Allowance for loan losses                                     40,265               38,285               28,761               22,002
Non-performing assets(2)                                     144,137              109,488               87,002               63,078

(1) Annualized when appropriate.

(2) Non-performing assets consist of loans past due more than ninety days, non-performing real estate held for development and sale, foreclosed properties and repossessed assets.

Significant Accounting Policies
There are a number of accounting policies that require the use of judgment. Some of the more significant policies are as follows:
• Declines in the fair value of held-to-maturity and available-for-sale securities below their 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). If a security is impaired, and the impairment is deemed other-than-temporary and material, a write down will occur in that quarter. Management has applied EITF 99-20, "Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets," based on the security attributes at the purchase date and then does not further evaluate. All securities were of high credit quality (i.e. rated AA or above) at the purchase date and therefore, do not fall within the scope of EITF 99-20.

• Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, requires that available-for-sale securities be carried at fair value. Management determines fair value based on quoted market prices of identical assets in active markets or by other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques. Adjustments to the available-for-sale securities fair value impact the consolidated financial statements by increasing or decreasing assets and stockholders' equity, and possibly net income as discussed in the preceding paragraph.

• The allowance for loan losses is a valuation allowance for probable losses incurred in the loan portfolio. Our allowance for loan loss methodology incorporates a variety of risk considerations in establishing an allowance for loan losses that we believe is adequate to absorb probable losses in the existing portfolio. Such analysis addresses our historical loss experience, delinquency and charge-off trends, collateral values, changes in non-performing loans, economic conditions, peer group experience and other considerations. This information is then analyzed to determine "estimated loss factors" which, in turn, is assigned to each loan category. These factors also incorporate known information about individual loans, including the borrowers' sensitivity to interest rate movements. Changes in the factors themselves are driven by perceived risk in pools of homogenous loans classified by collateral type, purpose and term. Management monitors local trends to anticipate probable delinquency on a quarterly basis.

Our primary lending emphasis is commercial real estate loans, construction loans and land acquisition and development loans for both residential and commercial projects. We also have a concentration of loans secured by real property located in Wisconsin. Based on the composition of our loan portfolio and the growth in our loan portfolio, we believe the primary risks inherent in our portfolio are increases in interest rates, a decline in the economy, generally, and a decline in real estate market values. Any one or a combination of these events may adversely affect our loan portfolio resulting in increased delinquencies, loan losses and future levels of provisions. We consider it important to maintain the ratio of our allowance for loan losses to total loans at an acceptable level given current economic conditions, interest rates and the composition of our portfolio.

The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. Provisions for loan losses are made on both a specific and general basis. Specific allowances are provided on impaired credits pursuant to SFAS No. 114 "Accounting by Creditors for Impairment of a Loan." The general component of the allowance for loan losses is based on historical loss experience and adjusted for qualitative and environmental factors pursuant to SFAS No. 5 "Accounting for Contingencies" and other related regulatory guidance. At least quarterly, we review the assumptions and formulas related to our general valuation allowances in an effort to update and to refine our allowance for loan losses in light of the various factors described above. In the event that our residential construction and land portfolio continues to experience deterioration in estimated collateral values, we may have to further adjust and discount the appraised values for the collateral underlying the loans in that portfolio, which could result in significant increases to our provision for loan losses. Subsequent to filing the original Form 10-Q for the period ended June 30, 2009, management began using a more consistent methodology in discounting appraisals within the current policy. A higher discount factor was applied if an older appraisal was used and a lower discount factor was applied if a more current appraisal was used. In both cases, marketing and selling costs were factored into the calculation.

We consider the ratio of the allowance for loan losses to total loans at June 30, 2009 to be at an acceptable level. Although we believe that we have established and maintained the allowance for loan losses at adequate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating environment. Although management uses 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.

• Valuation of mortgage servicing rights. Mortgage servicing rights are established on loans that are originated and subsequently sold. A portion of the loan's book basis is allocated to mortgage servicing rights when a loan is sold. The fair value of mortgage servicing rights is the present value of estimated future net cash flows from the servicing relationship using current market participant assumptions for prepayments, servicing costs and other factors. As the loans are repaid and net servicing revenue is earned, mortgage servicing rights are amortized into expense. Net servicing revenues are expected to exceed this amortization expense. However, if actual prepayment experience exceeds what was originally anticipated, net servicing revenues may be less than expected and mortgage servicing rights may be impaired. Mortgage servicing rights are carried at the lower of cost or fair value.

• The Corporation accounts for federal income taxes in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes." Pursuant to the provisions of SFAS No. 109, a deferred tax liability or deferred tax asset is 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. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years' earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management's estimate of future taxable income. A valuation allowance is provided for deferred tax assets to the extent that the value of net deductible temporary differences and carryforward attributes exceeds management's estimates of taxes payable on future taxable income. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future. A full valuation allowance has been recorded on the deferred tax asset because the Corporation has exhausted its carryback potential and is in a cumulative loss position.

RESULTS OF OPERATIONS
General. Net income for the three months ended June 30, 2009 decreased $68.4 million or 1,241.2% to a net loss of $62.9 million from net income of $5.5 million as compared to the same respective period in the prior year. The decrease in net income for the three-month period compared to the same period last year was largely due to an increase in non-interest expense of $10.3 million, an increase in provision for loan losses of $61.0 million and a decrease in net interest income of $8.5 million, which were partially offset by an increase in non-interest income of $7.8 million and a decrease in income tax expense of $3.6 million. A full valuation allowance has been recorded on the deferred tax asset because the Corporation has exhausted its carryback potential and is in a cumulative loss position.
Net Interest Income. Net interest income decreased $8.5 million or 25.5% for the three months ended June 30, 2009 as compared to the same respective period in the prior year. Interest income decreased $10.4 million or 14.8% for the three months ended June 30, 2009 as compared to the same period in the prior year. Interest expense decreased $1.9 million or 5.1% for the three months ended June 30, 2009 as compared to the same period in the prior year. The net interest margin decreased to 1.99% for the three-month period ended June 30, 2009 from 2.87% for the three-month period ended June 30, 2008. The change in the net interest margin reflects the decrease in yield on interest-earning assets from 6.05% to 4.80% during the three months ended June 30, 2009 and 2008, respectively. The decrease in the yield on interest-earning assets is primarily the result of the reversal of interest income on nonaccrual loans as well as the decline in interest rates. The interest rate spread decreased to 2.01% from 2.83% for the three-month period ended June 30, 2009 as compared to the same respective period in the prior year.
Interest income on loans decreased $11.9 million or 18.1%, for the three months ended June 30, 2009, as compared to the same respective period in the prior year. This decrease was primarily attributable to a decrease of 90 basis points in the average yield on loans to 5.39% from 6.29% for the three-month period. The decrease in the yield on loans was due to the level of loans on nonaccrual status as well as a modest decline in rates on loans. In addition, the average balance of loans decreased $193.6 million in the three months ended June 30, 2009, as compared to the same period in the prior year.
Interest income on mortgage-related securities increased $1.9 million or 52.0% for the three-month period ended June 30, 2009, as compared to the same respective period in the prior year, primarily due to an increase of $144.5 million in the three-month average balance of mortgage-related securities. The increase in the average balance of mortgage-related securities is due to the purchase of securities (all of which were rated AAA) at a significant discount. This increase was offset by a decrease of 2 basis points in the average yield on mortgage-related securities to 5.33% from 5.35% for the three-month period. Interest income on investment securities (including Federal Home Loan Bank stock) decreased $329,000 or 41.1%, for the three-month period ended June 30, 2009 as compared to the same respective periods in the prior year. The decrease for the three-month period was due to a decrease in the average balances. Interest income on interest-bearing deposits decreased $59,000, for the three months ended June 30, 2009 as compared to the same respective period in 2008, primarily due to decreases in the average yields for the three-month period offset by an increase in the average balance. Interest expense on deposits decreased $2.7 million or 10.1% for the three months ended June 30, 2009, as compared to the same respective period in 2008. This decrease was primarily attributable to a decrease of 67 basis points in the weighted average cost of deposits to 2.43% from 3.10% for the three months ended June 30, 2009, as compared to the same respective period in the prior year, partially offset by an increase in the average balance of deposits of $512.7 million for the respective three-month period. The decrease in the cost of deposits was due to the fact that certificates are repricing at lower rates and interest rates on demand deposits have declined. Interest expense on borrowed funds increased $813,000 or 7.9% during the three months ended June 30, 2009, as compared to the same respective period in the prior year. For the three-month period ended June 30, 2009, the average balance of other borrowed funds decreased $82.1 million, as compared to the same respective period in 2008. The weighted average cost of other borrowed funds increased 59 basis points to 4.17% from 3.58% for the three-month period ended June 30, 2009, respectively, as compared to the same respective period last year.
Provision for Loan Losses. Provision for loan losses increased $61.0 million or 648.9% for the three-month period ended June 30, 2009, as compared to the same respective period last year. Management evaluates a variety of qualitative and quantitative factors when determining the adequacy of the allowance for losses. Management continues to evaluate and monitor the individual borrowers and underlying collateral as it relates to the current economic conditions. Due to recent increased charge-offs, declines in real estate values, the amounts of delinquent

loans, non-accrual loans (as discussed under "Asset Quality" below), impaired loans and an increase in loans moved to REO management determined that increased provisions for loan losses were appropriate to reflect the risks inherent in the various lending portfolios during the current period. The provisions were based on management's ongoing evaluation of asset quality and pursuant to a policy to maintain an allowance for losses at a level which management believes is adequate to absorb probable losses on loans as of the balance sheet date. Average Interest-Earning Assets, Average Interest-Bearing Liabilities and Interest Rate Spread. The table on the following page shows the Corporation's . . .