Thank you for investing in a Home Federal Escalator Certificate of Deposit. This document has been prepared for your reference so that you will be fully aware of the rules established by the Home Federal Board of Directors for your account. The following marked Rules of Class and the General Rules of Class apply to your Escalator Certificate.

PERIOD: The 12-month term is composed of twelve monthly periods.

DISTRIBUTION OF EARNINGS: At each monthly maturity date, you may: 1) Have your earnings transferred to a separate savings or checking account; 2) Leave your earnings in your certificate account, where they compound; or 3) Get a monthly check.

36-MONTH ESCALATOR CERTIFICATE
RULES OF CLASS

PERIOD: The 36-month term is composed of twelve quarterly (three-month) periods.

DISTRIBUTION OF EARNINGS: At each quarterly maturity date, you may: 1) Have your earnings transferred to a separate savings or checking account; 2) Leave your earnings in your certificate account, where they compound; or 3) Get a quarterly earnings check.

GENERAL RULES OF CLASS

RATE: The rate you will earn on your certificate at the issue date (the day you purchase your certificate) and each renewal date during the next twelve periods will be determined by Home Federal and given to you when you purchase your certificate.

MINIMUM BALANCE: A $2,500 minimum account balance is required at all times.

ADDITIONAL DEPOSITS: This particular certificate does not allow for additions to the principal balance. Check with us about our other certificates that have an add-on capability.

DETERMINATION DATES: Earnings will be paid from the date of deposit up to but not including the date of withdrawal.

CALCULATION OF EARNINGS: The Escalator Certificate uses the DAILY BALANCE METHOD.  This method applies a daily periodic rate to the principal in the account each day.

WITHDRAWAL GRACE PERIOD: If you withdraw the balance of your account within seven days after the maturity date, the last rate in effect on the certificate will be paid from the certificate maturity date to the date of withdrawal without any reduction for penalty.

PARTIAL WITHDRAWALS: You may withdraw down to the $2,500 minimum balance level, subject to any early withdrawal penalties that may apply.

EARLY WITHDRAWALS: If you withdraw the principal from this account before a periodic maturity date, there will be a penalty of three months’ interest (whether earned or not) or the replacement cost, whichever is greater. "Replacement cost" is the difference between the original certificate rate and the current rate (if it is higher) for the remaining term, calculated on the amount you withdraw. Any withdrawal which reduces your balance below the $2,500 minimum, or any change in term, is considered a withdrawal of the entire account balance, and will be subject to the early withdrawal penalty. Of course, after the death of an account owner, or if an account owner is declared legally incompetent, there are no early withdrawal penalties. To calculate penalties, we use a weighted average of rates in effect during the term of the certificate. See above for specific penalty for your Escalator Certificate.

AVAILABILITY OF EARNINGS: You may withdraw earnings already credited to your Escalator Certificate account during the monthly/quarterly grace period without penalty. If you leave your earnings in your account on the renewal date, the earnings will be merged with the principal balance.

AUTOMATIC RENEWAL: If after the 12 or 36 month period you allow your certificate to automatically renew, it will renew as an Escalator under the same terms and conditions. The schedule of Rates that you will earn during the next twelve periods will be the schedule of Escalator rates in effect on your twelfth period maturity date.

Your Escalator Certificate will not automatically renew if: 1) You close out your certificate at any time; or 2) Before the twelfth periodic maturity date, we give you written notice that the Escalator Certificate will no longer be offered by Home Federal. In the event that the Escalator Certificate is discontinued, your account will be converted to a One-Month certificate for a 12-month Escalator or a Three-Month certificate for a 36-Month Escalator earning the rate being offered for the One-Month and Three-Month Certificate on the maturity date.

RETIREMENT CERTIFICATES: The Escalator Certificate is not available as a retirement certificate; however, Home Federal offers a wide variety of certificates for retirement accounts.

RIGHT TO CHANGE CONDITIONS: We do reserve the right to change these rules. But any change we make will be effective at the end of the twelfth periodic renewal period, before the automatic renewal of your certificate.

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