This section should be read in conjunction with the following parts on this Form 10-K: Part II, Item 8 "Consolidated Financial Statements and Supplementary Data," Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," and Part I, Item 1 "Business."

General

The Company is a unitary savings and loan holding company whose primary subsidiary is the Bank. The Company focuses on two core businesses, its regional Retail Banking business and a national payments business, conducted through its MPS division. The Company's Retail Bank business is focused on establishing and maintaining long-term relationships with customers, and is committed to serving the financial service needs of the communities in its market area. The Retail Bank's primary market area includes the following counties: Buena Vista, Dallas and Polk located in central and northwestern Iowa, and Brookings, Lincoln, and Minnehaha located in east central South Dakota. The Retail Bank segment attracts retail deposits from the general public and uses those deposits, together with other borrowed funds, to originate and purchase residential and commercial mortgage loans, and to originate consumer, agricultural and other commercial loans and to purchase various investment and mortgage-backed securities.

MPS, a division of the Bank, is an industry leader in the issuance of prepaid debit cards and is also a provider of a wide range of payment-related products and services, including prepaid debit cards such as those related to gift, tax refunds, rebate, travel and payroll, ATMs, and consumer credit products. MPS pursues a strategy of working with industry-leading companies in a variety of businesses to help them introduce new payment products to their customers. In addition, MPS partners with emerging companies to develop and introduce new payment products. MPS earns revenues from fees and is responsible for the bulk of our low- and no-cost demand deposits related to its prepaid card business. Certain MPS' activities have been significantly curtailed as a result of Consent Orders issued by the OTS, our former regulator. For a description of the Consent Orders, see Item 1 "Business - Regulation - Bank Supervision and Regulation." The Consent Orders, and the related directives that preceded them, have had a significant impact on revenues, profitability, and growth of the MPS division, the Bank, and the Company as a whole.

Overview of Corporate Developments

The most significant financial developments occurred in the Bank's MPS division. MPS' fiscal 2011 net income was $3.9 million compared to net income of $12.6 million in fiscal 2010. While non-interest income decreased by $39.6 million in fiscal 2011, noninterest expenses decreased by $15.2 million and loan loss provision expense declined by $11.8 million primarily due to the discontinuance of iAdvance in October 2010 and certain income tax-related programs previously disclosed in our Annual Report on Form 10-K for the year ended September 30, 2010. The remainder of the decrease relates to the $5.2 million of charges resolving previously disclosed actions of the OTS which were recorded in fiscal 2011. For additional discussion, see Item 1, "Business - Regulation - Bank Supervision and Regulation."

As mentioned earlier in this Annual Report on Form 10-K, on July 15, 2011, the Company and the Bank each stipulated and consented to a Cease and Desist Order (the "Orders" or the "Consent Orders") issued by the OTS. Since the issuance of the Supervisory Directives, during the last calendar quarter of 2010, the Company and the Bank have been cooperating with the regulatory authorities to correct those aspects of our operations that were addressed in the Consent Orders. Based on an interim examination by our previous regulator, the OTS, we believe we have already made substantial progress. The Company and MetaBank have completed many of the items in the Orders and expect to complete substantially all of the required actions in the Orders by their respective deadline dates. Notwithstanding our belief as to substantial progress, we are currently undergoing an examination by our new regulator, the OCC, and we can provide no assurances as to whether the OCC will concur with our belief on what actions will be taken by the OCC if it does not so concur. See Item 1A "Risk Factors - Risks Related To Our Industry and Business." See Item 1 "Business - Bank Supervision and Regulation - OTS Consent Orders and Related Matters."

The Retail Bank segment is continuing to build its customer base from its previous expansion in the growing metropolitan areas of Sioux Falls, South Dakota and Des Moines, Iowa. The Bank focuses primarily on establishing lending and deposit relationships with commercial businesses and commercial real estate owners or developers in these communities. The Company is now a unitary savings and loan holding company, not a bank holding company, and is subject to the jurisdiction of the Federal Reserve. The Bank operates 12 Retail Banking branches: in Brookings (1) and Sioux Falls (3), South Dakota, in Des Moines (6) and Storm Lake (2), Iowa and maintains a non-retail service branch in Memphis, Tennessee. During fiscal 2011, the Retail Bank segment recognized a goodwill impairment charge of $1.5 million due primarily to the decline in stock price of the Company during the first fiscal quarter of 2011. The original goodwill asset represented the excess of acquisition costs over the fair value of the net assets acquired in an earlier bank acquisition.

Effective as of September 30, 2011, James S. Haahr retired as Chairman of the board of directors of the Company and the Bank, succeeded as Chairman by J. Tyler Haahr who continued as President & CEO of the Company and the Bank. In addition, effective as of October 1, 2011, E. Thurman Gaskill, a Company board member since 1982, was named to the newly created position of Vice-Chairman and Lead Director of the board of directors of the Company and the Bank. Troy Moore III, Executive Vice President and Chief Operating Officer, was named to the board of directors of the Company and the Bank effective as of October 1, 2011.

Financial Condition

The following discussion of the Company's consolidated financial condition should be read in conjunction with the Selected Consolidated Financial Information and Consolidated Financial Statements and the related notes included in this Annual Report on Form 10-K.

As of September 30, 2011, the Company's assets grew by $245.7 million, or 24.0%, to $1.3 billion compared to $1.0 billion at September 30, 2010. The increase in assets was reflected primarily in increases in the Company's mortgage-backed securities and to a lesser extent the Company's cash and cash equivalents, offset in part by smaller decreases in the Company's portfolio of net loans.

Total cash and cash equivalents and federal funds sold were $276.9 million at September 30, 2011, an increase of $189.4 million from $87.5 million at September 30, 2010. The growth primarily was the result of the Company's increased liquidity from an increase in deposits, primarily due to low- and no-cost deposits generated by the MPS division. In general, the Company maintains its cash investments in interest-bearing overnight deposits with the Federal Home Loan Bank, ("FHLB") and the Federal Reserve Bank ("FRB"). Federal funds sold deposits may be maintained at the FHLB. At September 30, 2011 the Company had no federal funds sold.

The total of mortgage-backed securities and investment securities available for sale increased $112.4 million, or 22.2%, to $619.2 million at September 30, 2011, as investment purchases exceeded related maturities, sales, and principal pay downs. The Company's portfolio of investment securities available for sale consists primarily of mortgage-backed securities, which have relatively short expected lives. During fiscal 2011, the Company purchased $281.7 million of mortgage-backed securities with average lives of five years or less or stated final maturities of approximately 30 years or less and sold mortgage-backed securities in the amount of $54.8 million. In addition, the Company purchased $8.3 million of investment securities which are comprised of corporate and tax exempt bonds. See Note 3 to the "Notes to Consolidated Financial Statements," which are included in Part II, Item 8 "Consolidated Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

The Company's portfolio of net loans receivable decreased by $51.6 million, or 14.1%, to $314.4 million at September 30, 2011 from $366.0 million at September 30, 2010. All loan categories decreased due to broadly lower demand in the Company's markets, a reduction in purchased loans, and increased repayment and prepayment speeds given the lower interest rate environment. See Note 4 to the "Notes to Consolidated Financial Statements," which is included in Part II, Item
8 "Consolidated Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

The Company owns stock in the FHLB due to its membership and participation in this banking system. The Company's investment in such stock decreased $0.6 million, or 10.3%, to $4.7 million at September 30, 2011 from $5.3 million at September 30, 2010. The decrease was due to a decrease in the level of borrowings from the FHLB, which require a calculated level of stock investment based on a formula determined by the FHLB.

Insurance receivable decreased $1.4 million at September 30, 2011 to $2.3 million from $3.7 million at September 30, 2010 as management revised the expected receipt of insurance proceeds related to the purported MetaBank certificate of deposits matter disclosed in Item 3. "Legal Proceedings."

Premises, furniture, and equipment decreased $2.2 million to $17.2 million at September 30, 2011 from $19.4 million at September 30, 2010 due to depreciation exceeding purchases.

Foreclosed real estate and repossessed assets increased to $2.7 million as compared to $1.3 million at September 30, 2010 due to the foreclosure of assets and loan collateral related to previously reported non-performing loans exceeding sales and write offs.

Goodwill and intangible assets decreased $1.3 million, or 50.6%, to $1.3 million at September 30, 2011. Based upon the Company's periodic goodwill impairment testing, it was determined that the Retail Bank goodwill was impaired. The Company wrote-off the entire amount of $1.5 million during the first quarter of fiscal 2011 due primarily to the decline in stock price of the Company at that time.

Total deposits increased by $244.2 million, or 27.2%, to $1.1 billion at September 30, 2011 from $897.4 million at September 30, 2010. During fiscal 2011, the Company continued to grow its low- and no-cost deposit portfolio. Deposits attributable to MPS were up $270.0 million, or 41.2%, at September 30, 2011, as compared to September 30, 2010. This increase results from growth in existing prepaid card programs. As mentioned previously, it is unclear what the level of MPS-generated deposits will be in fiscal 2012.

The Company's total borrowings decreased $11.8 million, or 28.8%, from $41.2 million at September 30, 2010 to $29.4 million at September 30, 2011, primarily due to the growth of deposits. See Notes 8, 9, and 10 to the "Notes to Consolidated Financial Statements," which is included in Part II, Item 8 "Consolidated Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

At September 30, 2011, the Company's stockholders' equity totaled $80.6 million, up $8.6 million from $72.0 million at September 30, 2010. The increase was related to a favorable change in the accumulated other comprehensive loss on the Company's available for sale portfolio and offset, in part, by the payment of cash dividends on the Company's common stock. At September 30, 2011, the Bank continues to meet regulatory requirements for classification as a well-capitalized institution. See Note 14 to the "Notes to Consolidated Financial Statements," which is included in Part II, Item 8 "Consolidated Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Results of Operations

The following discussion of the Company's Results of Operations should be read in conjunction with the Selected Consolidated Financial Information and Consolidated Financial Statements and the related notes included in this Annual Report on Form 10-K.

The Company's Results of Operations are dependent on net interest income, provision for loan losses, non-interest income, non-interest expense, and income tax expense. Net interest income is the difference, or spread, between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread is affected by regulatory, economic, and competitive factors that influence interest rates, loan demand, and deposit flows. Notwithstanding that a significant amount of the Company's deposits pay low rates of interest, the Company, like other financial institutions, is subject to interest rate risk to the extent that its interest-earning assets mature or reprice at different times, or on a different basis, than its interest-bearing liabilities. The Company's non-interest income decreased in fiscal 2011 as compared to fiscal 2010, and improved significantly in fiscal 2010 as compared to fiscal 2009. Non-interest expense, related primarily to card processing expense, decreased in proportion to non-interest income as compared to the prior fiscal year. A more detailed explanation of the factors responsible for results of operations of the Company is presented below.

The Company's non-interest income is derived primarily from prepaid card, credit products, and ATM fees attributable to MPS and fees charged on bank loans and transaction accounts. This income is offset by expenses, such as compensation and occupancy expenses associated with additional personnel and office locations as well as card processing expenses attributable to MPS. To a lesser extent, non-interest income is derived from gains or losses on the sale of securities available for sale as well as the Company's holdings of bank owned life insurance. Non-interest expense is also impacted by occupancy and equipment expenses, regulatory expenses, and legal and consulting expenses.

Comparison of Operating Results for the Years Ended September 30, 2011 and September 30, 2010

General. The Company recorded net income of $4.6 million, or $1.49 per diluted share, for the year ended September 30, 2011 compared to $12.4 million, or $4.11 per diluted share, for the year ended September 30, 2010. The decrease in net income in the current period was primarily caused by a decrease in non-interest income which were partially offset by a reduction in the provision for loan losses and a reduction in non-interest expenses. In addition, net interest income increased $1.2 million as compared to the prior fiscal year.

Net Interest Income. Net interest income for fiscal 2011 increased by $1.2 million, or 3.7%, to $34.3 million from $33.1 million for the prior fiscal year. Net interest margin decreased to 3.21% in fiscal 2011 as compared to 3.43% in fiscal 2010.

The Company's average earning assets increased $104.4 million, or 10.8%, to $1.1 billion during fiscal 2011 from $964.6 million during fiscal 2010. The increase is primarily the result of the increase in the Company's mortgage-backed securities portfolio. Overall, asset yields declined by 40 basis points due to lower average rates. The increase in average earning assets was offset by a change in the mix of earning assets, to more investment securities and fewer loans, and a decrease in yields in mortgage-backed securities and other investments. Additionally, the prior fiscal year also included the effect of tax-related loans which were not present after October 13, 2010 in the current fiscal year.

The Company's average total deposits and interest-bearing liabilities increased $99.5 million, or 10.6%, to $1.0 billion during fiscal 2011 from $935.3 million during fiscal 2010. The increase resulted mainly from an increase in the Company's non-interest-bearing deposits. The average outstanding balance of non-interest bearing deposits increased from $633.2 million in fiscal 2010 to $780.9 million in fiscal 2011. The Company's cost of total deposits and interest-bearing liabilities declined 18 basis points to 0.46% during fiscal 2011 from 0.64% during fiscal 2010 primarily due to continued migration to low and no-cost deposits provided by MPS.

Average Balances, Interest Rates, and Yields

The following table presents, for the periods indicated, the total dollar amount
of interest income from average interest-earning assets and the resulting
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. No tax equivalent adjustments have been
made. Non-Accruing loans have been included in the table as loans carrying a
zero yield.

Year Ended September
30,                                        2011                                         2010                                          2009
(Dollars in
Thousands)                Average        Interest                      Average        Interest                       Average        Interest
                        Outstanding      Earned /       Yield /      Outstanding      Earned /       Yield /       Outstanding      Earned /       Yield /
                          Balance          Paid          Rate          Balance          Paid          Rate           Balance          Paid          Rate

Interest-earning
assets:
Loans receivable        $    338,114     $  19,654          5.81 %   $    402,750     $  24,944          6.19 %   $     423,915     $  25,561          6.03 %
Mortgage-backed
securities                   549,374        18,362          3.34 %        422,904        13,370          3.16 %         259,265        10,230          3.95 %
Other investments            181,514         1,043          0.57 %        138,915           769          0.55 %         111,910           935          0.84 %
Total
interest-earning
assets                     1,069,002     $  39,059          3.65 %        964,569     $  39,083          4.05 %         795,090     $  36,726          4.62 %
Non-interest-earning
assets                        67,114                                       49,739                                        68,187
Total assets            $  1,136,116                                 $  1,014,308                                 $     863,277

Non-interest bearing
deposits                $    780,941     $       -          0.00 %   $    633,246     $       -          0.00 %   $     490,651     $       -          0.00 %
Interest-bearing
liabilities:
Interest-bearing
checking                      32,717           409          1.25 %         21,169           258          1.22 %          15,795            39          0.25 %
Savings                       11,248            37          0.33 %         10,431            34          0.33 %           9,734            38          0.39 %
Money markets                 34,975           234          0.67 %         34,713           292          0.84 %          38,559           415          1.08 %
Time deposits                119,318         2,389          2.00 %        136,409         3,324          2.44 %         146,647         4,849          3.31 %
FHLB advances                 39,316         1,181          3.00 %         76,312         1,558          2.04 %          66,272         2,627          3.96 %
Other borrowings              16,322           497          3.04 %         23,023           527          2.29 %          32,477           939          2.89 %
Total
interest-bearing
liabilities                  253,896         4,747          1.87 %        302,057         5,993          1.98 %         309,484         8,907          2.88 %
Total deposits and
interest-bearing
liabilities                1,034,837     $   4,747          0.46 %        935,303     $   5,993          0.64 %         800,135     $   8,907          1.11 %
Other non-interest
bearing liabilities           19,956                                       18,815                                        16,383
Total liabilities          1,054,793                                      954,118                                       816,518
Shareholders' equity          81,323                                       60,190                                        46,759
Total liabilities and
shareholders' equity    $  1,136,116                                 $  1,014,308                                 $     863,277
Net interest income
and net interest rate
spread including
non-interest bearing
deposits                                 $  34,312          3.19 %                    $  33,090          3.41 %                     $  27,819          3.51 %

Net interest margin                                         3.21 %                                       3.43 %                                        3.50 %

Rate / Volume Analysis

The following schedule presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase related to higher outstanding balances and that due to the levels and volatility of interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (i.e. changes in volume multiplied by old rate) and (ii) changes in rate (i.e. changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

Rate / Volume

Year Ended September 30,                       2011 vs. 2010                                           2010 vs. 2009
(Dollars in Thousands)
                                  Increase /       Increase /             Total          Increase /        Increase /             Total
                                  (Decrease)       (Decrease)        Increase /          (Decrease)        (Decrease)        Increase /
                               Due to Volume      Due to Rate        (Decrease)       Due to Volume       Due to Rate        (Decrease)

Interest-earning assets
Loans receivable             $        (3,826 )   $     (1,464 )   $      (5,290 )   $        (1,317 )   $         700     $        (617 )
Mortgage-backed securities             4,193              799             4,992               4,597            (1,457 )           3,140
Other investments                        245               29               274                 385              (551 )            (166 )
Total interest-earning
assets                       $           612     $       (636 )   $         (24 )   $         3,665     $      (1,308 )   $       2,357

Interest-bearing
liabilities
Interest-bearing checking    $           144     $          7     $         151     $            18     $         202     $         220
Savings                                    3                -                 3                   3                (7 )              (4 )
Money markets                              2              (60 )             (58 )               (38 )             (85 )            (123 )
Time deposits                           (383 )           (552 )            (935 )              (320 )          (1,205 )          (1,525 )
FHLB advances                        (12,861 )         12,484              (377 )               486            (1,555 )          (1,069 )
Other borrowings                         240             (270 )             (30 )              (241 )            (172 )            (413 )
Total interest-bearing
liabilities                  $       (12,855 )   $     11,609     $      (1,246 )   $           (92 )   $      (2,822 )   $      (2,914 )

Net effect on net interest
income                       $        13,467     $    (12,245 )   $       1,222     $         3,757     $       1,514     $       5,271

Provision for Loan Losses. In fiscal 2011, the Company recorded a provision for loan losses of $0.3 million, compared to $15.8 million for fiscal 2010. The MPS division had a reduction of $11.8 million when comparing the fiscal 2011 to the fiscal 2010 provision, primarily because the Bank did not offer iAdvance and tax-related loan programs after October 13, 2010. In addition, the Retail Bank had a reduction of $3.7 million when comparing the fiscal 2011 to the fiscal 2010 provision.

Management closely monitors economic developments both regionally and nationwide, and considers these factors when assessing the adequacy of its allowance for loan losses ("ALL"). While the Company has no direct exposure to sub-prime mortgage loans, management believes the current recessionary environment may strain the financial condition of some borrowers. Management therefore believes that future losses in the residential portfolio may be somewhat higher than historical experience. Concerns regarding the economic slowdown, have led management to the conclusion that future losses in its commercial and multi-family and commercial business portfolio may be somewhat higher than historical experience. On the other hand, current trends in agricultural markets remain reasonable. Higher commodity prices as well as average to above average yields created positive economic conditions for most farmers in our markets in 2011. Nonetheless, management still expects that future losses within the agricultural operating portfolio, which have been very low, could be higher than recent historical experience. Management believes that the aforementioned recession may also negatively impact consumers' repayment capacities. Additionally, a sizable portion of the Company's consumer loan portfolio is secured by residential real estate, as discussed above, which is an area to be closely monitored by management in view of its stated concerns. Despite our efforts to monitor our credits, we can offer no assurance that loan losses in fiscal 2012 and thereafter will not exceed the relatively low levels of such losses taken in fiscal 2011.

The allowance for loan losses established in connection with MPS operations results from an estimation process that evaluates relevant characteristics of its credit portfolio. We consider other internal and external environmental factors such as changes in operations or personnel and economic events that may affect the adequacy of the allowance for credit losses. Adjustments to the allowance for loan losses are recorded periodically based on the result of this estimation process. Due to the varied and unknown nature and structures of future credit programs, the exact methodology to determine the ALL for each program will not be identical. Each program may have differing levels of risk, definitions of delinquency and loss, inclusion/exclusion of credit bureau criteria, roll rate migration dynamics, etc. Similarly, the additional capital required to offset the increased risk in subprime lending activities may vary by credit program. Each program is evaluated separately and with potentially . . .