FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Fifth Street Bank (In Organization)
Las Vegas, Clark County, Nevada
Application for Federal Deposit Insurance
(Deposit Insurance Fund)

The Federal Deposit Insurance Corporation has satisfactorily resolved the factors enumerated in section 6 of the Federal Deposit Insurance Act, as they relate to the application for Federal deposit insurance submitted on behalf of Fifth Street Bank (the Bank), a proposed new Nevada thrift company to be located at 376 East Warm Springs Road, Suite 110, Las Vegas, Clark County, Nevada. Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by the Bank for Federal deposit insurance be approved, subject to the following conditions:

1. That the Bank's beginning paid-in capital funds will not be less than $13,700,000;

2. That prior to the date of Federal deposit insurance, the Bank and Security National Master Holding Company, LLC (SNMHC) enter into a Capital Maintenance and Liquidity Agreement with the FDIC;

3. That SNMHC shall submit to the FDIC an initial listing of all of its subsidiaries and update the list annually;

4. That SNMHC shall consent to examination by the FDIC of SNMHC and each of its subsidiaries to monitor compliance with the provisions of the Federal Deposit Insurance Act or any other federal law that the FDIC has specific jurisdiction to enforce against such company or subsidiary and those governing transactions and relationships between any depository institution subsidiary and its affiliates;

5. That deposit insurance shall not become effective until SNMHC ceases to engage in activities that are not financial activities, and that commencing on the effective date of deposit insurance, SNMHC shall engage, directly or indirectly, only in financial activities. (For purposes of this Order, the term "financial activity" means (1) banking, managing, or controlling banks or savings associations; (2) any activity permissible for financial holding companies under 12 U.S.C. 1843(k), any specific activity that is listed as permissible for bank holding companies under 12 U.S.C. 1843(c) and activities that the Federal Reserve Board has permitted for bank holding companies under 12 C.F.R. 225.28 and 225.86, and (3) any activity permissible for all savings and loan holding companies under 12 U.S.C. 1467a(c));

6. That SNMHC shall submit to the FDIC an annual report regarding its operations and activities, in the form and manner prescribed by the FDIC, and such other reports as may be requested by the FDIC to keep the FDIC informed as to financial condition, systems for monitoring and controlling financial and operating risks, and transactions with the Bank; and compliance by SNMHC or its subsidiaries with applicable provisions of the Federal Deposit Insurance Act or any other Federal laws that the FDIC has specific jurisdiction to enforce against such company or subsidiary;

7. That SNMHC shall maintain such records as the FDIC may deem necessary to assess the risks to the Bank or to the Deposit Insurance Fund;

8. That SNMHC shall ensure that an independent annual audit of the Bank is performed during the first three years of operation, and the Bank shall submit to the FDIC, (i) a copy of the audited annual financial statements and the independent public auditor's report thereon within 90 days after the end of the depository institution's fiscal year, (ii) a copy of any other reports by the independent auditor (including any management letters) within 15 days after their receipt by the institution, and (iii) written notification within 15 days when a change in the institution's independent auditor occurs;

9. That SNMHC shall limit its representation, direct and indirect, on the Board of Directors of the Bank to no more than 25% of the members of such Board of Directors, in the aggregate;

10. That prior to the effective date of deposit insurance, the Bank and SNMHC shall enter into a written agreement with the FDIC whereby SNMHC agrees to adhere to conditions imposed in paragraph 3 through 9 above;

11. That this approval is conditioned on the facts as currently known by the FDIC. If there are any material events prior to the opening of the Bank for business, including, for example, any person or group obtaining ownership, control, or the ability to vote 10% or more of any class of voting interests of the Bank or any company that controls the Bank, the Bank shall notify the FDIC as soon as the Bank becomes aware of the event, and this approval may be withdrawn or modified;

12. That prior to the effective date of deposit insurance, the Bank shall have appointed and shall thereafter maintain a Board of Directors who possess the knowledge, experience, and capability to carry out the responsibilities of the position in a safe and sound manner and independently of the activities of SNMHC and its affiliated entities;

13. The Bank shall obtain written approval from the FDIC prior to adding or replacing a member of the Bank's Board of Directors or any senior executive officer during the first three years of operation;

14. That prior to the effective date of deposit insurance, the Bank shall have appointed and shall thereafter retain senior executive officers who possess the knowledge, experience, and capability to carry out the responsibilities of the position in a safe and sound manner and independently of the activities of SNMHC and its affiliated entities. Further, absent the prior written non-objection of the FDIC, each such officer's permanent place of work shall be physically located at the Bank's main office located in Las Vegas, Nevada, such that the individuals shall be capable of providing ongoing and direct oversight of the Bank's activities. At a minimum, such senior executive officers shall include (or be similarly qualified and titled) the President/Chief Executive Officer, Chief Credit Officer, and Chief Financial Officer;

15. That the Bank shall obtain written approval from the FDIC prior to employing a senior executive officer who is associated in any manner (e.g., as a director, officer, employee, agent, owner, partner, or consultant) with an affiliate of the Bank;

16. That the Bank shall obtain written approval from the FDIC prior to entering into any contract for essential services with SNMHC or any of its affiliated entities;

17. That the Bank shall notify the FDIC of any material nonperformance under any contract for essential services with SNMHC or any of its affiliated entities within 15 days;

18. That during the first three years of operation, the Bank shall obtain written approval from the FDIC prior to consummating any proposed major deviation or material change fiom its business plan;

19. That the Bank shall conduct business pursuant to operating policies that are commensurate with the proposed business plan, independent from those of affiliated entities, and adopted by the Board of Directors of the Bank. Also, the Board of Directors shall adopt controls reasonably designed to ensure compliance with and enforcement of such policies. Further, the Board of Directors shall ensure that executive officers are delegated reasonable authority to implement and enforce the policies independently of SNMHC and its affiliated entities. At a minimum, such operating policies and procedures shall encompass the Bank's lending, investment, liquidity, and asset-liability management activities;

20. That the Bank shall adhere to U.S. Generally Accepted Accounting Principles, adopt an accrual accounting system for maintaining the books of the depository institution, and maintain separate accounting and other business records, including customer account records. The Bank's books and records shall be maintained under the control and direction of authorized Bank officials and available for review by the FDIC at the Bank's main office located in Las Vegas, Nevada. Further, the Bank's books and records shall be sufficient1y detailed and maintained in a manner that provides Bank officials with the objective and transparent information necessary to administer the Bank's affairs;

21. That, prior to the opening of the Bank for business, any changes in proposed management shall be approved by the FDIC;

22. That Federal deposit insurance shall not become effective until the Bank is authorized to operate as a State bank by the appropriate State of Nevada;

23. That no dividends will be paid by the Bank during the first three years of operations without the prior written approval of the FDIC and the State of Nevada;

24. That prior to the effective date of Federal deposit insurance the Bank shall obtain surety bond coverage in a sufficient amount to conform to generally accepted banking practices;

25. That until the conditional commitment herein granted becomes effective, the FDIC shall have the right to alter, suspend, or withdraw said commitment should any interim development warrant such action; and

26. That the consent granted herein shall expire if Federal deposit insurance has not become effective within twelve months from the date of this ORDER, unless the FDIC approves a request for an extension of the deadline prior to the expiration.

By Order of the Board of Directors of the Federal Deposit Insurance Corporation.

Dated at Washington, D.C, this 20th day of March, 2007.

FEDERAL DEPOSIT INSURANCE CORPORATION
By: Robert E. Feldman
Executive Secretary

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FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Fifth Street Bank
Las Vegas, Clark County, Nevada
Application for Federal Deposit Insurance
(Deposit Insurance Fund)

Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815), an application for Federal deposit insurance with membership in the Deposit Insurance Fund has been filed on behalf of Fifth Street Bank (Bank), a proposed new institution that will be located at 376 East Warm Springs Road, Suite 110, Las Vegas, Clark County, Nevada.

The Bank will be a direct subsidiary of Security National Master Holding Company, LLC (SNMHC), Eureka, California. SNMHC is owned by Robin P. Arkley, II and his wife and children. SNMHC is a holding company that owns a large number of subsidiaries, which are involved in the purchase, management, and collection of distressed real estate loans and properties.

The activities of SNMHC and its subsidiaries are considered financial in nature, with the exception of four relatively small investments in non-financial companies. Therefore, approval of the application is conditioned on SNHMC ceasing to engage in non-financial activities prior to the effective date of deposit insurance.

Further, SNMHC is not subject to consolidated Federal bank supervision. Therefore, in order to protect the safety and soundness of the Bank and to protect the Deposit Insurance Fund, approval of the application is conditioned on SNMHC executing one or more written agreements that incorporate some or all of the conditions and requirements contained in the FDIC's recently proposed rules regarding certain industrial banks. See 72 Fed. Reg. 5217 (February 5, 2007). The written agreements incorporate those conditions and requirements detailed in the proposed rules that are appropriate for this application.

The Bank is structured as a wholesale bank with primary emphasis on purchasing real estate loans and investment activities. The Bank will not offer checking accounts or accept demand deposits. The proposed Bank's primary trade area includes the greater Las Vegas metropolitan area, encompassing all of Clark County, Nevada. The Bank will purchase loans from a national network of brokers and financial institutions; the loans will be diversified nationally, with a focus on Nevada, Arizona, and California. The Bank will ensure that all affiliate transactions are conducted in accordance with Sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c, 371c-1, and the Board of Governors of the Federal Reserve System's Regulation W, 12 CFR part 223. The Bank will maintain a Board of Directors independent of its holding company and its affiliates.

For the purposes of this proposal, capital is adequate, projections for future earnings prospects are favorable, management is considered satisfactory, and the investment in fixed assets is reasonable. Corporate powers to be exercised are consistent with the purpose of the Federal Deposit Insurance Act. No formal objections to this proposal have been filed and no undue risk to the insurance fund is apparent.

Accordingly, based upon careful evaluation of all available facts and information, the Board of Directors of the FDIC has concluded that approval of the application is warranted, subject to certain prudential conditions.

BOARD OF DIRECTORS

FEDERAL DEPOSIT INSURANCE CORPORATION