The History

First Bank of Minnesota (FBM) was formed May 26, 2003, andobtained the majority of outstanding

stocks of The First National Bank of St. Paul (FNBSP) and NorthMN State Bank (NMNB) on November

18, 2003. After acquiring Securian Security, Inc. (SSI), FBMdefined as a multi-tiered holding company

for tax purposes is organized as a C corporation. FBM is a bankholding company organized under the

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laws of Minnesota. The Corporation, through its banksubsidiaries, FNBSP, NMNB and SSI, engaged in

general commercial banking. On January 16, 2004, FBM purchased100% of the common stock of SSI.

FBM, effective October 1, 2005, owns the merged banking entityof First National Bank Crosslake

(FNBC) which was merged effective that date. The Office of theComptroller of Currency approved the

merger in July of 2005. Also as a part of this merger approval anew bank name was born. All of our

banking entities following the merger will do business under thename of First Bank Minnesota.

Upon consolidation the combined assets were $215,000,000 with anew lending limit of approximately

$3.2 million. Our strategy moving forward is to continue tomaintain a well-diversified balance sheet with

a focus on individuals, small and mid-size businesses,non-profit institutions, and government entities.

The mission of FBM is to guide, direct, and grow its subsidiarybanks to operate in a profitable,

professional, and efficient manner to enhance shareholder valueand to provide excellent service to our

customers, concentrating in our trade area.

Corporate Profile

FBM is a financial service holding company headquartered inBaxter, Minnesota, with banking offices in

Crosslake, Breckenridge, Benson, Morris, Big Lake, and Baxter.Our primary geographic market covers a

large area in Minnesota, including Nicollet, Blue Earth,LeSueur, St. Louis, and Sibley counties.

Through the six banking offices, we serve nonprofitorganizations, businesses, agriculture, and

individuals with a combination of responsive, personal service,and high-quality products. Our aim is to

remain one of the area's most successful and respected financialorganizations by creating and

maintaining mutually beneficial relationships with ourcustomers, shareholders, employees, and

communities.

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Crosslake: 10 employees (one manager), 900 customers.

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Breckenridge: 14 employees (one manager), 500 customers

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Benson: 20 employees (two managers, 6 part-time), 500customers

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Morris: 40 employees (3 managers, 15 part-time), 2000customers

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Big Lake: 20 employees (two managers, 6 part-time), 400customers

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Baxter: 50 employees (Headquarter, top management teams, IT, HR,and so on), 1000 customers.

As a locally owned corporation, we are dependent upon thecommunities we serve for our growth and

profitability. The holding company, its banks, its management,and its staff are committed to supporting

our neighbors and businesses with the financial products andservices they need. In the process, we will

adhere to fair employment and business practices, invest in theprofessional growth of our staffs, reinvest

customer deposits locally, and contribute both time and money tocommunity causes.

Challenges after the Merger

Because of the outstanding growth of our business in the lastseveral years through merger and

acquisition, we have met many challenges. Most of the challengeshave been processed by our

outstanding employees who are experts at customer relationshipmanagement. However, the current staff

members are not so versatile in dealing with the technologicalchallenges after the merger. The following

are a list of concerns:

1. The six offices are using different banking computer systemsto process business transactions, because

of historical reasons and legacy. The new companies cannoteasily get rid of all the legacy systems

which we inherited from the previous banks.

2. The data cannot be easily shared in real time andconsolidation of banking data across the six offices

are not accomplished yet. Each location has its own backupsystem, very limited in terms of size,

capacity, and processing speed.

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3. Different venders constructed the computer networks fordifferent locations, 10base 2, 10base5,

10baseT are seen here and there.

4. Different telecommunication carriers provide phone servicesfor different locations. Telephone bills

across different locations are very high, because all the phonecalls are long-distance calls.

5. There is an increasing demand for internet banking because ofthe development of internet

technologies. The management team has seen this a greatopportunity to reach out our customers who

are from the rural areas.

6. There is an increasing demand for mobile banking because cellphones are very popular now. Our

customers would like to have real time connection to their bankaccounts through cell phones. Any

charges on their bank accounts should be notified to thecustomer by means of cell phone, so that

customers can react to fraudulence, unexpected charges andcrime.

7. There is an increasing concern about the security of thebanking system with the introduction of the

internet. The state and federal governments have various lawsand regulations which FBM is not

aware of. It is not clear whether their current computer networkhas met all the regulative

requirements.

8. There is an increasing demand for communications andcollaborations among employees from

different locations. Various knowledge of how to train employeesand how to process and address

customer concerns should be shared and disseminated easilyacross the company.

Call for Solutions

The company is requesting proposals from different technologyfirms for solutions to address these

concerns. You are supposed to provide a detailed plan and sendover to the management team.