1. INTEREST RATE SWAP S&L pays interest on $15 million at 11.5% 11.5% Fixed-Rate Obligation in Eurobond Market Commercial Bank Counterparty Southwest Savings Association Bank Pays Interest on $15 Million at LIBOR +.25% Variable-Rate Obligation on Deposits

2. INTEREST RATE SWAP SOUTHWEST SAVINGS ASSOCIATION BALANCE SHEET ASSETS LIABILITIES & NET WORTH Adjustable rate loans (10.5%) $25.5 Fixed rate loans (13.50%) $65.8 Non-earning assets $ 4.5 $95.8 Adjustable rate funds (9.8%) $62.5 Fixed-rate funds (11.85%) $28.8 Net Worth $ 4.5 $95.8 GAP = $25.5 - $62.5 = -$37.0

3. INTEREST RATE SWAP SOUTHWEST SAVINGS ASSOCIATION INCOME STATEMENT PROJECTED PRE-TAX EARNINGS REVENUES: Rate Sensitive Assets $2.678 Fixed-Rate Assets $8.883 $11.561 INTEREST EXPENSE: Rate-Sensitive Liabilities ($6.125) Fixed-Rate Liabilities ($3.413) ($9.538) PRE-TAX EARNINGS $2.023

4. INTEREST RATE SWAP Projected Pre-Tax Earnings with SWAP and no Interest Rate Change REVENUES: Rate Sensitive Assets $2.678 Fixed-Rate Assets 8.883 Swap Interest Income ($15 at 10.60%) 1.590 $13.151 INTEREST EXPENSE: Rate-Sensitive Liabilities ($6.125) Fixed-Rate Liabilities (3.413) Swap Payments ($15 at 11.50%) (1.725) ($11.26) PRE-TAX EARNINGS $1.888

5. INTEREST RATE SWAP Projected Pre-Tax Earnings with Interest Rate Increase REVENUES: Rate Sensitive Assets (at 12.30%) $3.137 Fixed-Rate Assets (at 13.50%) 8.883 $12.020 INTEREST EXPENSE: Rate-Sensitive Liabilities (at 11.10%) ($6.938) Fixed-Rate Liabilities (at 11.85%) (3.413) ($10.351) PRE-TAX EARNINGS $1.669 Without Swap

6. INTEREST RATE SWAP Projected Pre-Tax Earnings with Interest Rate Increase With Swap REVENUES: Rate Sensitive Assets (at 12.30%) $3.137 Fixed-Rate Assets (at 13.50%) 8.883 Swap Interest Income ($15 at 12.20%) 1.830 $13.850 INTEREST EXPENSE: Rate-Sensitive Liabilities (at 11.10% ($6.938) Fixed-Rate Liabilities (at 11.85%) (3.413) Swap Payments ($15 at 11.50%) (1.725) ($12.076) PRE-TAX EARNINGS $1.774

7. INTEREST RATE SWAP Projected Pre-Tax Earnings with Interest Rate Decrease REVENUES: Rate Sensitive Assets (at 9.50%) $2.423 Fixed-Rate Assets (at 13.50%) 8.883 $11.306 INTEREST EXPENSE: Rate-Sensitive Liabilities (at 8.90%) ($5.563) Fixed-Rate Liabilities (at 11.85%) (3.413) ($8.976) PRE-TAX EARNINGS $2.330 Without Swap

8. INTEREST RATE SWAP Projected Pre-Tax Earnings with Interest Rate Decrease With Swap REVENUES: Rate Sensitive Assets (at 9.50%) $2.423 Fixed-Rate Assets (at 13.50%) 8.883 Swap Interest Income ($15 at 9.55%) 1.433 $12.739 INTEREST EXPENSE: Rate-Sensitive Liabilities (at 8.90%) ($5.563) Fixed-Rate Liabilities (at 11.85%) (3.413) Swap Payments ($15 at 11.50%) (1.725) ($10.701) PRE-TAX EARNINGS $2.038