MISSOURI LINKED DEPOSIT PROGRAM The Missouri Linked Deposit Program partners with lending institutions to provide low-interest loans to help create and retain Missouri jobs, expand the economy and strengthen communities statewide.

The Missouri Linked Deposit Program helps qualified lenders from Missouri better serve Missouri-based companies and agricultural operations by reducing the interest rate on certain loans that borrowers can use to improve their businesses.

State Treasurer Clint Zweifel is committed to making the process simple and the program easy to use, serving as a knowledgeable resource to lenders and borrowers.

The Missouri Linked Deposit Program is well-funded with a total of $720 million available.

SAMPLE RATE CALCULATIONState of Missouri Linked Deposit Program

Deposit Rate paid to State (August 2011)Terms

1-yr 2-yr 3-yr 4-yr 5-yr Market Rate as surveyed by State 0.59% 0.93% 1.22% 1.49% 1.77%Less Cost of Collateralization -0.1250% -0.1250% -0.1250% -0.1250% -0.1250% Net Market Rate (rounded) 0.47% 0.81% 1.10% 1.37% 1.65%

Reduced by as much as 60% -60% -60% -60% -60% -60%________________________________________________________________________________________________________________Deposit Rate paid to State (Rounded) 0.19% 0.32% 0.44% 0.55% 0.66%________________________________________________________________________________________________________________

Maximum Loan Rate paid to BankTerms

1-yr 2-yr 3-yr 4-yr 5-yrBorrower Lending Rate as attested by Bank 5.00% 5.25% 5.50% 5.75% 6.00%X 70% 70% 70% 70% 70% 70%Maximum Loan Rate for Borrower 3.50% 3.68% 3.85% 4.03% 4.02%_______________________________________________________________________________________________________________

Net Interest Margin 3.31% 3.36% 3.41% 3.48% 3.54%

PROGRAM PROCESSTreasurer Zweifel is committed to making the Missouri Linked Deposit Program process simple and the

program easy to use for approved lending institutions and borrowers.

1. A borrower applies for a loan at a qualified lending institution. The lending institution applies its normal lending procedures to assess the creditworthiness of the borrower.

2. Once the loan is approved, the borrower or lender expresses interest in the Missouri Linked Deposit Program.

3. The lender works with the borrower to submit the requisite loan and deposit applications via secure online application system found here: https://www.treasurer.mo.gov/linkeddepositloanapps/default.aspx

4. Treasurer Zweifel’s office determines the eligibility of the borrower for the Missouri Linked Deposit Program.

5. Many loans can be approved within 10 business days. If there are problems with the application, Treasurer Zweifel’s office will notify the lender so those issues can be addressed prior to approval.

6. The lender is notified if the Missouri Linked Deposit Program loan is approved and the staff works with the lender on placement of the deposit.

7. Upon approval by Treasurer Zweifel’s office, the bank pledges collateral, if needed, and Treasurer Zweifel deposits the funds through ACH.

GENERAL REQUIREMENTSA depository contract is required with Treasurer Zweifel’s office. Any qualified lending institution - whether large or small, urban or rural – can apply to partner with Treasurer Zweifel to access this program for their customers.

Deposits must be fully collateralized. Collateral can include certain securities or FHLB letters of credit. Acceptable collateral is posted on the website (http://www.treasurer.mo.gov/policiesandinformation.aspx).

Unused amounts of the linked deposits are charged at the comparable market rate.

Early prepayment of loans may require payment at this higher rate. Treasurer Zweifel’s office can provide lender options to avoid this higher payment.

A multi-year fixed rate loan is available on all Missouri Linked Deposit Program loans.

Audits are conducted periodically to ensure compliance with State laws.

Borrowers with employees will have to verify the immigration status of their employees. All borrowers will have to provide a tax clearance letter.

Ineligible uses of the program include: speculative commercial developments; residential real estate; finance companies; subsidiaries of foreign companies; non-profit institutions.

EXAMPLESMasonry Business in St. Charles, MO

Use of loan proceeds – refinance of commercial buildingOverall project cost -- $592,000Amount requested for MLDP -- $560,000 (five year fixed rate requested)Deposit rate bank pays to State Treasurer – 0.90%Original loan rate for borrower as attested by bank – 7.125%New linked deposit loan rate for borrower – 4.99%Bank loan interest margin – 4.09%

Retail Lumber Supply in Pleasant Hill, MOUse of loan proceeds – refinance of commercial buildingOverall project cost -- $3,100,000Amount requested for MLDP -- $2,500,000 (one year linked deposit rate requested)Deposit rate bank pays to State Treasurer – 0.30%Original loan rate for borrower as attested by bank – 6.00%New linked deposit loan rate for borrower – 4.20%Bank loan interest margin – 3.9%

Consumer Chemical Manufacturer in St. Louis, MOUse of loan proceeds – purchase equipmentOverall project cost -- $2,000,000Amount requested for MLDP -- $2,000,000 (one year linked deposit rate requested)Deposit rate bank pays to State Treasurer – 0.30%Original loan rate for borrower as attested by bank – 6.00%New linked deposit loan rate for borrower – 4.20%Bank loan interest margin – 3.90%

CURRENT LINKED DEPOSIT LOAN VOLUME(August 8, 2011)

The program is funded to $720 million

Current active linked deposits -- $360,695,822

Linked deposits placed for calendar year 2011 -- $235,630,708

Linked Deposits approved by Treasurer Zweifel since January 1, 2009 -- $741,299,488

TREASURER CLINT ZWEIFEL’S 2009 INVEST IN MISSOURI LEGISLATION

Treasurer Zweifel realizes deposits with Missouri banks are one of the safest investments to make in today’s capital markets.Deposits allow Treasurer Zweifel to reinvest in the State’s economy, thereby increasing jobs, generating economic development and capital formation.Treasurer Zweifel’s office can and wants to increase reinvestment of State monies in Missouri.INVEST IN MISSOURI, which passed unanimously in the House and Senate, enables Treasurer Zweifel to achieve a market return on State CD investments AND increase deposits in Missouri banks.INVEST IN MISSOURI (HB 883) also greatly expands and modifies the 25-year old Missouri Linked Deposit Program to allow banks to use this low-interest loan program to a far greater extent.

MISSOURI LINKED DEPOSIT PROGRAMENHANCEMENTS - EFFECTIVE AUGUST 28, 2009

PROGRAM NAME OLD PROGRAM NEW PROGRAM

Job Enhancement Limits amount business can borrow to $50,000 for each job created or retained

Allows companies with significant capital needs to borrow $50,000 for each job, plus the amount of capital outlay, physical expansion, or renovation.

Small Business Eligibility limited to fewer than 25 employees

Eligibility increased to fewer than 100 employees

Farm Operation Farmers with more than 60% equity were ineligible

All equity limits have been removed

Alternative Energy – Consumer Not available Allows individuals to receive Linked Deposits when installing alternative energy-producing equipment.

Alternative Energy – Operations Available for businesses producing energy for sale

Now available to businesses producing fuel or energy for sale or for their own use.

Local Governments Not available Available for political subdivisions to make capital improvements or to implement significant public programs

OTHER PROGRAM ENHANCEMENTS

Elimination of 1% floor rate on linked deposit rate paid to the State

Greater usage of 5-year fixed rates for Missouri Linked Deposit Program loans

Creation of a full-time Relationship Manager that will reach out to lending institutions to share the benefits of the program, relay information and updates, and help users fully understand the process.– Jason Ramsey started as the Relationship Manager on August 17, 2009.

Streamlining of application process– Many applications processed internally by staff within one week– Higher-dollar applications processed within two weeks

On-line application system launched on October 1, 2010

FOR MORE INFORMATIONNew resources are available to assist you through the process:

A new website has been developed (www.treasurer.mo.gov/linkeddeposit) – Online application is now available– General information and requirements about each program are available

Staff is available to walk lenders through the new online application systemStaff is available to answer questions about requirements for the Missouri Linked Deposit Program, such as tax clearance letters, program eligibility requirements and equity calculations.www.treasurer.mo.gov/linkeddepositPhone: (573) 751-2372Fax: (573) 751-2177linkeddeposit@treasurer.mo.gov

TO ARRANGE FOR A MEETING TO LEARN MORE

Contact information:Jason RamseyRelationship ManagerOffice of Missouri State Treasurer Clint ZweifelTruman Building, Room 780PO Box 210Jefferson City, MO 65102(573) 526-3485jason.ramsey@treasurer.mo.gov