Key First Quarter Results

     --  Provisions for loan losses during the quarter declined to       $19.4 million from $56.4 million in the previous quarter;       provisions for loan losses exceeded the net charge-off by       $4.2 million.   --  Net loan-charge offs declined by more than 63 percent to       $15.2 million from $41.8 million in the previous quarter.   --  FDIC special assessment expense of $2.5 million was recorded       during the quarter.   --  Residential mortgage origination and refinancing activity were       strong during the quarter, which resulted in a gain on sale of       loans of $11.4 million versus $7.9 million for the previous       quarter.   --  Non-interest income increased to $19.6 million for the quarter       versus $16.0 million for the previous quarter.   --  Total risk-based capital ratio at the bank level was 10.4       percent as of June 30, 2009, an improvement from 10.2 percent       as of March 31, 2009. 

Loan Charge Offs and Provisions Improve

Provisions for loan losses during the quarter declined to $19.4 million, from $56.4 million in the previous quarter; provisions for loan losses exceeded the net charge-off by $4.2 million. "While we expect to see charge-offs and provisions continue to exceed historical levels for the foreseeable future, we do believe the situation is improving," said Chris Bauer, President and CEO of Anchor BanCorp Wisconsin, Inc.

Net loan charge-offs also declined by more than 63 percent to $15.2 million from $41.8 million in the previous quarter due to a substantial slowdown in the growth of troubled loans. "The improvement in our need to recognize loan charge-offs and increase our provision for future possible loan losses is, we believe, indicative of the slowdown in the rate of decline of the economy," added Bauer.

"I have to credit the efforts of our troubled loan workout team," said Bauer. "We have expanded the resources of this group, and they are currently working with our most significant troubled borrowers to find solutions to each of their specific situations. This effort is receiving the highest priority and senior management attention."

FDIC Special Assessment

Net income was negatively impacted by an additional expense of $2.5 million accrued to the FDIC as part of a special assessment levied on all FDIC-insured financial institutions to help replenish the insurance fund.

Mortgage Loan Originations Strong

Benefitting from lower interest rates, AnchorBank's residential mortgage origination and refinancing activity was strong during the quarter, which resulted in a gain on sale of loans of $11.4 million, compared with $2.2 million for the same quarter last year and $7.9 million for the quarter ending March 31, 2009. AnchorBank sells the underlying loan on most of the mortgages it originates, but it generally retains the servicing of the mortgage, providing customers with continued local service.

"Single family mortgages have always been at the heart of AnchorBank's franchise, and the strength of that connection with the community can be seen in the volume of mortgage originations this last quarter," said Bauer. "A substantial portion of these loans represent new customers to the Bank and more than half came through online applications."

Non-Interest Income Increases

Non-interest income increased to $19.6 million for the quarter, up from $16.0 million in the previous quarter and from $11.8 million during the same quarter a year ago, primarily benefitting from gains on the sale of mortgage originations and refinances, in addition to the sale of portions of AnchorBank's student loan portfolio.

Total Risk-Based Capital Ratio Improves

At June 30, 2009, the bank subsidiary's risk adjusted capital ratio improved to 10.4 percent as compared with 10.2 percent at March 31, 2009, as loan loss provisions decreased and liquidity significantly increased. Tier 1 capital at June 30, 2009, was 6.05 percent compared with 6.17 percent at March 31, 2009.

"Our improvement in risk-adjusted capital is the result of reducing loans receivable by approximately $250 million, consistent with our strategy to contract our balance sheet," said Bauer. "During the second quarter, our strong liquidity position will allow us to significantly reduce liabilities and improve our Tier 1 capital ratio. These actions will help us achieve our target of an 11 percent risk-based and 7 percent Tier 1 capital ratios by September 30, 2009."

About Anchor BanCorp Wisconsin, Inc.

Anchor BanCorp's stock is traded on the NASDAQ exchange under the symbol ABCW. AnchorBank fsb, the wholly-owned subsidiary, has more than 70 offices. All are located in Wisconsin.

For More Information

For more information, contact Dale Ringgenberg, CFO, or Chris Bauer, CEO, at (608) 252-1810.

Forward-Looking Statements

This news release contains certain forward-looking statements based on unaudited financial statements, results of operations and business of Anchor BanCorp. This includes any statements regarding management's plans, objectives or goals for future operations, products or services, and forecasts of its revenues, earnings or other measures of performance. Forward-looking statements are subject to various factors which could cause actual results to differ materially from these estimates. These factors include changes in general economic conditions, deposit flows, loan demand, asset quality, competition, legislation or regulation and accounting principles, policies or guidelines affecting reports filed with the Securities and Exchange Commission for financial and business information regarding Anchor BanCorp, including information which could affect Anchor BanCorp's forward-looking statements.