MoneyGram 2009 Annual Report Download - page 674

Section 4.8 1
Ordinary Course 1
1. On October 17, 2007, Holdco announced the strategic review of Holdco's payment systems segment. On January 7, 2008, Holdco's Board of Directors
approved the restructuring of its Official Check business model by changing its commission structure, enabling Holdco to continue providing these
essential services by focusing on small to mid-sized institutions and exiting certain large customer relationships. Holdco expects to exit contracts with
most of its top ten Official Check customers, who together account for approximately $2 billion of Holdco's Official Check payment obligations.
2. The Form 8-Ks filed with the SEC on January 14, 2008, January 15, 2008, January 31, 2008, February 12, 2008, March 5, 2008, and Form NT-10-K
filed February 29, 2008, and Form NT-10-K/A filed March 13, 2008 are incorporated herein by reference.
3. First Interstate has requested and Holdco has agreed to increase First Interstate's funding frequency to limit end of day settlement to $40 million of
exposure.
4. Huntington National Bank has requested and Holdco has agreed to provide Huntington early day funding in the amount of approximately $130 million.
5. Holdco has agreed with Wells Fargo to pre-paid funding status for ACH transaction (representing approximately $10 million) and international wires
(approximately $100 million) and to ensure funds are available prior to cash letter posting.
6. Since the beginning of 2008, Holdco received notices of cancellation and discontinuance of issuance from a number of Official Check customers.
Holdco has also terminated or begun termination of a number of Official Check relationships. The Official Check customers that have provided formal
or verbal notice of termination or have stopped issuing checks are listed as Exhibit A to this Section 4.8. The current status of Holdco's relationships
with its top 10 Official Check customers is summarized in Exhibit B to this Section 4.8..
7. Holdco currently holds approximately $680 million in deposits from Official Check customers for same day remittances. In connection with Holdco's
recent disclosure of the unrealized losses in its investment portfolio, certain Official Check customers have asked Holdco to return their deposits for
same day remittances. These customers are Huntington National Bank (representing $31 million in deposits), BankAtlantic (representing $9 million in
deposits), Bancorp South (representing $6 million in deposits), and Farmer's & Merchants Trust (representing $3 million in deposits). At this time, no
deposits have been returned and it is Holdco's current plan that such amounts shall not be returned until the customer has executed a termination
agreement. Several additional Official Check customers have inquired about their deposits, but have not yet demanded a return of the deposit.
8. From January 1, 2008 through March 14, 2008, Holdco sold a total of approximately $3.8 billion of securities (based on book value as of December 31,
2007), resulting in a realized
1 The appearance of [ * ] denotes confidential information that has been omitted from this Exhibit and filed separately with the SEC pursuant to a
confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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