Profile: TierOne Corporation (TONE.O)

TierOne Corporation, incorporated in 2002, is the holding company for TierOne Bank (Bank). The Bank has two wholly owned subsidiaries, TMS Corporation of the Americas (TMS) and United Farm & Ranch Management, Inc. (UFARM). TMS is the holding company of TierOne Investments and Insurance, Inc. (doing business as TierOne Financial), a wholly owned subsidiary that administers the sale of securities and insurance products, and TierOne Reinsurance Company, a wholly owned subsidiary that reinsures credit life and disability insurance policies. UFARM provides agricultural customers with professional farm and ranch management and real estate brokerage services.

The Company is a regional community bank offering a variety of financial products and services to meet the needs of the customers it serves. Its deposit gathering is concentrated in the communities surrounding its 69 banking offices located in Nebraska, seven counties in southwest Iowa and one county in northern Kansas. TierOne Corporation offers around-the-clock automated teller machine (ATM) banking at 68 of its banking offices and offers 31 ATM banking locations at supermarkets, convenience stores and shopping malls.

Lending Activities

TierOne Corporation originates loans to customers located in Nebraska, Iowa, Kansas (Primary Market Area). It also purchases loans and loan participation interests from financial institutions, loan correspondents and mortgage brokers located throughout the United States. During the year ended December 31, 2008, approximately 53.7% of its total loan portfolio consisted of loans secured by properties located in its Primary Market Area. TierOne Corporation offers multi-family residential, commercial real estate, land and land development, construction, agricultural, business, warehouse mortgage lines of credit, business lending and consumer other lending.

One-to-four family residential mortgage loan originations are obtained from the Company’s in-house loan representatives, from existing or past customers and from mortgage brokers. TierOne Corporation also originates and/or purchases from correspondent lenders second mortgage loans in amounts up to 85% of the appraised value of the collateral with maturities of up to 30 years. It originates fixed-rate, one-to-four family residential mortgage loans with terms of up to 30 years. The Company offers multi-family residential, commercial real estate and land and land development loans for permanent financing collateralized by real property. These loans are used for business purposes, such as apartment buildings, office and retail facilities.

TierOne Corporation offers residential construction loans for either pre-sold houses (a purchase contract has been signed) or speculative houses (properties for which no buyer yet exists). It also originates commercial real estate construction loans, as well as purchase participation interests in such loans. TierOne Corporation provides commercial construction loans to real estate developers for the purpose of constructing a variety of commercial projects, such as retail facilities, industrial buildings and warehouses. Agricultural loans are made to farmers and ranchers in its Primary Market Area. Agricultural operating loans are made to finance day-to-day operations, including crop and livestock production. Intermediate term loans are used to purchase breeding livestock and machinery. Real estate loans are used to purchase or refinance farm and ranchland. It also offers revolving lines of credit to mortgage brokers. Business loans are made to small- and mid-sized businesses located within its Primary Market Area. The business lending products include lines of credit, receivable and inventory financing and equipment loans. Consumer loans are originated directly through its network of banking offices. It offer home equity loans, home improvement loans and home equity lines of credit in amounts up to $100,000 with a term of 15 years or less and a loan-to-value ratio up to 85% of the appraised value of the collateral.

Investment Activities

The Company primarily utilizes investments in securities for liquidity management. As of December 31, 2008, TierOne Corporation’s investment portfolio includes investments in United States Government securities and agency obligations, corporate securities, municipal obligations, agency equity securities, asset management fund - ARM Fund and (federal home loan bank) FHLBank Topeka stock.

The Company does not maintain a portfolio of securities categorized as held for trading. Substantially all of its investment securities are purchased for the available for sale portfolio, which totaled $137.7 million, or 4.1%, of total assets, as of December 31, 2008.

Sources of Funds

TierOne Corporation’s primary sources of funds are deposits; amortization of loans, loan prepayments and maturity of loans; repayment, maturity or sale of investment and mortgage-backed securities, and other funds provided from operations. The Company utilizes FHLBank advances and other borrowings as additional funding sources. TierOne Corporation offers a variety of deposit products designed to attract both short-term and long-term deposits from the general public. Its product offerings consist of checking (both interest and non-interest-bearing), money market, savings, time deposits and individual retirement accounts. The Company also uses brokered time deposits as an additional source of funds for its loan origination and purchase activity.

Subsidiary Activities

TierOne Bank is the wholly owned subsidiary of TierOne Corporation. TMS Corporation of the Americas is the wholly owned subsidiary of TierOne Bank and holds all of the stock of TierOne Investments and Insurance, Inc. (doing business as TierOne Financial) and TierOne Reinsurance Company. TierOne Financial provides a selection of investment and insurance products, equity securities, mutual funds and annuities. These products are made available to consumers via licensed representatives in the Company’s banking offices. TierOne Reinsurance Company reinsures credit life and disability insurance, which is sold in conjunction with the origination of consumer loans by TierOne Bank. United Farm & Ranch Management, Inc. is a wholly owned subsidiary of the Bank that provides agricultural customers with professional farm and ranch management and real estate brokerage services.