Rather than shy away from some of the more efficient non-core funding techniques, we believe it wise to make certain your Board and your Examiners understand what is being accomplished through the use of wholesale funding tactics and our third webinar on the ALCO Process is designed to describe an approach to this issue. We will provide guidance on: 1. Where to describe your strategy. 2. Limits to place on non-core funding. 3. Reporting the use of non-core funding. 4. Non-core funding products and services that are in use today. 5. Pros and Cons of these funding sources.

1. KPN Consulting Webinar Series Part 3 of 6 Funds Management

12. Role of Wholesale Funding 12/31/05 – 12/31/10 Bank Thrift Industry Data (in Trillions) 2005 2006 2007 2008 2009 2010 Deposits $7.141 $7.825 $8.546 $9.037 $9.227 $9.422 Mutual Funds $8.906 $10.414 $12.039 $9.601 $11.121 $11.817 Total Wholesale Funding $2.077 $2.160 $2.464 $2.673 $1.852 $1.773 Total Assets $10.877 $11.860 $13.039 $13.853 $13.134 $13.321 Wholesale Funding / Total Assets 19.1% 18.2% 19.7% 19.3% 14.1% 13.3%

20. QwickRate eContact Activity by Month

21. Nationwide Unbiased Rate Information

22. QwickRate Activity By Term

23. QwickRate Activity by Position

27. Brokered CDs on the Rise Year End Institutions Deposits 2000 1611 $196 billion 2001 1709 $233 billion 2002 1877 $253 billion 2003 2121 $331 billion 2004 2473 $428 billion 2005 2850 $482 billion 2006 3341 $540 billion 2007 3339 $586 billion 2008 3938 $829 billion 2009 3759 $629 billion 2010 3758 $497 billion

33. EXPANDED FDIC INSURANCE COVERAGE & FLOW OF FUNDS Bottom Line for the Customer: All Funds are 100% Insured

34. Liquidity Provided By: Banks and their customers MMAX Accounts Funding the Balance Sheet Custodian: Wells Fargo Your Bank

35. Funding Solution Long Term MMA Funding – 93% of deposits retained on an annual basis Easy & Reliable – very little back office support and simple documentation No CIP/AML issues No Collateralization Use it when you need it Current rate – Call For Quote Requirement – the bank must be “well capitalized” as defined by the FDIC

46. Federal Home Loan Bank Advances

48. FHLB Districts

49. FHLBank System Membership Composition FHLBank System Members 1990 2010 Savings Banks/ Thrifts 2,779 1,083 Commercial Banks 55 5,507 Credit Unions 3 1,030 Insurance Companies 4 227

50. The FHLBank System: How It Works Homes Community Investment Member Institution Investors FHLBanks Office of Finance

51. FHLBank System Financial Metrics ($ billions) 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 Advances $620 $641 $875 $928 $631 $479 Investments $266 $271 $297 $327 $284 $238 Mortgages $105 $98 $91 $87 $71 $61 Other Assets $6 $6 $8 $15 $30 N/A Total Assets $997 $1,016 $1,271 $1,349 $1,016 $878 Capital-to-Asset Ratio 4.46% 4.43% 4.20% 3.81% 4.22% 5.00% Net Income $2.5 $2.6 $2.8 $1.2 $1.9 $2.1

53. The Federal Reserve System

56. Wide Range of Collateral Securities Loans Treasury 1-4 Family Agency Consumer Municipal Commercial & Industrial CMO Commercial Real Estate ABS Construction CMBS Agriculture Corporate Bonds Raw Land