Commitment Letter and Credit Facility Renewal Agreement between HF Financial Corp. and Home Federal Bank (April 28, 2009)

CAPITAL MARKETS

EQUITY RESEARCH

INVESTMENT BANKING

CORRESPONDENT SERVICES

STRATEGIC ALLIANCES

Borrower:

HF Financial Corp. (hereinafter “Borrower”)

Bank:

Home Federal Bank (hereinafter “Bank”)

Purpose:

General liquidity needs, capital injection to subsidiary savings bank, and/or repurchase Bank stock as comes available.

Amount:

$6,000,000.00 (hereinafter “Note”)

Collateral:

25% of stock in Home Federal Bank. This will only be required if credit facility is drawn upon.

Terms:

Interest quarterly with principal due at maturity.

Rate:

FTB Base Rate minus 1/4%, with a floor of 4.00%

Maturity:

September 30, 2009

Affirmative Covenants:

Borrower hereby covenants and agrees that, until the Note, together with interest thereon, is paid in full, unless specifically waived by the Lender in writing, Borrower will, or will cause Borrower and Bank to;

Financial Reports

Furnish to Lender (a) as soon as available and in any event within ninety (90) days after the end of each calendar year, consolidated and consolidating balance sheets of Borrower and Bank, as at the end of such year and consolidated and consolidating statements of income of Borrower and Bank for the year then ended, together with the audit report and opinion of independent Certified Public Accountants acceptable to the Lender with respect thereto, which audit report and opinion shall contain no exceptions or qualifications unacceptable to Lender; (b) promptly upon receipt, copies of all management letters and other assessments and recommendations, formal or informal, submitted by the Certified Public Accountants to Borrower or

Bank; (c) a copy of Borrower’s FR Y-9 Parent Company Only Financial Statement and (d) a copy of Borrower’s F.R. Y-6 Annual Report promptly upon the filing of the same with the Federal Reserve Board; and (e) a copy of Bank’s Quarterly Report of Condition and Income promptly upon the filing with the appropriate regulatory agency.

Capital Ratios

With respect to the financial statements of the Borrower and Bank, maintain at all times until payment in full of the Loan “well-capitalized” levels of both Borrower and Bank in full compliance with all state and federal regulatory authorities and without limiting the generality of the foregoing, a ratio of Qualifying Total Capital to Weighted Risk Assets as required by all state and federal regulatory authorities; provided further, however, with respect to the financial statement of the Bank, in no event shall the ratio of Tier 1 Capital to the difference between Total Assets less Goodwill be less than six percent (6.00%) at the end of each calendar quarter. For purposes hereof, “Qualifying Total Capital” and “Weighted Risk Assets” are defined in Appendix A to Title 12, Code of Federal Regulations, Part 325, Capital Maintenance.

Loan Loss Reserves

With respect to Bank, maintain at all times loan loss reserves in amounts deemed adequate by all federal and state regulatory authorities.

Notice of Litigation

Borrower shall notify Lender of any actions, suits or proceedings instituted by any person against the Borrower, the Bank or other Subsidiary claiming money damages or other monetary liability. Said notice to be given within ten days of the first notice to Borrower or other party of the institution of such action, suit or proceeding and to specify the amount of damages being claimed or other relief being sought, the nature of the claim, the person instituting the action, suit or proceeding, and any other significant features of the claim.

Events of Default

Any one or more of the following events shall constitute a default (“Event of Default”) under the terms of this Agreement:

Payment

Default in the payment when due of the principal or interest on the Note;

Performance

Default in the performance of any provisions or breach of any covenant of this Letter Agreement or any other Loan Document;

Misrepresentation

If any representation, warranty or any other statement made or deemed to be made by the Borrower herein, in any other Loan Document, or in any writing, certificate, or report or statement at any time furnished to Lender pursuant to or in connection with this Agreement shall to be false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Bankruptcy

If Borrower or Bank files a petition in bankruptcy or seeks reorganization or arrangements under the Bankruptcy Code (as it now exists or as amended); is unable or admits in writing its inability to pay its debts as they become due or is not generally paying its debts as they come due; makes an assignment for the benefit of creditors; has a receiver, custodian or trustee appointed voluntarily or involuntarily, for its property; or is adjudicated bankrupt; or if an involuntary petition is filed in bankruptcy, for reorganization or arrangements, or for the appointment of a receiver, custodian or trustee of Borrower or Bank on their respective properties and if Borrower or Bank either acquiesce therein or fails to have such petition dismissed within sixty (60) days of the filing thereof.

Return on Assets

If Borrower, on a consolidated basis, shall fail to maintain an annualized return on total average assets of at least sixt one hundredths of one percent (0.60%) as

reported on a quarterly basis. For purposes of this covenant “total average assets” shall be deemed to mean the year-to-date consolidated average of total assets of Borrower.

Non-Performing Loans

If the Borrower’s non-performing loans, on a consolidated basis, exceed two and one-half percent (2.50%) of the Bank’s gross loans. For purposes hereof, “non-performing loans” shall be defined as the sum of all loans any installment or prepayments on which are 90 days or more past due plus all loans that are on non-accrual plus those loans which have been renegotiated (as defined by the regulatory agencies) or restructured to provide a reduction in either interest or principal because of a deterioration in the financial position of the borrower.

Change in Control

If there shall at any time occur without the prior written approval of Lender a change in control (including any change in control under the Change in Bank Control Act of 1978, as amended, and any transaction or restructuring which requires approval under the Bank Holding Company Act of 1956, as amended) of Bank or Borrower.

Supervisory Action

The issuance, after the date hereof, by or at the request of any bank regulatory authority of any Supervisory Action. As used herein, “Supervisory Action” shall mean and include the issuance by any bank regulatory authority of a letter agreement or memorandum of understanding (regardless of whether consented or agreed to by the party to whom it is addressed); or the issuance by or at the behest of any bank regulatory authority of a cease and desist order, injunction, directive, restraining order, notice of charges, or civil money penalties, against Borrower, Bank or the directors or officers of either of them, whether temporary or permanent.

Remedies

If an Event of Default shall occur, at any time thereafter, Lender may, at its option without demand or notice (except as otherwise provided herein), the same being expressly waived, declare the Loan, with interest thereon, to be immediately due and payable, and may proceed to exercise all rights and remedies available under the Pledge Agreement, under any other Loan Document, at law or in equity, concurrently or sequentially, in such order as Lender may elect, all such rights and remedies being cumulative.

Miscellaneous

Binding Effect

This Letter Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective heirs, successors, and assigns, except that Borrower shall not have the right to assign its rights hereunder or any interest therein without the prior written consent of Lender.

Governing Law

This Letter Agreement shall be governed and construed in accordance with the laws of the State of Tennessee; except that the provisions hereof which relate to the payment of interest shall be governed by (i) the laws of the United States or, (ii) the laws of the State of Tennessee, whichever permits the Lender to charge the higher rate, as more particularly set out in the Note.

Survival

The terms and provisions of this commitment shall survive the closing of the Loan made hereunder, the delivery of all documents necessary to carry out the provisions of this commitment, and the funding and making of loans and disbursements hereunder. Unless superseded or supplemented by a separate loan agreement, this Letter Agreement shall constitute the Loan Agreement between the parties.

Dividends

Borrower may pay cash dividends without restriction provided Borrower and Bank are in compliance with the terms and conditions of said Letter Agreement and an Event of Default has not occurred.

Closing Cost

All legal expenses, if any, associated with the closing of the subject credit facility will be the responsibility of the Borrower. However, in order to eliminate any significant legal costs associated with Loan, and to expedite the loan closing process, it is anticipated that, when applicable, standard First Tennessee Bank documents, to include but not limited to, the note, commercial pledge agreement, standard letter agreement, etc., will be used.

Other

A review of the Bank’s quarterly performance will be conducted prior to funding. It is expressly understood that Lender reserves the right to decline this commitment if a material adverse change has occurred at the Bank or Holding Company Level.

HF FINANCIAL CORP.

By:

/s/ Curtis L. Hage

By:

/s/ Darrel L. Posegate

Curtis L. Hage

Darrel L. Posegate

Title:

Chairman/Pres./CEO

Title:

EVP/CFO

Date:

5/15/09

Date:

5/15/09