Spectrum Financial Group - Wholesale - Wholesale A, Alt-A, Subprime

We recieved the following notification in our mailbag regarding Spectrum Financial Group's wholesale operations:

From: Jerry Craig Jr.
Sent: Tue 8/14/2007 12:09 PM
To: Spectrum Financial Group, Inc.
Subject: Bank Operation Halted

Good Afternoon,

Yesterday I was informed that Regions Funding is being closed by its parent company Regions Bank. They will no longer be funding loans due to the uncertainty in the market. Unfortunately, while there were no problems with our line with them, this leaves us without the $35M credit facility to fund loans going forward. We do have a secondary warehouse line, however, they have declined to fund every loan we have sent to them, and the facility is very small. Thus, we are halting our bank operation effective immediately. At some point in the future we may reopen and begin funding loans again, but the timing is uncertain at this point. We thank you for your support.

This does not affect the ability of Spectrum Financial Group to Broker Loans, just to fund them and sell them in the secondary market. If you have any questions please direct those to your branch manager, to Jerry Sr or myself.

Sincerely,
Jerry E. Craig, Jr.
President

Regarding Spectrum Financial Group's operations, an informant provided the following:

Last year 80M month, down to 4M this month. We did everything from A+ to sub prime, mostly in the alt-a. Between Vegas and Scottsdale--about 40 Bank employees. Retail is open ... Total employees retail and wholesale at its peak was about 300.