Selling Mortgages to the Federal Home Loan Bank of Cincinnati

1. Selling Mortgages to theFederal Home Loan Bank of Cincinnati Credit Union Real Estate Network Sylvania, Ohio July 15, 2008

2. FHLB MembershipOhio Credit Unions>$25 million in assets # Eligible FHLB Assets of Credit UnionsMembersFHLB Members Asset Range $25 -$100 million 58 21 $1.1billion $100 - $250 million 29 23 $3.5billion >$250 million 1313$10.2billion Total 100 57 $14.8billion Note: Data as of March 31, 2008

3. FHLB Membership Eligibility Requirements • Duly organized under federal or state laws. • Subject to inspection and regulation under the banking laws, or similar laws, of any state or federal regulatory agency. • Originates or purchases home mortgage loans with a maturity of five years or greater. • Must have at least 10 percent of its total assets in residential mortgage loans. • Financial condition and collateral allow advances to be safely made. • Character of the institution's management and home financing policy is consistent with sound and economical home financing.

4. FHLB Dividend History • Membership Stock: .15% of member’s total assets, adjusted annually • Activity Stock: .0 – 4.0% of outstanding Advances and MPP loans

5. Eligible Collateral Types • Blanket pledge of 1-4 family residential loans • Blanket pledge of multi-family (5+) residential loans • Specific 1-4 family residential loans • Blanket pledge of commercial real estate loans, agricultural real estate loans, second mortgage loans, or balances on home equity lines of credit • FHLB Deposits • U.S. Treasury Securities • U.S. Agency Securities • Mortgage-backed securities issued or guaranteed by GNMA, FNMA, or FHLMC • Non-agency residential whole mortgage MBS pass-through securities • Non-agency commercial whole mortgage MBS pass-through securities • CMO, REMIC, and CMBS securities • Small business loan-based securities issued or guaranteed by the SBA

6. Credit Product 1 Day 1 Mth 3 Mths 6 Mths 1 Yr 3 Yrs 5 Yrs 10 Yrs 15 Yrs 20 Yrs 30 Yrs Cash Management Letters of Credit REPO Short-Term Fixed Rate Regular Fixed Rate Putable LIBOR-Based Floating-to-Fixed Rate Prime-Based Constant Monthly Payment Balloon Payment Mortgage-Matched Advance (MMA) Select Payment MMA FHLB Credit ProductsTerms to Maturity, Interest Rate Types Fixed Interest Rate for Entire Term Variable Interest Rate for Entire Term LIBOR-indexed adjustable rate for lockout period; then terminated or becoming fixed for remaining maturity Fixed or Variable Rate for Entire Term (specified at outset) Fee-based service

7. MORTGAGE PURCHASE PROGRAM (MPP)

8. Overview, History, Purpose • Approved by Federal Housing Finance Board in 2000 to complement FHLB’s product line. • Purchase qualifying residential mortgages through MPP and hold loans as investments on balance sheet. • Designed to provide unique, more lucrative alternative to selling conventional and FHA mortgage loans in secondary market. • Since inception in 2000, 137 Participating Financial Institutions (PFIs) approved, over $19 billion UPB volume purchased; over 8,100 trade executions; and over 139,000 loans purchased. • Over 75% of approved PFIs have assets under $500M.

9. Benefits for Members • 17 Credit Unions participate in MPP • 11 Ohio CUs, 4 Kentucky CUs, 2 Tennessee CUs • 7 additional CUs in process of selling to MPP (all in Ohio) • $65 Million in loan commitments from CUs • 53% sell servicing retained, 33% sell servicing released, 14% sell both retained and released

10. Benefits for Members • Reduced Risk - increase liquidity, remove interest rate and prepayment risk and reduce credit risk. • Better Price and Execution - competitive cash price plus servicing released premium (if selling servicing released) plus Lender Risk Account (LRA). • Attractive to Community Financial Institutions - pricing, execution and customer service offered to all sellers, regardless of size. • Alternative Investor for Medium and Large Institutions - mirrors standard secondary market operations; easy transition for experienced sellers. • Established Relationship - members leverage long-term relationship with FHLBank. PFI has cooperative ownership of Bank. • Increases Return to Shareholders - MPP enhances FHLB’s long-term profitability, augmenting return on stockholders’ capital investment. 

11. Program Features, Products, Underwriting, Pricing and Commitments • Products - Conforming Conventional and FHA mortgage loans. • Conform to Agency loan balance limits. • 10, 15, 20 and 30 year fixed rate, fully amortizing. • Single family, 2-4 family, condos and Planned Unit Developments. • Primary residence and second (vacation) homes.

12. Program Features, Products, Underwriting, Pricing and Commitments – cont’d • Features - • Sales allow for flow closed loans (loan by loan) or bulk deliveries. • New and seasoned (more than 12 months) originations are acceptable. • Loans closed in name of, or assigned to, a Fifth District FHLB member. • PFIs may either sell loans servicing retained or servicing released with a Servicing Released Premium in addition to the cash price. • When servicing loans, PFI may select either a Schedule/Schedule or Actual/Actual remittance option.

13. Program Features, Products, Underwriting, Pricing and Commitments – cont’d • Underwriting - • Delegated Underwriting: must conform to MPP Guide; most LP/DU decisions are accepted. • Loans that satisfy “A” quality criteria. • Minimum 620 FICO/credit score required. • 95% Loan to Value, or less. Standard Mortgage Insurance (MI) coverage required for loans with LTVs greater than 80%. • Contract underwriting from MIs is acceptable. • Quality Control Program conducted by third party to ensure compliance with Guide.

14. Program Features, Products, Underwriting, Pricing and Commitments – cont’d • Technology Platform - • PFI conducts business via Loan Acquisition System (LAS). On-line, real time, web based technology platform which the PFI accesses via the FHLB’s website. • No additional hardware or software is required. PFIs utilize the system to price loans, execute Mandatory Delivery Contracts (MDC), allocate, deliver and fund loan sales. • Pricing - • Cash prices established by FHLB, window open for commitments from 8:30 AM to 4:00 PM regular business days. • Servicing Released premiums, if selling on a servicing released basis, established by WAMU.

15. Program Features, Products, Underwriting, Pricing and Commitments – cont’d • Commitments - • Master Commitment Contract (MCC) contains negotiated terms and conditions under which MPP will purchase loans from PFI under “best efforts” commitment. PFI has 9 months to deliver $2 million minimum commitment. • For each trade or loan sale, PFI executes MDC which is a legal commitment we make to purchase, and PFI makes to deliver, specified dollar amount of mortgage loans in future, with forward settlement date, at specified range of four note rates and prices.

16. Program Features, Products, Underwriting, Pricing and Commitments – cont’d • Lender Risk Account (LRA) - A risk sharing credit support structure involving the FHLB, PFI and Mortgage Insurance Company, to mitigate credit risk. LRA provides layer of credit risk protection, actual loan losses are deducted against loan loss reserve account that can be viewed as performance-based accounts receivable on the PFIs books. PFIs are rewarded for selling high quality loans to FHLB. • Funded through the proceeds of individual mortgages at predetermined level between 30 – 50 basis points. • Scheduled releases, net of losses, to the PFI beginning in the sixth year and ending in the eleventh year. • Total LRA balance of approximately $50 M, just over $860,000 claims filed on 42 loans.

17. Lender Risk Account

18. Pricing Delivery Option 15304560 Note Rate

19. Pricing – Conventional Servicing Released Premiums

20. Pricing – Comparison with Freddie Mac *45 LRA Pricing, cash price as shown on schedule paid up front, plus 45 basis points LRA paid out over time **Does not include Fannie Mae 25 basis point reduction for “market condition delivery fee”

21. Pricing – Comparison with Fannie Mae *45 LRA Pricing, cash price as shown on schedule paid up front, plus 45 basis points LRA paid out over time **Does not include Fannie Mae 25 basis point reduction for “market condition delivery fee”

22. Historical Pricing – MPP v. Freddie & Fannie

23. Historical Pricing – MPP v. Freddie & Fannie

24. Historical Pricing – MPP v. Freddie & Fannie

25. Comparison of Loan-Level Price Adjustments and Delivery Fees *Settlements on or after September 1, 2008; Source: FHLMC Bulletin May 29, 2008; Freddie Mac “Overview of Recent Pricing and Credit changes for Sellers”, June 6, 2008 **Settlements on or after June 1, 2008; Source: Fannie Mae Announcement 08-04, March 6, 2008; Fannie Mae “Loan-Level Price Adjustment Matrix and Adverse Market Delivery Charge Information”, May 23, 2008

26. Comparison of Loan-level Price Adjustments: Indicator Score / Loan-to-Value

28. More Information…Contact: Tom Ciresi Vice President, Member Services 513.852.7695 ciresitj@fhlbcin.com Robin McNulty Vice President, Mortgage Purchase Program 513.852.7568 mcnultyrc@fhlbcin.com