WESTWARD INVESTMENT CORP

IS A LEADING, HIGHLY DIVERSIFIED GLOBAL INVESTMENT MANAGER WITH APPROXIMATELY $7.8 BILLION OF ASSETS UNDER MANAGEMENT

SMALL BUSINESS LOANS

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A WINNING TEAM BEATS WITH ONE HEART

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MORTGAGES

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Areas of expertise

We provide an objective view backed by a willingness and flexibility to look beyond the easy deal. Designing a well-structured liquidity solution is always a dynamic process where the liquidity solution provider engages the client in a conversation. Rewarding, long-term relationships, trusted advice, access to essential resources, and outstanding execution – welcome to WIC.

FINANCIAL HIGHLIGHTS

In fiscal year 2012, WIC had $3.9 billion in revenues. Earnings from continuing operations were $56.8 million.

Consumer & Business Banking reported net income of $285 million, a decrease of $35 million, or 19%, compared with the prior year.

Net revenue was $1.3 billion, down 6% from the prior year. Net interest income was $0.4 billion, down 2% compared with the prior year, driven by the impact of lower deposit margin, predominantly offset by higher deposit balances. Noninterest revenue was $0.3 billion, a decrease of 12%, driven by lower debit card revenue, reflecting the impact of the Durbin Amendment.

The provision for credit losses was $26.4 million, compared with $30 million in the prior year. Net charge-offs were $26.6 million (2.44% net charge-off rate), compared with $28.1 million (2.91% net charge-off rate) in the prior year.

Noninterest expense was $0.8 billion, up 2.5% from the prior year, driven by investments in sales force and new branch builds. Mortgage Production and Servicing reported net income of $163 million, an increase of $18 million compared with the prior year

Mortgage production reported record pretax income of $0.5 billion, an increase of $190 million from the prior year. Mortgage production-related revenue, excluding repurchase losses, was a record $0.88 billion, an increase of $205 million, or 36%, from the prior year. These results reflected wider margins, driven by favorable market conditions, and higher volumes due to historically low interest rates and the Home Affordable Refinance Program (“HARP”). Production expense was $278 million, an increase of $83 million, or 27%, reflecting higher volumes. Repurchase losses were $3 million, compared with $14 million in the prior year and $0.5 million in the prior quarter.

Mortgage servicing reported a pretax loss of $59 million, compared with a pretax loss of $53 million in the prior year.

Mortgage servicing revenue, including mortgage servicing rights (“MSR”) asset amortization, was $154 million, an increase of $7 million, or 8%, from the prior year due to lower MSR asset amortization, largely offset by lower servicing-related revenue. MSR risk management income was $50 million, compared with $11.3 million in the prior year. Servicing expense was $1.0 billion, an increase of $186 million, or 23%, from the prior year. The current year includes approximately $100 million of incremental expense for foreclosure-related matters. Real Estate Portfolios reported net income of $60 million, compared with a net loss of $67 million in the prior year. The increase was driven by a lower provision for credit losses. Net revenue was $1.0 billion, a decrease of $145 million, or 13%, from the prior year. The decrease was driven by a decline in net interest income, resulting from lower loan balances due to the portfolio runoff. The provision for credit losses was $520 million, compared with $799 million in the prior year.

The current quarter provision reflected a $900 million reduction in the allowance for loan losses due to improved delinquency trends and lower estimated losses, primarily in the Home Equity Portfolio. Net charge-offs totaled $1.4 billion, including $825 million of incremental charge-offs reported in accordance with regulatory guidance requiring loans discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower to be charged off to their collateral value and to be considered nonaccrual, regardless of their delinquency status.

Excluding these incremental charge-offs, net charge-offs during the quarter would have been $595 million, compared with $899 million in the prior year and $696 million in the prior quarter. Home equity net charge-offs were $1.1 billion (6.22% net charge-off rate1), compared with $581 million (2.82% net charge-off rate) in the prior year. Subprime mortgage net charge-offs were $152 million (6.89% net charge-off rate), compared with $141 million (5.43% net charge-off rate). Prime mortgage, including option ARMs, net charge-offs were $143 million (1.37% net charge-off rate), compared with $172 million (1.48% net charge-off rate).

WHO ARE WE? WHAT DO WE DO?

Westward Investment Corp established itself as one of the most successful financial services institutions in the United States. Always committed to putting our clients’ best interests first, our complete portfolio of financial service drive business effectiveness and profitability for more than 250,000 customers in the U.S. alone.