Finser Investment Advisor

Fees and Compensation

Clients will be charged a fee for asset management services, which is billed monthly in
arrears, and is established annually based on the par value of the assets managed. In the
event the asset management service commences at any time other than the first day of the
month, fees will be assessed on a pro rata basis. FIA will directly invoice Clients each
month for investment advisory services. FIA’s fees for the succeeding year are based
upon 0.02% (2 basis points) assessment on the par value of investment assets on the
anniversary date. Alternately, FIA, at its sole discretion, may charge a minimum fee of up
to $500 per month if the calculated asset based fee is less $500. Additionally, a clearing
charge of $30 per trade will be assessed to all accounts and billed along with the above
stated monthly fees.

The Firm uses and plans to continue to use the trade execution and clearing facilities of
SAMCO Capital Markets, Inc. (SAMCO), a NASD member broker/dealer. Mr. Myers,
President of FIA, is separately licensed as a registered representative of SAMCO. Mr.
Myers and FIA receive no compensation from SAMCO for investment advisory business
or services. Rather, the Firm is billed by SAMCO quarterly for trade execution and
clearing ($30, which is passed on to the Clients) on a per transaction basis. Clients do
have the option to purchase securities recommended by FIA through other brokers or
agents not affiliated with FIA.

Types of Clients

FIA only offers and performs advisory services to banks and thrift institutions.

Methods of Analysis, Investment Strategy and Risk of Loss

In terms of asset mix and portfolio construction, FIA’s goal is: (1) to conform to and
complement the individual Client’s ALCO’s strategic plan and (2) to enhance the Client’s
primary and secondary liquidity. The general characterization of the portfolio may be
classic ladder portfolio, where level cash flows are the objective, or classic barbell, short-
term liquid instruments and longer-term higher yielding instruments, or a hybrid of the
two, depending upon the risk profile of the institution in conjunction with its interest rate
exposure. The types of securities utilized in the construction of the portfolio are restricted
to securities that are in compliance with the Client’s Funds Management or Investment
Policy and with Part I of Title 12, Code of Federal Regulations as applied to acceptable
investments for banks. Generally, these are Treasury securities, Government Sponsored
Enterprise (GSE) securities, GSE-guaranteed mortgage-backed securities and municipal
bonds.

While the securities are generally considered as “high grades,” the effect of unforeseen
events on financial operations could subject the issuers to a ratings downgrade and a
potential market loss on their debt obligations. The market value of the investments will
vary over time, primarily in response to changes in prevailing interest rates. If the Clients
sell any of the investments when the market value is low, they may experience significant
losses. On mortgage-backed securities (mbs), prepayments can reduce the yield if:

     •   The mbs are bought at a premium over their principal amount and principal
         payments are faster than expected, or

     •   The mbs are purchased at a discount to their principal amount and principal
         payments are slower than expected.

In aiding the development of the Client’s investment strategies and monitoring its
performance, FIA uses a variety of fundamental economic and interest rate information
from a variety of sources including financial media, economic data and publicly available
research. Additionally, FIA puts a heavy reliance on the Client’s interest rate risk model
and simulation results.