Keystone HELP Update, Issues and FutureAFC First Financial Corporation

September 20, 2011

Peter Krajsa, Chairman and CEO

AFC First – A National Leader In Energy Efficiency Lending

• AFC First Financial Corporation is an experienced specialty energy efficiency lender and the provider of the EnergyLoan® program.

• Founded in 1947 in Allentown, PA. AFC has processed over 50,000 energy efficiency loan applications.

• Retail contractor-driven energy lending to consumers has been primary business since 1999.

• AFC First is one of only three Fannie Mae approved Energy Lenders in the nation.

• Currently lending in 24 states with over 3,000 Approved Contractors, Manufacturer, Utility and State and Municipal Partners

• Developing Green Energy Federal Credit Union for Program Expansion

• First Private Pilot Home Performance with EnergyStar Sponsor

AFC’s National Programmatic Expansion

•National EnergyLoan Platform•PA’s Keystone HELP•Energize Delaware•Maryland EnergyLoan•Greater Cincinnati Energy Alliance•Illinois On Bill Finance Program•Kentucky Home Performance Finance•Efficiency Maine PACE program•CT Solar Lease•CT Energy Efficiency Loan Program

•Progress Energy•National Grid•Duke Energy

•Selected as one of 18 pilot Power Saver Lenders

PA’s Keystone HELP (Home Energy Loan Program)• One of the most successful state sponsored consumer

energy efficiency finance programs in the nation

• Over 8,000 loans and $65 million funded since 2006 with rapidly increasing consumer demand

• Over 1,600 Approved Contractors statewide

• A model DOE and EPA program and a principal prototype for the proposed federal Home Star program as it addresses both “reactive” and “proactive” energy improvement needs

• Based on a pilot started by the West Penn Power Sustainable Energy Fund it has involved into a unique public-private partnership which leverages loan capital provided by PA Treasury and PHFA with DEP (ACT 1 and ARRA) funds to provide greatest incentives

Keystone HELP Loans by County 2006-2010

Keystone HELP Annual Loan Growth 2006-2010

Pennsylvania’s Keystone HELP Enhanced By EnergyWorks ®

Loss Reserve/Rate Buydowns

PA DEPEnergyWorks

Core Loan Capital

PA TreasuryPA Housing

Finance Agency

Contractor Management/Loan Origination & Servicing

AFC First Financial Corp.ECA (EnergyWorks)

Approved Contractors

Homeowner

Program Dollars for Loss Reserves and Other Incentives Promote Private Capital Investment

Great New Simplification and Replacement of "CAPP Scorecard/Points" with a Simple Checklist for 2.99% Financing Statewide (for Energy Improvements with Air Sealing and Insulation (BPI Only)

You Can Now Combine Keystone HELP Financing with All Utility, Manufacturer and Other Rebates (Including Act 129) For the Most Affordable "Price Package" for The Customer!

Continued Low Rate 7.99%/8.99% Unsecured Financing Statewide for stand alone ENERGY STAR Heating, Cooling, Windows, Doors, Insulation and More

4.99% for Geothermal Heat Pumps, plus “No Payments for 12 Months"Optional Additional Tax Credit Anticipation Loan

Larger Secured Loans  to $35,000 for Whole House, Solar and Major Energy Improvements to 120% LTV - Pennsylvania's PowerSaver-type program

Special rates for flood damage repair for 19 effected counties through December 14.

What’s New with Keystone HELP Statewide?

Unsecured 4.99/5.99 Financing to $15,000 for HEATING, COOLING, WINDOWS, DOORS, INSULATION (SILVER)◦ Bucks, Chester, Delaware, Montgomery and Philadelphia Counties through EnergyWorks ◦

Unsecured CAPP 0.99 Financing to $15,000 for Energy Improvements with Air Sealing and Insulation (GOLD)◦ For BPI Contractors/ECA Only

No Loan or Funding Fees to Contractor

100% Financing – Combine a Low Monthly Payment with Rebates from Utilities, Manufacturers and Others to Provide the Most Affordable Package! - Homeowners are eligible to receive both an Act 129 funded Utility rebate and a Keystone HELP Loan

Longer Terms Than Conventional Loans Means Lower Monthly Payments

Simple Interest, Fixed Rate, Fixed Payment – No Surprises, No “Teasers”

No Penalties for Pre-Payment

Fast, Professional Service to You and Your Customers

Contractors Approved for Keystone HELP Can Offer All of AFC First EnergyLoan financing programs

What Improvements Are Eligible?

•ENERGY STAR rated Heating and Cooling (All Fuels)

•ENERGY STAR Water Heaters, Fans, Thermostats

Above must be listed on energystar.gov or ARI certified as ENERGY STAR

•Solid Fuel Indoor Furnaces (Wood, Coal etc.) – 78% AFUE

•Air Sealing (Whole House) and Insulation to Program Standards

•ENERGY STAR Windows and DoorsMust have a NFRC label with U-Factor <= .30

•Recommendations of a Certified Energy Audit with sufficient predicted energy savings

Entire job can be financed if at least 75% of the work is for eligible improvements. Improvements not qualifying for Keystone HELP may be

eligible for other financing programs at different rates and terms.

New Simple CAPP Checklist – The “Scorecard” Has Been Eliminated!

2011 Issues and Complexities

• Last minute November 2010 edict to not allow loans to be coupled with utility rebates (since corrected!) briefly stymied program’s historic growth. Consumers (and contractors) were confused, The power of financing is to allow consumers to leverage manufacturer, utility and other rebates for the lowest possible monthly payments.

• Economic conditions are making customers think about band aids rather than upgrades. Investments in energy efficiency are not top of mind and “whole house” (air seal before HVAC), no matter how beneficial, seems complex to consumers because contractors are reluctant to present it. They are afraid to lose a sale – yet it may be the most effective path for both contractors and consumers (bigger sale, more savings)

• Complexity kills programs. The perfect is the enemy of the good. Most Better Building and states programs have low uptake because of excessive requirements that turn off consumer and contractors. PA is an exception.

2012 Opportunities • Utility partnerships coupling marketing and rebates and

potentially ACT 129 funds with financing to continue to provide low rates are resurfacing and can drive markets

• The long awaited secondary market to allow a continuous low of affordable capital into energy efficiency financing is close coming to fruition. PA Treasury has taken the national lead on this with its “WHEEL” model. The uncertainty of who will fund energy efficiency lending as a long term investment, despite its extraordinary performance, has induced market instability.

• Credit unions appear to be a very attractive and interested source of capital. AFC First is behind the development of the Green Energy Federal Credit Union, supported by KEEA. The intent is to make this one of the focal points of this capital channel.

• Keep it Simple! Make energy efficiency affordable for consumers, with no hassle and clear benefits and they will respond. Contractors, however, drive the market. They are the missionaries, but it must make business sense.

AFC First – A National Leader In Energy Efficiency Lending

AFC FIRST KEYSTONE HELP CONTACTS

Tessa Shin Director, Keystone HELP Program ManagerKen Yeager VP of Business DevelopmentBob Groegler Business Development ManagerJeff Kadas Director, Marketing & Programs

Peter Krajsa Chairman and CEOJohn Hayes President and COOJulie Unger VP of Operations

(610) 433-7486 keystonehelp.com afcfirst.com