United Western Bancorp, Inc. Reports Fourth Quarter and 2009 Annual Results

United Western Bancorp, Inc. (NASDAQ: UWBK) (the "Company”), a Denver-based holding company whose principal subsidiary, United Western Bank® (the "Bank”), is a community bank focused on expansion across Colorado’s Front Range market and selected mountain communities, announced its 2009 fourth quarter and annual results.

For the fourth quarter of 2009, the Company incurred a loss from continuing operations of $(40.6) million or $(1.40) per share. The loss was attributable to four principal factors: (i) a net other-than-temporary impairment (OTTI) charge on non-agency mortgage backed securities of $33.2 million, or $27.0 million net of tax; (ii) $14.5 million of provision for credit losses, or $11.8 million net of tax; (iii) the establishment of a $10.2 million deferred tax valuation allowance against the Company’s gross deferred tax assets of $45.9 million; and (iv) during the fourth quarter, the Company held on average approximately $698 million of excess short term liquidity on its balance sheet, which resulted in an approximate 85 basis point reduction in net interest margin for the period. These results compare with a loss from continuing operations for the third quarter of 2009 of $(8.7) million, or $(.95) per share, and income from continuing operations for the fourth quarter of 2008 of $2.4 million, or $.33 per diluted share. See Appendix I to this earnings release for a reconciliation of our adjusted core earnings and weighted average shares outstanding.

The loss from continuing operations for the year ended December 31, 2009 was $(79.6) million, or $(6.06) per share, compared to income from continuing operations of $10.1 million, or $1.39 per diluted share, for 2008. The loss from continuing operations for 2009 was principally the result of a $47.0 million loss on the sale of mortgage-backed securities collateralized by option adjustable rate mortgages, other-than-temporary impairment losses on securities of $36.6 million, and $35.0 million provision for credit losses, partially offset by earnings from the Company’s regular operations and lending activities.

Scot T. Wetzel, President and Chief Executive Officer, said: "We experienced a very difficult fourth quarter in 2009, while continuing to execute our community banking and overall business plan. We are not satisfied with our results for the quarter or for the year, and we are working diligently to reposition the Company for profitability in 2010. The current economic environment negatively affected our loan portfolio and our non-agency mortgage-backed securities portfolio, which significantly impacted our financial results. We continued to execute our planned reduction of exposure to construction and land loans, and, exclusive of our high performing, government guaranteed SBA banking business, we further reduced our exposure to commercial real estate as well. Year end capital ratios at the Bank were 7.68% for core capital and 10.07% for total risk based capital and the Bank remained well capitalized. Prospectively we will look to further strengthen our capital position via multiple avenues, including focused expense reductions, optimizing our balance sheet for loans and deposits, and unlocking additional opportunities for margin improvement and ultimately improving the overall earnings power of the Company.

"I am pleased to announce the addition of Chuck Caswell, a veteran banking CFO, as Executive Vice President and CFO of United Western Bank. Chuck’s extensive banking and finance background with national and community banks will be of great help to our business as we navigate the challenging economy and difficult banking environment. We welcome Chuck to United Western and look forward to his future contributions as a member of our team.”

William D. Snider, Chief Financial Officer, said: "The management team continued to work through the very tough environment for all banks and particularly banks with concentrations in real estate lending. Our priorities are to maintain a strong balance sheet, capital and liquidity position. We expect peaking community bank loan migration and potential for further securities impairment expense to impact near term earnings and we believe our focused balance sheet management actions will help us achieve profitability in the later half of 2010. We recently completed a thorough review of our investment portfolio. The large OTTI charge on the non-agency MBS was the result of the continuing deterioration in the collateral and more conservative estimates of expected future cash flows for certain securities. Balance sheet risk management actions included maintaining liquidity at high levels, increasing reserves, lowering exposure to construction and development loans, increasing core deposits, and maintaining capital at well capitalized levels.”

• Community bank loan average balances decreased $41.6 million in the fourth quarter of 2009 to $1.125 billion compared to $1.167 billion for the third quarter of 2009. The community bank loan yield of 5.34% during the fourth quarter was unchanged from the prior quarter. The yield on community bank loans in the year ago quarter was 5.76%, when the average prime rate was 81 basis points higher than for the quarter ended December 31, 2009.
• The average balances of residential mortgage loans, mortgage-backed securities, and purchased SBA loans and securities, declined $44.9 million in the fourth quarter of 2009 to $793.6 million compared to $838.5 million in the third quarter of 2009. The yield on those assets declined 12 basis points to 4.30% in the fourth quarter of 2009 compared to 4.42% in the third quarter of 2009. The principal causes of the yield decline were: (i) adjustable rate residential loans that repriced to lower rates; and (ii) a $166,000 increase in premium amortization due to repayments from our purchased SBA loans and securities portfolio. In the year ago period, average residential mortgage loan, mortgage-backed securities and purchased SBA loans assets were $1.0 billion and they yielded 5.14%.
• Other interest earning assets average balance, which consists principally of Fed funds sold and balances due from the Federal Reserve Bank, increased $328 million from the third quarter of 2009. The additional liquidity was based on our decision to assess fourth quarter provision for credit loss levels and potential for OTTI charges prior to reducing our balance sheet liquidity. The average balance of other interest earning assets was $710 million for the fourth quarter, compared to $382 million for the third quarter. The yield was 28 basis points for the fourth quarter compared to 26 basis points for the third quarter.
• The Company’s cost of interest-bearing liabilities declined 17 basis points to 1.31% for the fourth quarter, compared with 1.48% for the third quarter. This decrease can be primarily attributed to the decline in rates paid on certificates of deposit. Although the average balance of interest-bearing liabilities increased $195.3 million between the third and fourth quarters, interest expense decreased since a majority of the balance increase was in money market/NOW accounts and certificates of deposit, whose rates were managed lower in the current environment between the third and fourth quarter. In addition, the average balance of FHLBank borrowings decreased $15 million. In the year ago period the cost of interest-bearing liabilities was 1.64%.
• The Company expects net interest margin to improve prospectively from the following actions: (i) future reductions in our processing and trust deposit base in order to reduce excess liquidity; (ii) continued disciplined loan pricing; and (iii) a 200 basis point reduction in the rates paid on $180 million of borrowings from FHLBank of Topeka.

• In the fourth quarter of 2009, provision for credit losses was $14.5 million, compared with $10.1 million for the third quarter of 2009 and $2.4 million for the fourth quarter of 2008. This increase in the fourth quarter was principally related to an increase in nonperforming loans in the period.
• Net charge-offs of community bank loans held for investment for the quarter ended December 31, 2009 were $6.9 million, compared to $8.3 million for the third quarter of 2009, and $142,000 for the fourth quarter of 2008. During the fourth quarter of 2009, there were three relationships in our construction and development ("C&D”) portfolio and two relationships in our commercial real estate portfolio that accounted for $6.0 million of the net charge-offs.
• Overall at December 31, 2009, our allowance for credit losses as a percent of loans held for investment increased to 2.93%, compared to 2.21% at September 30, 2009 and 1.30% at December 31, 2008.
• The allowance for loan losses attributed to community bank loans as a percent of community bank loans for the periods shown above was 3.29%, 2.47%, and 1.47%, respectively.

• Gain on sale of SBA originated loans held for sale decreased $618,000 to $626,000 in the fourth quarter compared with $1.24 million in the third quarter. The decrease in the fourth quarter of 2009 was the result of the Bank selling $8.3 million of SBA originated loans in the fourth quarter, compared to $15.6 million in the prior quarter. We expect such gains may fluctuate significantly from quarter to quarter based on a variety of factors, such as the current interest rate environment, the supply and mix of loans available in the market, the particular loan portfolios the Company elects to sell, and market conditions. Additionally, the implementation of new accounting guidance may impact the potential levels of gains recognized in the first quarter of 2010.
• The Company incurred $33.2 million of OTTI charges on 13 of its non-agency residential mortgage-backed securities (RMBS) in the fourth quarter of 2009 due to continued deterioration in the underlying performance of the mortgage collateral of these securities. The non-agency RMBS continue to be substantially illiquid, and their evaluation for impairment and the determination of fair value remains highly complex and is dependent upon the assumptions applied. As part of the evaluation, the Company completes an analysis of estimated cash flows for these securities, which incorporates, but is not limited to, an estimate of the level of voluntary repayments, both known and projected defaults on the underlying mortgage collateral, and an estimate of loss severity. Based on the continued deterioration of the underlying collateral performance, and the protracted nature of the current financial crises in the U.S. in general and the U.S. housing market in particular, the Company utilized a more conservative estimate of future defaults than in previous quarters. The $33.2 million of OTTI charges were predominately in older vintage securities with approximately 80% from 2005 and earlier securities. In addition, the OTTI is largely in securities that are support securities, or securities that are not the most senior securities in a structure. In the event securities demonstrate additional deterioration through an increase in defaults or loss severity that indicate the Company will not recover its anticipated cash flows or if the duration of relatively significant impairments in these securities does not reverse, the Company will incur additional other-than-temporary impairments, which may result in material charges to earnings in future periods.

• Noninterest expenses were unchanged between the fourth quarter of 2009 and the third quarter of 2009 as management reduced controllable expenses including compensation, professional fees, public relations and marketing.
• Compensation and employee benefits decreased $1.4 million to $5.6 million in the fourth quarter compared with $7.0 million in the third quarter. The decrease in the fourth quarter of 2009 compared to the third quarter of 2009 was due to a modest headcount reduction, and a reduction of the accrual for bonus payments based on our results for the year.
• Subsequent to the sale of certain assets of UW Trust Company at the end of June 2009, the Company has incurred subaccounting fees on the custodial deposits transferred to the buyer. The amount of the subaccounting fees increased $265,000 between the third and fourth quarters of 2009 principally as result of the $75.9 million increase in the average balance of these custodial deposits. In total, deposits subject to subaccounting fees increased $100.8 million between the third and fourth quarters of 2009. Between the fourth quarter of 2009 and the fourth quarter of 2008, subaccounting fees increased principally as a result of the sale of certain assets of UW Trust, adjusted for decline in the underlying index upon which the subaccounting fees are based.
• The fair value adjustment on loans held for sale increased $311,000 between the third quarter of 2009 and the fourth quarter of 2009. During the fourth quarter of 2009, an increase in the level of residential mortgage loan delinquencies resulted in an additional decline in the fair value of such assets.
• Other expense increased $733,000 between the third quarter of 2009 and the fourth quarter of 2009. This increase was principally caused by additional FDIC deposit insurance premiums of $379,000 and other tax expense associated with sale of the UW Trust assets of $487,000. Loan collection and real estate owned expense, which is included in other expense, declined modestly for the fourth quarter of 2009, to $1.5 million compared to $1.6 million for the third quarter of 2009. Other expense for the fourth quarter of 2009 increased $1.8 million compared to the fourth quarter of 2008 as a result of increases in deposit insurance expense, loan collection expenses, and real estate owned expenses. On a calendar year basis, total deposit insurance expense increased to $4.9 million in 2009 compared with $1.0 million in 2008.

Income Taxes. For the quarter ended December 31, 2009, the Company’s effective tax rate was (18.8%). The Company’s tax rate was (38.2%) for the third quarter of 2009 and 24.4% for the fourth quarter of 2008. The effective income tax rate was impacted by the establishment of a $10.2 million deferred tax valuation allowance in the fourth quarter of 2009. Due to the loss incurred in the fourth quarter of 2009 and for the year then ended, the Company was unable to conclude that it is more likely than not that it will generate sufficient taxable income in the foreseeable future to realize all of its deferred tax assets. At December 31, 2009, gross deferred tax assets were $45.9 million.

Balance Sheet. The Company’s assets were $2.53 billion at December 31, 2009, compared with $2.63 billion at September 30, 2009 and $2.26 billion at December 31, 2008, an increase of $267 million during 2009. Loan and security repayments together with deposit growth were principally invested in cash and due from banks.

• At December 31, 2009, community bank loans held for investment decreased $42.5 million compared to September 30, 2009. This consisted of a $26.2 million decline in construction loans and a $6.3 million decline in land loans as well as smaller declines in commercial real estate and commercial loans. Community bank loans held for investment decreased $12.9 million compared to the prior year end. Absent the $41.5 million note received in connection with the UW Trust asset sale, community bank loans decreased $54.4 million during 2009, which is consistent with its balance sheet management plan implemented in 2008.
• The Company reduced its exposure to construction loans by $55.8 million since their peak at June 30, 2009. As a percentage of the total held for investment loan portfolio, C&D loans decreased to 29.0% at December 31, 2009 compared to 30.4% at September 30, 2009 and 32.3% at June 30, 2009. The Company has established a goal to reduce C&D loans to 25% of its total held for investment loan portfolio. Commitments to fund C&D loans declined to $23.6 million at December 31, 2009; such commitments were $42.8 million at September 30, 2009, $80.6 million at June 30, 2009 and $151.2 million at December 31, 2008.
• In the fourth quarter of 2009, residential and purchased SBA loans declined $7.5 million, and for all of 2009 such loans declined $51.8 million principally as a result of repayments.

• Total nonperforming assets were $60.8 million at December 31, 2009, representing a $19.2 million increase from the previous quarter. In the fourth quarter of 2009, eight community bank relationships caused substantially all the increase in nonperforming loans, and of these the largest is a $4.3 million SBA 504 hospitality loan included in the commercial real estate portfolio. There were two relationships that accounted for the increase in the C&D nonperforming loans, and two other relationships that accounted for the increase in the commercial portfolio.
• Real estate owned increased $3.0 million from the third to fourth quarter of 2009, as the Company foreclosed upon four nonperforming loans.
• The Company continues to manage these problem loans with anticipatory actions that are appropriate for the overall credit relationship including conducting regular reviews of loans, obtaining current independent appraisals, and taking other actions to work with its customers to a satisfactory resolution.

The table below shows the nonperforming loans that are held for sale which are subject to the fair value adjustment for loans held for sale:

• Nonperforming residential loans increased a modest $144,000 in the fourth quarter of 2009. This increase is generally consistent with delinquency trends in the national marketplace. There were residential charge-offs from the held for sale portfolio during the fourth quarter of 2009 of $375,000.
• Multifamily nonperforming loans held for sale decreased by $1.5 million as a result of moving a nonperforming loan into REO during the fourth quarter.

Investment Securities

• At December 31, 2009, the Company’s held to maturity mortgage-backed investment security portfolio had an amortized cost of $312.0 million. At December 31, 2009, the Company’s available for sale mortgage-backed investment security portfolio had a fair value of $33.0 million, or approximately $1.8 million below cost. Non-agency MBS at United Western Bank totaled $286.5 million at December 31, 2009.
• As shown above in noninterest income, the Company incurred $33.2 million net OTTI on 13 private label mortgage-backed securities during the fourth quarter of 2009. To date these securities have been written down to 46.3% of the remaining unpaid principal balance, which represents the Company’s best estimate of anticipated recovery. Of these 13 securities, with a book value of $39.0 million at year end, nine securities, with a book value of $14.1 million at December 31, 2009, are securities that support a higher security in the structure. These securities have been written down to 28.8% of the remaining unpaid principal balance. The remaining four securities, with a book value of $24.8 million at December 31, 2009, are senior securities or pass through securities for which the underlying collateral has deteriorated. These securities have been written down to 70.8% of the remaining unpaid principal balance. The credit fundamentals of these securities, including the low current credit coverage ratios, the collateral performance, and the default trends that continued to weaken in the fourth quarter and continued to weaken in early 2010 collectively, resulted in an OTTI conclusion for these securities as of December 31, 2009.
• The Company’s exposure to non-agency mortgage-backed securities decreased $24.9 million from repayments in the fourth quarter of 2009, and $33.2 million from the OTTI charge discussed above. In the year ended December 31, 2009, nonagency mortgage-backed securities decreased $192 million as a result of the previously disclosed sale of $47 million of mortgage-backed securities secured by option-adjustable-rate mortgage loans during the second quarter, $36.6 million of OTTI charges, and $107.6 million of repayments.
• At December 31, 2009, risk based capital regulations required the Bank to allocate $77.7 million of capital to support the $288.5 million book value of its non-agency mortgage-backed securities portfolio, of which $69.0 million of capital was allocated to $117.0 million of non-agency mortgage-backed securities subject to the direct credit substitute methodology, which are support tranches in the structures.
• A continued increase in the levels of delinquencies, foreclosures and incurred losses by the underlying collateral of the mortgage-backed securities owned by the Company may result in additional OTTI charges prospectively.

Deposits. Community bank deposits increased $80 million, or 21%, in the fourth quarter of 2009 to $465 million at December 31, 2009, versus $385 million at September 30, 2009. During the fourth quarter of 2009, community bank deposits increased as a result of successful marketing efforts which resulted in higher money market account and certificates of deposit balances. In total, at December 31, 2009, deposits, including custodial escrow balances, increased $271 million to $2.02 billion, as compared with $1.75 billion at December 31, 2008.

Capital. At December 31, 2009, the Company’s equity leverage ratio was 6.32% compared with 4.51% at December 31, 2008. At December 31, 2009, the Bank’s Tier-1 core capital, total risk-based and Tier-1 risk-based capital ratios were 7.68%, 10.07% and 8.81%, respectively, all of which are in excess of regulatory requirements for "well-capitalized”of 5%, 10% and 6%, respectively.

The Office of Thrift Supervision ("OTS”) conducted a regularly scheduled examination of the Company’s and Bank’s condition as of March 30, 2009. Upon completion of the examination the OTS found certain matters that required the attention of management and the Company’s and the Bank’s Boards of Directors. Effective as of December 10, 2009, the Company and the Bank each entered into separate informal Memorandums of Understanding ("Informal Agreements”) with the OTS. The Informal Agreements are not "written agreements” for purposes of Section 8 of the Federal Deposit Insurance Act, as amended.

The Informal Agreement between the Company and the OTS provides, among other things, that the Company, acting through its Board of Directors, will (i) support the Bank’s compliance with the Informal Agreement it entered into with the OTS; (ii) not declare or pay dividends or any other capital distribution or redeem any capital stock of the Company, or take dividends representing a reduction in the capital from the Bank, without the prior written non-objection of the Regional Director of the OTS; and (iii) not incur, issue, renew, repurchase, make payments on or rollover any debt, increase any current lines of credit, or guarantee the debt of any entity without receiving the prior written approval of the OTS Regional Director. Pursuant to the terms of the Credit Agreement with JPMorgan Chase Bank, N.A. ("JPMorgan”), entering into the Informal Agreements is considered an event of default; however, JPMorgan and the Company entered into an Amendment and Forbearance Agreement dated December 14, 2009 wherein JPMorgan agreed to forbear from declaring the amounts owing under the Credit Agreement immediately due and payable as a result of the Company and the Bank executing the Informal Agreements and any events of default resulting therefrom.

The Informal Agreement between the Bank and the OTS provides, among other things, that the Bank’s Board of Directors will (i) adopt a written Capital Plan for the Bank for the OTS Regional Director’s review and comment, and such plan shall address how the Bank will achieve and maintain by June 30, 2010 a Tier-1 core capital ratio of 8% and a total risk-based capital ratio of 12% (as of December 31, 2009, the Bank’s Tier-1 core capital and total risk-based capital ratios were 7.68% and 10.07%, respectively); and; (ii) approve a written Liquidity Contingency Plan to ensure the Bank maintains adequate short-term and long-term liquidity, with such plan to specifically address deposit concentrations and plans to reduce or manage such concentrations. The Bank’s Board of Directors approved the Liquidity Contingency Plan in January 2010. The Informal Agreements remain effective until modified, suspended or terminated by the OTS Regional Director.

Subsequent Events. Effective January 15, 2010, the Company entered into an Amendment to its Credit Agreement dated as of June 29, 2007, as amended by that certain Amendment to Credit Agreement JPMorgan. The terms of the Amendment provide, among other things: (i) for the extension of the maturity date on the $25 million line of credit note (the "Note”) from December 31, 2009 to June 30, 2010 (the Note had a current principal balance of $20 million); (ii) that the Company make a principal reduction payment on the Note of $2.5 million upon execution of the Amendment (which payment the Company made), and another principal reduction payment on the Note of $1.25 million on or before March 31, 2010; (iii) that JPMorgan agrees to continue to forbear from declaring all outstanding amounts on the Note to be immediately due and payable as a result of the Company and its subsidiary, United Western Bank, each executing the Informal Agreements; and (iv) that the Company and one of its nonbank subsidiaries pledge certain securities as additional collateral to JPMorgan.

On January 15, 2010, United Western Bank exchanged $180 million of outstanding FHLBank of Topeka (FHLB) advances for $180 million in new advances. The Bank believes that this exchange will improve earnings across a broad range of interest rate scenarios and will improve the Bank’s liquidity and its interest rate risk profile. The Bank anticipates these exchanges will reduce interest expense by approximately $3.9 million over the next 12 months. Specifically, the Bank exchanged 14 separate advances, totaling $180 million, with yields ranging from 2.77 percent to 4.80 percent, with a weighted average yield of 4.15 percent and an average remaining term of 29 months, and with final maturities scheduled 16 to 52 months into the future. These advances were exchanged for four new advances totaling $180 million of five-year convertible advances with a coupon rate fixed for at least the first 12 months. The FHLB has the option after the first year to convert the fixed coupon rate to the FHLB one-month advance rate, reset monthly, and the Bank has the option to prepay the advance if the FHLB exercises its option to convert the coupon rate to the FHLB one-month advance rate. For the first year, the Bank will incur an all-in rate of approximately 2.15 percent. The Bank recorded a $12.4 million charge related to the exchange. The transaction qualified for debt exchange accounting and the charge will be recognized over the five-year term of the new advances. The amortization of the deferred charge is considered in the all-in prospective rate of 2.15 percent. Should an advance be extinguished prior to its scheduled maturity, any remaining unamortized exchange charge would be accelerated and recognized in the period the debt is extinguished.

In December 2009, the Office of Thrift Supervision notified the Company and the Bank that they would be the subject of a joint off-cycle review (field visit) by both the FDIC and the Office of Thrift Supervision that would commence on January 11, 2010. The joint off-cycle review is currently ongoing. On March 5, 2010, the Bank was notified by the OTS that it could no longer accept, renew, or rollover brokered deposits without the prior approval of the OTS.

Conference Call

Any investor or interested individual can listen to the teleconference, which is scheduled to begin at 3:00 p.m. MDT (5:00 p.m. EDT) on Monday, March 15, 2010. To participate in the teleconference, please call toll-free 1-877-941-2333 (or 1-480-629-9723 for international callers) approximately 10 minutes prior to the start time. You may also listen to the teleconference live on the Company’s website, www.uwbancorp.com, and accessing the Investor Relations tab, or by accessing http://www.talkpoint.com/viewer/starthere.asp?Pres=129780. The teleconference may include forward-looking statements.

For those unable to attend, an archive of the conference call will be hosted on our website.

About United Western Bancorp, Inc.

Denver-based United Western Bancorp, Inc. is focused on developing its community-based banking network through its subsidiary, United Western Bank, by strategically positioning branches across Colorado’s Front Range market and certain mountain communities. This area spans the eastern slope of the Rocky Mountains – from Pueblo to Fort Collins, and from metropolitan Denver to the Roaring Fork Valley. United Western Bank plans to grow its network to an estimated ten to twelve community bank locations over the next three to five years. In addition to community-based banking, United Western Bancorp, Inc. and its subsidiaries offer deposit services to processing and trust customers and custodial, administrative, and escrow services through its wholly owned subsidiary, UW Trust Company. For more information, please visit our website at www.uwbancorp.com.

Forward-Looking Statements

This press release contains certain statements that may be deemed to be "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include information concerning our liquidity, exposure to C&D loans, management of nonperforming loans, and community bank implementation and business strategy. These statements often include terminology such as "may,” "will,” "expect,” "anticipate,” "predict,” "believe,” "plan,” "estimate,” "continue,” "could,” "should,” "would,” "intend,” "projects,” or the negative thereof or other variations thereon or comparable terminology and similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to: the successful implementation of our community banking strategies; the ability to secure, timing of, and any conditions imposed thereon of any, regulatory approvals or consents for new branches or other contemplated actions; the availability of suitable and desirable locations for additional branches; the continuing strength of our existing business, which may be affected by various factors, including but not limited to interest rate fluctuations, level of delinquencies, defaults and prepayments, increased competitive challenges, and expanding product and pricing pressures among financial institutions; changes in financial market conditions, either internationally, nationally or locally in areas in which we conduct our operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development, real estate prices and other recent problems in the commercial and residential real estate markets; demand for loan products and financial services; unprecedented fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing; increases in the levels of losses, customer bankruptcies, claims and assessments; the extreme levels of volatility and limited credit currently being experienced in the financial markets; changes in political and economic conditions, including the economic effects of terrorist attacks against the United States and related events; legal and regulatory developments, such as changes in fiscal, monetary, regulatory, trade and tax policies and laws, including policies of the U.S. Department of Treasury and the Federal Reserve Board; our participation, or lack thereof, in governmental programs implemented under the Emergency Economic Stabilization Act (the "EESA”), including without limitation the Troubled Asset Relief Program ("TARP”), and the Capital Purchase Program (the "CPP”), and the impact of such programs and related regulations on our business and on international, national, and local economic and financial markets and conditions.

Additional information concerning these and other factors that may cause actual results to differ materially from those anticipated in forward-looking statements is contained in the "Risk Factors” section included in the Prospectus filed with the Securities and Exchange Commission pursuant to Rule 424 (b) (4) on September 17, 2009, the Annual Report on Form 10-K being filed on the date of this release, and in the Company’s other periodic reports and filings with the Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release.

Any forward-looking statements made by the Company speak only as of the date on which the statements are made and are based on information known to us at that time. The Company does not intend to update or revise the forward-looking statements made in this press release after the date on which they are made to reflect subsequent events or circumstances, except as required by law.

NM - Not Meaningful
(1) Calculations are based on average daily balances where available and monthly averages otherwise, as applicable.
(2) Net interest margin has been calculated by dividing net interest income before credit losses by average interest earning assets.
(3) The operating efficiency ratios have been calculated by dividing noninterest expense, excluding amortization of mortgage servicing rights, by operating income. Operating income is equal to net interest income before provision for credit losses plus noninterest income. Such ratios are not meaningful for the quarter ended September 30, 2009 due to the loss on sale of available for sale investment securities and for the quarter and year ended December 31, 2009 due to the loss on sale of available for sale investment securities, the provision for credit losses and other-than-temporary impairment losses.
(4) Excludes loans held for sale.
(5) Excludes nonperforming loans held for sale.

Adjusted core earnings (earnings before income taxes, provision for credit losses, loss on securities, loss on disposition of assets owned by non-core subsidiary, loss at UWBK Colorado Fund, FDIC special assessment, OTTI losses and gain on sale of investment) is not a measure of financial performance under generally accepted accounting principles, or GAAP, but is used by some investors to determine a company's ability to generate core earnings from operations. The Company presents adjusted core earnings as it believes that it provides useful information to both management and investors by excluding specific revenues, costs and expenses that the Company believes are not indicative of core operating results. The presentation of adjusted core earnings should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. The reconciliation set forth above is provided in accordance with Regulation G and reconciles (loss) income from continuing operations with adjusted core earnings. This may not be comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted core earnings is not intended to represent and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP.