The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2008 Annual Report on Form 10-K. Results of operations for the three and nine month periods ended September 30, 2009 are not necessarily indicative of results to be attained for any other period.

Forward Looking Information

This report may contain "forward-looking statements" that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause results or performance to differ materially from those expressed in the forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. Such possible events or factors include: changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, governmental legislation and regulation, fluctuations in interest rates, changes in liquidity requirements, demand for loans in the Company's market area, and competition with other entities that offer financial services.

Critical Accounting Policies

The Company's consolidated financial statements are prepared based on the application of certain accounting policies, some of which require numerous estimates and strategic or economic assumptions that may prove inaccurate or be subject to variations which may significantly affect the Company's reported results and financial position for the current period or future periods. The use of estimates, assumptions, and judgments are necessary when financial assets and liabilities are required to be recorded at, or adjusted to reflect, fair value. Current economic conditions may require the use of additional estimates, and some estimates may be subject to a greater degree of uncertainty due to the current instability of the economy. The Company has identified several policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the allowance for loan losses, the valuation of investment securities, and accounting for income taxes.

Allowance for Loan Losses

The Company performs periodic and systematic detailed reviews of its loan portfolio to assess overall collectability. The level of the allowance for loan losses reflects the Company's estimate of the losses inherent in the loan portfolio at any point in time. While these estimates are based on substantive methods for determining allowance requirements, actual outcomes may differ significantly from estimated results, especially when determining allowances for business, lease, construction and business real estate loans. These loans are normally larger and more complex, and their collection rates are harder to predict. Personal loans, including personal mortgage, credit card and consumer loans, are individually smaller and perform in a more homogenous manner, making loss estimates more predictable. Further discussion of the

methodologies used in establishing the allowance is provided in the Provision and Allowance for Loan Losses section of this discussion.

Valuation of Investment Securities

The Company carries its investment securities at fair value, and employs valuation techniques which utilize observable inputs when those inputs are available. These observable inputs reflect assumptions market participants would use in pricing the security, developed based on market data obtained from sources independent of the Company. When such information is not available, the Company employs valuation techniques which utilize unobservable inputs, or those which reflect the Company's own assumptions about market participants, based on the best information available in the circumstances. These valuation methods typically involve cash flow and other financial modeling techniques. Changes in underlying factors, assumptions, estimates, or other inputs to the valuation techniques could have a material impact on the Company's future financial condition and results of operations. Assets and liabilities carried at fair value inherently result in more financial statement volatility. Under the fair value measurement hierarchy, fair value measurements are classified as Level 1 (quoted prices), Level 2 (based on observable inputs) or Level 3 (based on unobservable, internally-derived inputs), as discussed in more detail in Note 14 to the consolidated financial statements. Most of the available for sale investment portfolio is priced utilizing industry-standard models that consider various assumptions which are observable in the marketplace, or can be derived from observable data. Such securities totaled approximately $5.5 billion, or 90.4% of the available for sale portfolio at September 30, 2009, and were classified as Level 2 measurements. The Company also holds $170.1 million in auction rate securities. These were classified as Level 3 measurements, as no market currently exists for these securities, and fair values were derived from internally generated cash flow valuation models which used unobservable inputs which were significant to the overall measurement.

Changes in the fair value of available for sale securities, excluding credit losses relating to other-than-temporary impairment, are reported in other comprehensive income. The Company periodically evaluates the available for sale portfolio for other-than-temporary impairment. Evaluation for other-than-temporary impairment is based on the Company's intent to sell the security and whether it is likely that it will be required to sell the security before the anticipated recovery of its amortized cost basis. If either of these conditions is met, the entire loss (the amount by which the amortized cost exceeds the fair value) must be recognized in current earnings. If neither condition is met, but the Company does not expect to recover the amortized cost basis, the Company must determine whether a credit loss has occurred. This credit loss is the amount by which the amortized cost basis exceeds the present value of cash flows expected to be collected from the security. The credit loss, if any, must be recognized in current earnings, while the remainder of the loss, related to all other factors, is recognized in other comprehensive income.

The estimation of whether a credit loss exists and the period over which the security is expected to recover requires significant judgment. The Company must consider available information about the collectability of the security, including information about past events, current conditions, and reasonable forecasts, which includes payment structure, prepayment speeds, expected defaults, and collateral values. Changes in these factors could result in additional impairment, recorded in current earnings, in future periods.

In 2009, non-agency guaranteed mortgage-backed securities with a par value of $137.8 million were identified as other than temporarily impaired. The credit-related impairment loss on these securities amounted to $2.8 million, which was recorded in the consolidated income statement in investment securities gains (losses), net. The noncredit-related loss on these securities, which was recorded in other comprehensive income, was $32.6 million on a pre-tax basis.

The Company, through its direct holdings and its Small Business Investment subsidiaries, has numerous private equity investments, categorized as non-marketable securities in the accompanying consolidated balance sheets. These investments are reported at fair value, and totaled $47.8 million at September 30, 2009. Changes in fair value are reflected in current earnings, and reported in investment securities gains (losses), net in the consolidated income statements. Because there is no observable market data for these securities, their fair values are internally developed using available information and

management's judgment and are classified as Level 3 measurements. Although management believes its estimates of fair value reasonably reflect the fair value of these securities, key assumptions regarding the projected financial performance of these companies, the evaluation of the investee company's management team, and other economic and market factors may affect the amounts that will ultimately be realized from these investments.

Accounting for Income Taxes

Accrued income taxes represent the net amount of current income taxes which are expected to be paid attributable to operations as of the balance sheet date. Deferred income taxes represent the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Current and deferred income taxes are reported as either a component of other assets or other liabilities in the consolidated balance sheets, depending on whether the balances are assets or liabilities. Judgment is required in applying generally accepted accounting principles in accounting for income taxes. The Company regularly monitors taxing authorities for changes in laws and regulations and their interpretations by the judicial systems. The aforementioned changes, and changes that may result from the resolution of income tax examinations by federal and state taxing authorities, may impact the estimate of accrued income taxes and could materially impact the Company's financial position and results of operations.

Selected Financial Data


                                                          Three Months Ended            Nine Months Ended
                                                             September 30                 September 30
                                                          2009           2008           2009          2008


Per Share Data
Net income per common share - basic                    $      .66       $   .33      $     1.55      $  1.92
Net income per common share - diluted                         .66           .32            1.54         1.90
Cash dividends                                               .240          .238            .720         .714
Book value                                                                                23.45        21.16
Market price                                                                              37.24        44.19
Selected Ratios
(Based on average balance sheets)
Loans to deposits(1)                                        77.40 %       93.29 %         81.96 %      92.46 %
Non-interest bearing deposits to total deposits              6.33          5.49            6.12         5.44
Equity to loans(1)                                          16.62         14.26           15.01        14.14
Equity to deposits                                          12.86         13.30           12.30        13.07
Equity to total assets                                      10.13          9.88            9.64         9.75
Return on total assets                                       1.16           .60             .91         1.18
Return on total equity                                      11.49          6.06            9.49        12.14
(Based on end-of-period data)
Non-interest income to revenue(2)                           38.44         38.68           38.36        39.96
Efficiency ratio(3)                                         57.75         74.20           60.76        64.43
Tier I risk-based capital ratio                                                           12.77        10.65
Total risk-based capital ratio                                                            14.14        11.94
Tangible equity to assets ratio(4)                                                         9.60         8.66
Tier I leverage ratio                                                                      9.65         9.11

(1) Includes loans held for sale.
(2) Revenue includes net interest income and non-interest income.
(3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.
(4) The tangible equity ratio is calculated as stockholders' equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).

Results of Operations

Summary


                                            Three Months Ended                              Nine Months Ended
                                               September 30                                    September 30
(Dollars in thousands)             2009            2008          % Change          2009            2008          % Change


Net interest income             $  163,539      $  151,564             7.9 %    $  470,999      $  436,450             7.9 %
Provision for loan losses          (35,361 )       (29,567 )          19.6        (119,695 )       (67,567 )          77.2
Non-interest income                102,135          95,593             6.8         293,128         290,486              .9
Investment securities gains
(losses), net                         (945 )         1,149            N.M.          (5,870 )        25,480            N.M.
Non-interest expense              (154,489 )      (184,446 )         (16.2 )      (467,386 )      (471,692 )           (.9 )
Income taxes                       (23,415 )        (9,534 )         145.6         (52,264 )       (67,320 )         (22.4 )
Non-controlling interest
(expense) income                       185             (86 )          N.M.             541          (1,018 )          N.M.


Net income                      $   51,649      $   24,673           109.3 %    $  119,453      $  144,819           (17.5 )%

For the quarter ended September 30, 2009, net income amounted to $51.6 million, an increase of $27.0 million, or 109.3%, over the third quarter of the previous year. For the current quarter, the annualized return on average assets was 1.16%, the annualized return on average equity was 11.49%, and the efficiency ratio was 57.75%. Diluted earnings per share was $.66, an increase of 106.3% over $.32 per share in the third quarter of 2008. Compared to the third quarter of last year, net interest income increased $12.0 million, or 7.9%, resulting from an increase in investment securities balances and lower rates paid on deposits, partly offset by lower loan balances and lower yields on earning assets. Additionally, non-interest income increased $6.5 million, or 6.8%, partly because of a $5.3 million increase in loan fees and sales income, mainly in gains on student loan sales. The provision for loan losses was $35.4 million in the current quarter, a $5.8 million increase over the third quarter of last year. Non-interest expense declined by $30.0 million, or 16.2%, largely due to a $33.0 million loss related to the purchase of auction rate securities in the third quarter of 2008. The loss on auction rate securities lowered diluted earnings per share in the third quarter of 2008 by $.27.

Net income for the first nine months of 2009 was $119.5 million, a $25.4 million, or 17.5%, decrease from the first nine months of 2008. For the first nine months of 2009, the annualized return on average assets was .91%, the annualized return on average equity was 9.49%, and the efficiency ratio was 60.76%. Diluted earnings per share was $1.54, a decrease of 18.9% from $1.90 per share during the first nine months of 2008. Compared to the first nine months of 2008, net interest income increased $34.5 million, or 7.9%. Non-interest income rose $2.6 million due to increases in loan fees and sales, bond trading income, and bank card fees. Investment securities gains declined $31.4 million due to a $22.2 million gain on the redemption of Visa, Inc. common stock in the first quarter of 2008. The provision for loan losses totaled $119.7 million for the first nine months of 2009, representing an increase of $52.1 million over the same period in 2008. Non-interest expense declined by $4.3 million, largely due to the absence of the $33.3 million loss related to the purchase of auction rate securities in the third quarter of 2008, partly offset by increases of $20.4 million in FDIC insurance expense and $10.3 million in salaries and benefits expense in 2009.

The Company continually evaluates the profitability of its network of bank branches throughout its markets. As a result of this evaluation process, the Company may periodically sell the assets and liabilities of certain branches, or may sell the premises of specific banking facilities. In February 2009, the Company sold its branch in Lakin, Kansas. In this transaction, the Company sold the bank facility and certain deposits of approximately $4.7 million, and recorded a pre-tax gain of $644 thousand. In May 2008, the Company sold its banking branch, including the facility, in Independence, Kansas. In this transaction, approximately $23.3 million in loans, $85.0 million in deposits, and various other assets and liabilities were sold, and the Company recorded a pre-tax gain of $6.9 million.

Net Interest Income

The following table summarizes the changes in net interest income on a fully taxable equivalent basis, by major category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates. Changes not solely due to volume or rate changes are allocated to rate.

Analysis of Changes in Net Interest Income


                                                     Three Months Ended                         Nine Months Ended
                                                 September 30, 2009 vs. 2008               September 30, 2009 vs. 2008
                                                 Change due to                             Change due to
                                             Average       Average                     Average       Average
(In thousands)                               Volume         Rate          Total        Volume         Rate          Total


Interest income, fully taxable equivalent
basis:
Loans                                       $ (11,415 )   $ (11,659 )   $ (23,074 )   $ (16,210 )   $ (58,197 )   $ (74,407 )
Loans held for sale                              (630 )      (1,699 )      (2,329 )       3,093        (7,567 )      (4,474 )
Investment securities:
U.S. government and federal agency
securities                                      3,037           404         3,441           904          (204 )         700
State and municipal obligations                 2,819          (939 )       1,880        10,907        (2,777 )       8,130
Mortgage and asset-backed securities           19,212        (5,404 )      13,808        38,641        (7,147 )      31,494
Other securities                                2,332          (947 )       1,385         1,200         1,129         2,329


Total interest on investment securities        27,400        (6,886 )      20,514        51,652        (8,999 )      42,653


Federal funds sold and securities
purchased under agreements to resell           (1,953 )        (120 )      (2,073 )      (6,769 )        (819 )      (7,588 )
Interest earning deposits with banks              120             -           120           622             -           622


Total interest income                          13,522       (20,364 )      (6,842 )      32,388       (75,582 )     (43,194 )


Interest expense:
Deposits:
Savings                                            26          (179 )        (153 )          92          (599 )        (507 )
Interest checking and money market                951        (7,905 )      (6,954 )       2,741       (28,277 )     (25,536 )
Time open & C.D.'s of less than $100,000          604        (3,247 )      (2,643 )      (2,188 )     (16,890 )     (19,078 )
Time open & C.D.'s of $100,000 and over         1,942        (5,053 )      (3,111 )      10,806       (23,888 )     (13,082 )


Total interest on deposits                      3,523       (16,384 )     (12,861 )      11,451       (69,654 )     (58,203 )


Federal funds purchased and securities
sold under agreements to repurchase            (1,817 )      (2,784 )      (4,601 )      (8,645 )     (11,511 )     (20,156 )
Other borrowings                               (2,295 )         (35 )      (2,330 )         797        (2,695 )      (1,898 )


Total interest expense                           (589 )     (19,203 )     (19,792 )       3,603       (83,860 )     (80,257 )


Net interest income, fully taxable
equivalent basis                            $  14,111     $  (1,161 )   $  12,950     $  28,785     $   8,278     $  37,063

Net interest income for the third quarter of 2009 was $163.5 million, a $12.0 million, or 7.9%, increase over the third quarter of 2008. The increase in net interest income was primarily the result of lower rates paid on interest bearing deposits and higher average balances of investment securities, partly offset by lower loan yields coupled with lower average loan balances. The Company's net interest rate margin was 4.02% in the third quarter of 2009, compared to 4.04% in the third quarter of 2008.

Interest income, on a tax equivalent basis (T/E), decreased $6.8 million, or 3.2%, in the third quarter of 2009 compared to the same quarter in 2008. Interest income on loans (T/E) declined $23.1 million, or 14.2%,

as the result of a 57 basis point decrease in rates earned on the loan portfolio coupled with a decrease in average loan balances of 5.1%. Average rates earned on business loans in the third quarter of 2009 decreased 93 basis points from the same quarter in 2008, resulting in a $7.2 million decrease in interest income. Average quarterly rates earned on business real estate loans decreased 76 basis points resulting in a decline in interest income of $4.0 million. Contributing to the income reduction in the current quarter compared to the same quarter in 2008 was a decrease in the average balances of business loans of $454.8 million, or 13.1%, which reflected lower line of credit usage, lower demand, and pay-downs by business loan customers. Average business real estate loans declined $177.6 million, or 7.6%, as a result of continued uncertain economic conditions in the real estate markets and lower overall demand. Also, quarterly average consumer loan balances decreased $293.2 million, or 17.1%, reducing interest income by $5.2 million compared to the same quarter in 2008. Partially offsetting these reductions to interest income were an increase of $1.8 million earned on consumer credit card loans, primarily due to a 184 basis point increase in rates earned, and an increase of $2.0 million earned on student loans, which were acquired in the fourth quarter of 2008. During the third quarter of 2009, interest income on investment securities (T/E) increased $20.5 million, as average balances increased $2.1 billion, or 60.6%, with most of the growth in mortgage and asset-backed securities. In addition, average balances of U.S. government and federal agencies increased due to the purchase of $369.9 million of U.S. Treasury inflation-protected securities (TIPS) during the quarter. The inflation-adjusted income earned on the TIPS during the current quarter amounted to $2.4 million. However, these effects were partially offset by an overall decrease of 48 basis points in average rates earned on the total portfolio, compared to the third quarter of 2008. Interest income on overnight investments in federal funds sold and securities purchased under agreements to resell decreased $2.1 million, primarily due to a decrease in average balances of $388.3 million coupled with a decline of 135 basis points in rates earned. The average tax equivalent yield on total interest earning assets was 4.93% in the third quarter of 2009 compared to 5.55% in the third quarter of 2008.

Interest expense in the third quarter of 2009 decreased $19.8 million, or 34.2%, compared to the third quarter of 2008, primarily due to a $12.9 million decrease in interest expense incurred on interest bearing deposits, coupled with a $4.6 million decrease in interest expense incurred on federal funds purchased and securities sold under agreements to repurchase. The decrease in expense incurred on interest bearing deposits resulted from a 57 basis point decrease in average rates paid, offset slightly by a $1.5 billion, or 12.9%, increase in average balances. Average rates paid on interest checking and money market accounts decreased 42 basis points, while average balances increased $1.2 billion, or 15.4%, resulting in a net decrease in interest expense of $7.0 million. Additionally, interest expense incurred on certificates of deposit decreased $5.8 million as a result of an 83 basis point decline in average rates paid, partly offset by a $297.1 million increase in average balances. Interest expense on federal funds purchased and securities sold under agreements to repurchase decreased $4.6 million compared to the third quarter of 2008 as a result of a decrease in average balances of $430.3 million, or 31.5%, coupled with a 123 basis point decrease in average rates paid. Interest expense on other borrowings decreased $2.3 million, or 23.3%, primarily due to lower average balances of FHLB advances coupled with a decline in average borrowings under the Federal Reserve's Term Auction Facility (TAF). The overall average rate incurred on all interest bearing liabilities decreased to 1.02% in the third quarter of 2009 compared to 1.65% in the third quarter of 2008.

Net interest income for the first nine months of 2009 was $471.0 million compared to $436.5 million for the same period in 2008, an increase of $34.5 million, or 7.9%. For the first nine months of 2009, the net yield on total interest earning assets on a tax equivalent basis was 3.92% compared to the net yield of 3.93% in the first nine months of 2008. Lower rates paid on interest bearing liabilities, coupled with growth in average balances of investment securities, contributed to higher net interest income, which was partially offset by lower average rates earned on loans and declines in average loan balances.

For the first nine months of 2009, total interest income (T/E) decreased $43.2 million, or 6.6%, from the same period in 2008, mainly due to lower interest earned on loans coupled with lower average loan balances, partially offset by higher interest earned on investment securities. The average rate . . .