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Question and Answer Guide

Waterfield Bank, Germantown, MD

Is My Account Fully Insured? (https://closedbanks.fdic.gov/drrip/AFI/Search/)

Electronic Deposit Insurance Estimator   (www.fdic.gov/edie)

Waterfield Bank, Germantown, MD was closed Friday, March 5, 2010, by the Office of Thrift Supervision. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was appointed Receiver. According to regulatory policy, there is no advance notice given to the public. An assuming bank could not be located; therefore, the FDIC will fulfill its obligation to Waterfield Bank depositors.

The bank facilities will open Monday, March 8, 2010, as Waterfield Bank, FA, an FDIC insured financial institution. Customers of the former Waterfield Bank will have access to all their transaction account balances. Over the closing weekend, ATM/Debit card services will continue as usual.

Waterfield Bank, FA, is a special financial institution organized by the FDIC that enables depositors of the former Waterfield Bank to conduct most of their banking business as usual until they transfer their deposits to another financial institution. Deposits will be accepted; however, no new accounts will be opened. Waterfield Bank, FA, will remain open until April 5, 2010, after which depositors will be mailed checks for any funds remaining on deposit.

General Depositor Information
Under the terms of your Deposit Account Terms and Conditions agreement with Waterfield Financial Services and Waterfield Bank your deposits were distributed among several banks including Waterfield Bank and other Participant Banks. No depositor lost any insured deposits because of the closure of Waterfield Bank.

For the Waterfield Bank deposit accounts that were placed at Waterfield Bank, insurance checks for their certificates of deposit and individual retirement accounts will be mailed on Monday, March 8, 2010, to addresses on record with Waterfield Bank.

For the Waterfield Bank deposit accounts that were placed at a Participating Bank, receivership distribution checks for their certificates of deposit and individual retirement account balances will be mailed on Monday, March 8, 2010, to addresses on record with Waterfield Bank.

Customers are encouraged to open new accounts with another institution as soon as possible. Any automatic transactions, including social security checks and automated payments, should be transferred to the new institution. Customers who do not move their accounts by Monday, April 5, 2010, will be mailed checks for any remaining insured deposit balances to the mailing address on record with Waterfield Bank and all automatic transactions will stop.

Cashier’s checks drawn on Waterfield Bank will be issued to close customer accounts and will continue to clear. Holders of these checks should cash them as soon as possible.

Checking and Savings Accounts
You will have continued access to your insured checking and savings account funds by using your same checks and ATM/Debit cards. ATM/Debit cards can be used through March 31, 2010. At that time, ATM/Debit cards will be deactivated and the Germantown ATM will be shutdown. Checks may be used but should be written to allow time to clear by April 5, 2010. Checks that do not clear the account by April 5, 2010, will be returned. Once you have identified your outstanding checks and verified your account balance, you can also write a check without coming to the bank to close your account.

Certificates of Deposit (CD) and Individual Retirement Accounts (IRA)
Checks for CDs and IRAs will be paid directly by the FDIC. Checks will be sent to your mailing address on record with Waterfield Bank. Checks will be mailed on Monday, March 8, 2010. A letter will be sent to IRA customers outlining their rollover responsibilities.

Direct Deposits
All direct deposits, including Social Security checks, will continue through April 2, 2010. You should make other arrangements as soon as possible.

Please be advised that you will not receive an e-mail notification from the FDIC as the Receiver for Waterfield Bank to claim/unlock/unsuspend your account or to provide any personal information. However, you may receive informational emails from the FDIC with general information regarding the bank’s closing and how to contact the FDIC. Be watchful for and resist attempts to obtain information from you by individuals or entities purporting to act on behalf of Waterfield Bank or the FDIC. Please contact the FDIC if you have any questions.

DEPOSIT QUESTIONS

1. Over $250,000: What if I have more than $250,000 in my accounts at Waterford Bank?
2. Account Hold: I have been advised there is a hold on my account. What does that mean?
3. Account Insurance Status: Is my account fully insured? Is there a method to verify whether my account(s) at Waterfield Bank are fully insured?
4. ATM/Debit Card/Checks: Can I continue to write checks or use my ATM/Debit card?
5. Automatic Payments/Online Billpay: Will my automatic payments through Billpay continue?
6. Brokered Deposits/Deposit Broker: I am a deposit broker or I have brokered deposits. What do I need to do?
7. Checks not honored: A merchant will not honor my check. What can I do?
8. Claim Account(s): How do I claim my account(s)?
9. Customer Impact: How does this failure affect me?
10. Direct Deposits, Social Security: What will happen to my direct deposits?
11. Early withdrawal penalty: Will I incur an early withdrawal penalty if I close my CD before maturity?
12. Final Statement: When will I get my final account statement(s) from Waterfield Bank?
13. Interest: Will I continue to earn interest at the same rate?
14. Interest Checks/Cashier's Checks: Can I cash my interest check or cashier's check?
15. Internet Connection: Will my Internet connection to Waterfield Bank work?
16. IRAs: What if I have an Individual Retirement Account (IRA)?
17. Lose Any Money placed at Waterfield Bank: Will I lose anything on my deposit account placed at Waterfield Bank?
18. Lose Any Money placed at Participating Bank: Will I lose any money on my deposit placed at a Participating Bank?
19. Outstanding Checks: What will happen to the checks which have not cleared my account?
20. Records/Account Histories: What if I need information regarding my account during the time Waterfield Bank was in business?
21. Tax Reporting - 1098/1099s: Who will send my 1098 and/or 1099 information after the end of the year?
22. Uninsured: Will I collect my uninsured deposits?
23. Wire Transfer: Can funds be wired to me?

LOAN QUESTIONS

24. Automatic Payments: Will my automatic payment still occur on its assigned date?
25. Construction Loan Draws: Will construction draws continue? Will my project be completed?
26. Construction Loan Voucher Control: Will my subcontractors be paid as before?
27. Escrows: Will you continue to pay my escrows?
28. Fees: Are there any changes to fees or charges due to this event?
29. Foreclosures: Will the FDIC continue foreclosures in process?
30. Lender and contact names: Who is my lender and has my loan contact changed?
31. Loan Sales: Will my loan be sold?
32. Line of Credit Advances – Home Equity: Can I continue to perform advances on my line of credit?
33. Loan in Process: I have a loan currently in process. How is my loan impacted?
34. Loan Sweeps: Will my loan sweep be discontinued?
35. Overdraft Line of Credit: Will my overdraft line of credit continue to cover my overdrafts?
36. Payments: How and where do I make my payments?
37. Pre-payment Penalty: If I refinance with another lender, will my pre-payment penalty be waived?
38. SBA Application in Process: What will happen to my SBA loan application in process?
39. What Happens Now: What will happen to my loan?

GENERAL QUESTIONS

40. FDIC Insurance: Where can I find out more about Federal Deposit Insurance rules?
41. Media: I represent a TV/Newspaper/Radio and would like some information.
42. Shareholders: I am a shareholder. What happens to my shares?
43. Unpaid Bill: I did some work for Waterfield Bank and have not yet been paid. What should I do?

DEPOSIT QUESTIONS

1. What if I have more than $250,000 in my accounts at Waterford Bank?

If you have more than $250,000 in your interest-bearing account, or if the total of your related interest-bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claims Agent. You should call the FDIC to schedule a telephone appointment with an FDIC Claims Agent at 1-800-830-4735.

If you have an interest-bearing account or group of interest-bearing accounts that exceeds $250,000, you may need to complete certain declarations or affidavits and provide documentation so that the FDIC can make an insurance determination on your account(s).

If you are an investor with a deposit broker, you may need to complete a form only if your investment exceeds $250,000. However, you must mail your form to your deposit broker for submission to the FDIC.

If your deposits DO NOT exceed $250,000, or if your deposits are in a noninterest-bearing transaction account(s), you DO NOT need to complete these documents or contact the FDIC. The balance in ALL noninterest-bearing transaction accounts (checking accounts) is fully insured.

An account hold may be placed on an account due to the need for additional documentation from a depositor. For example, a Declaration for Trust form may be required to attest to the parties involved in a trust. These forms can be mailed to you, or you can access them online at: Deposit Claims (www.fdic.gov/regulations/laws/forms/#DepositClaims).

If you have a question regarding the completion of required affidavits or declarations, please call 1-800-830-4735 and indicate you have a form completion question.

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2. I have been advised there is a hold on my account. What does that mean?

Any account pledged as collateral for a loan will continue to be held. A letter will be sent informing you of any holds placed by the FDIC, along with instructions on how to proceed. If you have any questions regarding these holds, please call your loan officer or the FDIC at the number provided in the letter.

Another reason an account hold may be placed is due to the need for additional documentation from a depositor. For example, a Declaration for Trust form may be required to attest to the parties involved in the trust. Please contact the FDIC at 1-800-830-4735 to schedule a telephone appointment.

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3. Is my account fully insured? Is there a method to verify whether my account(s) at Waterfield Bank are fully insured?

A tool, Is My Account Fully Insured? (https://closedbanks.fdic.gov/drrip/AFI/Search/), is available that allows failed bank customers the ability to verify whether their account is fully insured or if they need to contact the FDIC.  This service will be available for use no later than the first business day after the bank's failure.  Once you enter your account number, your insurance status for that account will appear.  If there is a hold on your account, it may be due to the need for the additional documentation referenced in question number one. If there is a hold, you will need to contact the FDIC at 1-800-830-4735 to schedule a telephone appointment.

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4. Can I continue to write checks or use my ATM/Debit card?

You will be able to continue using your personal checks and your ATM/Debit card; however, any checks presented after close of business April 5, 2010, will be returned. The ATM will not be available for a short period on Friday for processing. However, it will be operational shortly thereafter and will be available as usual through close of business March 31, 2010, when the ATM will be disabled.

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5. Will my automatic payments through Billpay continue?

Billpay will be unavailable for transactions over the weekend; however, it will be available for transactions Monday morning. Billpay will only be available until April 1, 2010, when it will be disabled. You should arrange to transition to a new online banking service as soon as possible since the service will be discontinued.

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6. I am a deposit broker or I have brokered deposits. What do I need to do?

Insured brokered deposits will be paid off when the insurance determination is complete. The FDIC offers an online reference guide to deposit brokers acting as agents for their investor clientele. This site outlines the FDIC's policies and procedures that must be followed by deposit brokers when filing for pass-through insurance coverage on custodial accounts in a failed FDIC-insured bank. Please read the following Deposit Broker Processing Guide completely before contacting the FDIC with questions:

Deposit Broker's Processing Guide (www.fdic.gov/deposit/deposits/brokers/index.html)

Should you have any questions regarding the completion of required affidavits or declarations on behalf of your client, please call 1-800-830-4735 and indicate you have a form completion question.

If you are a customer who has a Waterfield Bank deposit through a broker, you must contact your broker with any questions. Once the FDIC receives a balanced investor file along with all the required documentation, from your broker, your insured funds will be wired to them on your behalf.

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7. A merchant will not honor my check. What can I do?

Merchants are encouraged to honor Waterfield Bank checks, as these will continue to clear. A copy of this document or the press release (www.fdic.gov/news/news/press/2010/pr10045.html) can be provided to the merchant. Both documents state insured deposits have been received by Waterfield Bank, FA. Waterfield Bank checks will continue to clear up to the available balance until close of business April 5, 2010. Copies of this press release will be available at the bank. Depositors or merchants can also call the FDIC at 1-800-830-4735 for questions about honoring Waterfield Bank checks.

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8. How do I claim my account(s)?

A deposit insurance payment of your checking and/or savings account(s) up to the insured limit has been transferred to Waterfield Bank, FA. Please be advised that the last business day to claim the money from Waterfield Bank, FA, is April 5, 2010. You should make sure that you allow time for all items to clear before that date. A check will be mailed to you for unclaimed insured balances after that date. Items presented after that date will be returned.

Checks for your CDs and IRAs will be mailed on Monday, March 8, 2010. Unclaimed monies will be escheated to the state after 18 months. Unclaimed property can be located by visiting www.missingmoney.com or contacting your state's treasurer's office or office of unclaimed property.

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9. How does this failure affect me?

You have until April 5, 2010, to close your checking and savings accounts. If your deposits are in a noninterest-bearing transaction account, the total balance of your account has been transferred to Waterfield Bank, FA. Your account balance will be available at the Waterfield Bank, FA, or by writing checks against your Waterfield Bank account to open an account with another institution. You should allow time for all items to clear before that date.

Waterfield Bank, FA, has possession of your noninterest-bearing transaction deposit accounts and it will continue to operate until close of business April 5, 2010. You will have continued access to your money through your ATM/Debit card (until April 1, 2010) and by writing checks. However, any checks that have not cleared by April 5, 2010, will be returned.

For depositors whose accounts were placed at Waterfield Bank, checks for CD and IRA insured account balances will be mailed to you on Monday, March 8, 2010. For depositors whose accounts were placed at Participating Banks, checks for CD and IRA account balances will be mailed Monday, March 8, 2010.

If you have more than $250,000 in your interest-bearing account (or $250,000 in your IRA), or if the total of your related interest-bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claims Agent. All accounts that appear to be related are reviewed to determine ownership and insurance coverage. Certain entitlements and different types of accounts are insured in excess of the $250,000. If you think you might have uninsured deposits, please see question number one for information regarding forms you may need to complete to expedite this process.

If you had a loan with the bank, continue to make your checks payable to Waterfield Bank and mail to the same address you have used in the past until you are instructed otherwise.

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10. What will happen to my direct deposits?

All direct deposits, including Social Security checks, will continue through April 2, 2010. You should make other arrangements as soon as possible.

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11. Will I incur an early withdrawal penalty if I close my CD before maturity?

You will NOT be assessed an early withdrawal penalty. Your CD will automatically be closed, and the FDIC will mail your check on Monday, March 8, 2010.

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12. When will I get my final account statement(s) from Waterfield Bank?

Waterfield Bank, FA, will mail your account statements at the same time you have received them in the past and when you close your account. Customers who have not closed their accounts by close of business April 5, 2010, will receive a final statement at that time.

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Interest: Will I continue to earn interest at the same rate?

No. All interest on deposits accrued through March 5, 2010, will be paid at your same rate. This will be included in the check you or your broker will receive from the FDIC. Waterfield Bank, FA, will not pay interest after March 5, 2010.

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14. Can I cash my interest check or cashier's check?

Interest checks and cashier's checks will continue to clear past April 5, 2010, as those will be issued to customers closing accounts; however, customers are highly encouraged to cash these checks as soon as possible. Cashier's checks, certified checks, money orders meet the definition of noninterest-bearing transaction accounts. Under the Temporary Liquidity Guarantee Program, noninterest-bearing transaction accounts are fully insured.

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15. Will my Internet connection to Waterfield Bank work?

Online Banking Services will be unavailable for transactions over the weekend; however, it will be available for transactions Monday morning. Online transactional service will be available only through Thursday, April 1, 2010. After that time, online transactional service will be disabled. Waterfield Bank had a number of avenues for customers to access funds, and each of those avenues will be available after initial processing is completed closing weekend.

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16. What if I have an Individual Retirement Account (IRA)?

From the date a check is issued to you from your IRA, you have 60 days to roll this over into another retirement vehicle. You should consult IRS Publication 590 and/or your tax advisor concerning the possible tax consequences of such distribution. This publication specifically addresses this situation; therefore, you should review it carefully. IRS Publication 590 may be obtained by contacting your local IRS office or via the Internet at www.irs.gov.

IRA funds are insured separately from other types of accounts up to $250,000. IRA checks for the insured amount will be mailed on Monday, March 8, 2010, to your address on record with the bank.

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17. Will I lose anything on my deposit account placed at Waterfield Bank?

For depositors whose accounts were placed at Waterfield Bank, principal and interest on insured accounts, through March 5, 2010, are protected by the FDIC, to at least $250,000. Certain entitlements and different types of accounts can be insured in excess of the $250,000. If you have more than $250,000 in your interest-bearing account(or $250,000 in your IRA), or if the total of your related interest-bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claims Agent. All accounts that appear to be related are reviewed to determine ownership and insurance coverage. See question number one for information regarding forms you may need to complete to expedite this process. Checking and savings account balances will be available through Waterfield Bank, FA.

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18. Will I lose any money on my deposit placed at a Participating Bank?

No. For depositors whose accounts were placed at Participating Banks, checks for CD and IRA account balances including interest will be mailed Monday, March 8, 2010. Checking and savings account balances will be available through Waterfield Bank, FA.

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19. What will happen to the checks which have not cleared my account?

Checks that were drawn on Waterfield Bank that did not clear before the institution closed will be honored up to your insured amount or available balance until close of business April 5, 2010. You should allow time for items to clear before that date.

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20. What if I need information regarding my account during the time Waterfield Bank was in business?

Please contact the Waterfield Bank, FA, to request any records that you may need. After April 5, 2010, you may call the FDIC at 1-800-830-4735.

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21. Who will send my 1098 and/or 1099 information after the end of the year?

The FDIC will be responsible for mailing your 1099 tax information. Your 1098 reporting will be done by the FDIC or the servicer of your loan. You will be notified of any changes in ownership or servicing of your loan.

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22. Will I collect my uninsured deposits?

If you have a loan in the same name as your uninsured deposit account, it may be possible to offset your uninsured amount against your loan. You should discuss this with your Claims Agent during your appointment.

If it is determined that you have some uninsured funds, the FDIC will mail you a Receivership Certificate. This certificate entitles you to share proportionately in any funds recovered through the sale of the assets of Waterfield Bank. You may eventually recover more of your uninsured funds as assets are liquidated.

When a financial institution is closed, and the Federal Deposit Insurance Corporation ("FDIC") is appointed as receiver, one of FDIC's responsibilities is to sell the institution's assets to pay the depositors and its creditors. The money generated by the sale of these assets will flow through the Receivership, and periodic dividend payments will be made to proven claimants when excess cash is available. For an explanation of the dividend process, go to FDIC Dividends from Failed Banks (https://closedbanks.fdic.gov/dividends/).

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23. Can funds be wired to me?

As of Monday, March 8, 2010, your checking and savings account funds can be wired at your request. Any outgoing wire fees will be waived. Please contact the former Waterfield Bank at 1-888-580-0049 regarding your wire request. Checks for insured CDs and insured IRAs will be mailed to you, and you will receive them by the end of the week.

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LOAN QUESTIONS

24. Will my automatic payment still occur on its assigned date?

Any automatic payments from your account will continue until close of business April 1, 2010. We encourage you to check your account the day after your scheduled draft to verify the transaction. If the transaction did not occur, please notify your loan officer. You should arrange for automatic payments with a new bank as soon as possible.

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25. Will construction draws continue? Will my project be completed?

Each loan is being reviewed independently and will be determined on a case-by-case basis. You should direct your questions to your loan officer.

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26. Will my subcontractors be paid as before?

Each loan is being reviewed independently and will be determined on a case-by-case basis. You should direct your questions to your loan officer.

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27. Will you continue to pay my escrows?

All services previously performed related to your loan will continue. Should you receive notification that any portion of your taxes or insurance were not paid, please notify your loan officer immediately.

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28. Are there any changes to fees or charges due to this event?

No. Charges and fees will be discontinued as of March 5, 2010.

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29. Will the FDIC continue foreclosures in process?

At this point, all foreclosure actions have been suspended in order to properly evaluate the loans and the borrowers’ ability to repay. It is our intention to sell all loans, and it will be up to the new owner of the loan to determine the best method of collection on the loan. There may be instances where FDIC will continue with the foreclosure process, but this will be done on a case-by-case basis.

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30. Who is my lender and has my loan contact changed?

Your loan is currently owned by the FDIC as Receiver for Waterfield Bank and is being serviced by the same personnel with whom you have worked in the past. All prior contacts remain the same.

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31. Will my loan be sold?

Your loan may be sold at a future date. If that occurs, you will be notified in advance through written correspondence. If you are concerned, about who your future lender or servicer will be you have the right to refinance your loan with another lender.

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32. Can I continue to perform advances on my line of credit?

No. All lines of credit, including Home Equity Lines of Credit (HELOCs), have been suspended. The FDIC as Receiver for Waterfield Bank intends to sell your loan. The Receiver is not a bank. It does have the ability to fund some short-term needs if in the best interest of the Receiver; however, any funding and issuance of a check is not immediate. You should contact another financial institution to discuss establishing a borrowing relationship. They will be able to serve your needs on an ongoing basis.

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33. I have a loan currently in process. How is my loan impacted?

Please contact your loan officer directly.

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34. Will my loan sweep be discontinued?

This will be determined on a case-by-case basis. Please contact your loan officer.

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35. Will my overdraft line of credit continue to cover my overdrafts?

No. These lines have been retained by the FDIC and have been frozen. You will need to establish a new overdraft line of credit with your new bank.

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36. How and where do I make my payments?

You should continue to make your payments as you have in the past. Make checks payable to Waterfield Bank and utilize the same payment address information. You may continue to use credit cards and telephone transfers to make your payments.

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37. If I refinance with another lender, will my pre-payment penalty be waived?

Any pre-payment penalty will be waived as long as FDIC as Receiver for Waterfield Bank has control of the asset, and the borrower obtains refinancing of the outstanding balance on the account with another financial institution.

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38. What will happen to my SBA loan application in process?

The Waterfield Bank, FA, will not be originating any new loans.

If your loan has been approved by the SBA, but is not yet funded, please contact your loan officer. You will be directed to the proper SBA contact to help you locate another approved lender.

If your loan is in process, and has not been approved by the SBA, we will release your SBA package on file with us to you. You will need to apply with another SBA-approved lender. Please contact your loan officer to make arrangements to retrieve your application from the bank.

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39. What will happen to my loan?

Each loan is currently being reviewed independently to determine the best action for that individual loan. Your loan may be sold at a future date. If that occurs, you will be notified in advance through written correspondence. If you are concerned about whom your future lender or servicer may be, you have the right to refinance your loan with another lender.

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GENERAL QUESTIONS

40. Where can I find out more about Federal Deposit Insurance rules?

You may access our website, which contains deposit insurance information and an Electronic Deposit Insurance Estimator (EDIE):

Go to www.fdic.gov:

Click on Deposit Insurance

Click on "Are my deposits insured?"

Click on "EDIE" (to calculate your insurance coverage)

You may also order any FDIC publication:

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41. I represent a TV/Newspaper/Radio and would like some information.

Please contact the Office of Public Affairs:

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42. I am a shareholder. What happens to my shares?

The Waterfield Bank had no publicly owned stock. Equity shareholders were invested in the holding company, Affinity Financial Corporation, Irvine, CA, and not in the bank. Please do not file a claim with the Receiver, rather contact the holding company with any questions you may have:

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43. I did some work for Waterfield Bank and have not yet been paid. What should I do?

You should submit your invoice for Waterfield Bank in writing, together with proof of the claim, to the Receiver at the following address:

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SCAMS: Be watchful for and resistant to any scams to obtain information from you by individuals or entities stating that they are acting on behalf of either the failed bank, new bank, or the FDIC. Should you be contacted by anyone requesting personal information from you related to this event, please contact the call center above and you will be directed to the appropriate person.

For more information: www.fdic.gov/bank/individual/failed/waterfield.html

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