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New Wave Market Makers We Make Markets for SBA Tails™ for Credit Unions New Wave Market Makers We Make Markets for SBA Tails™ for Credit Unions

What Are We Here to Discuss? n How you can increase your credit union’s What Are We Here to Discuss? n How you can increase your credit union’s net income by up to 88%. . . n With a single stroke of a pen! Confidential 2

How? By adding… n High-yield, low risk loan participations – 4. 00% Gross Adjusted How? By adding… n High-yield, low risk loan participations – 4. 00% Gross Adjusted Yield ¨ Adjusted for charge offs and premium amortized over 4 -7 years n n n Complies with NCUA rules for Loan Participations – 701. 22 NO FIELD OF MEMBERSHIP REQUIRED Highly diversified pools of loan participations ¨ Typically 5 loan participations per $1 million Confidential 3

Who Are We? We - the Management Team: n Have many years of experience Who Are We? We - the Management Team: n Have many years of experience with SBA lending at the local & national bank levels n Developed a program by which banks can now sell 90% of their SBA loans vs. the traditional 75% Confidential 4

What Do We Do? We… n Are the program manager & market maker for What Do We Do? We… n Are the program manager & market maker for banks desiring to sell the non-guaranteed portion of their SBA loans, being: 60% of the retained portion ¨ 15% of the current bank balance ¨ Typical a 106% vs. 116% premium for the guaranteed portion ¨ This loan segment is called “SBA Tails” ¨ n Provide a “fair & balanced” method of determining the pricing & terms between buyers & sellers Confidential 5

Regulatory Rules – Credit Unions n Need to be a SBA Participating Lender ¨ Regulatory Rules – Credit Unions n Need to be a SBA Participating Lender ¨ 120. 432 n Complies with the NCUA Loan Participation Rules ¨ 701. 22 n More information is available on the "Legal Guidance" tab of our website ¨ http: //sbatails. vpweb. com Confidential 6

No Field Of Membership Required – Breakthrough! n When structured using our method: ¨ No Field Of Membership Required – Breakthrough! n When structured using our method: ¨ Using a Georgia chartered credit union to purchase the loan participations first and then… ¨ Resell them to Federal and State Credit Unions nationwide ¨ Georgia credit unions have uniquely an exemption from FOM for the purchase of loan participations n Purchasing credit unions need to be: ¨ “Well Capitalized” Status ¨ CAMEL #1 & #2 or 702 Capital Ratios Confidential 7

Market for SBA Tails? n There are $600 BILLION of retained portions of SBA Market for SBA Tails? n There are $600 BILLION of retained portions of SBA loans on the books of banks ¨ The 25% retained portion that is not guaranteed ¨ Another $4. 0 BILLION is generated each year n $360 BILLION or 60% of the retain portion are sellable under the SBA Tails program ¨ At least 50% owned by community banks n $180 BILLION ¨ Plus $2. 4 BILLION of new originations each year n $1. 2 BILLION owned by community banks Confidential 8

Who Are Sellers? Community Banks Why? n Banks can now sell another 15% at Who Are Sellers? Community Banks Why? n Banks can now sell another 15% at a premium, on a non-recourse basis, resulting in: ¨ ¨ ¨ n Gains on Sale – 103 - 104% premium on average Acceleration of deferred premiums (FAS 140) – up to 2. 5 times the premium Retain the 1% servicing fee Fully controls recoveries & liquidations Reduce default exposure by 60%, or Originate $1. 0 million of new SBA loans for each $1. 0 million of SBA Tails sold, without any additional capital! ¨ Plus additional premiums of $98, 250! Confidential 9

Regulatory Rules – Banks n No additional requirements, except “Prior Written Notice” to the Regulatory Rules – Banks n No additional requirements, except “Prior Written Notice” to the SBA Area Office ¨ 120. 432 n Need to retain at least 5% ¨ 701. 22 n That is it! Confidential 10

Who Are the Buyers… Credit Unions Why? n n SBA Tails are highly attractive Who Are the Buyers… Credit Unions Why? n n SBA Tails are highly attractive purchases for credit unions 7 times the typical credit union’s earned income – Over 400 bps Adjusted Gross Yield vs. 50 bps on average, adjusted for: ¨ Credit risks – typically 2. 00% charge offs (NAICS Codes) ¨ Premium amortization – over 7 years for 25 -Year CRE loans - 1. 33% ¨ With at least 350 bps Lifetime Yield after amortizing the premium ¨ n n Gross Premiums – 104% to 106. 5% Regulatory structure eliminates the need for a “Field of Membership” for the borrowers… Highly diversified loan pools – 5 loans per $1 million Consistent underwritings standards governed by the SBA criteria Confidential 11

Impact on Earnings… Up to an 88% Increase n Typical Credit Unions earn 50 Impact on Earnings… Up to an 88% Increase n Typical Credit Unions earn 50 bps – $250 million X 50 bps = $1. 25 million Smaller credit unions earn less (under $250 million) – 25 bps ¨ Average credit unions ($250 million) – 50 bps ¨ Larger credit unions earn more ($500 million) – 75 bps ¨ Super large credit unions (over $1 BILLION) – 100 -150 bps ¨ n SBA Tails Capacity - 12. 25% X $250 million $31 million purchase ¨ Increased net earnings = $1. 1 million ¨ 88% increase in earnings from a single purchase! ¨ Of course, you do not have to purchase your allocation all at once… ¨ Confidential 12

Credit Criteria for LP Purchases n Determine the expected premium with our Pricing Calculator©, Credit Criteria for LP Purchases n Determine the expected premium with our Pricing Calculator©, based on Net Interest Rates of the selected loans n Selection Criteria – based NAICS Code data: No Default Rates over 20% ¨ No Charge Off Rates over 3% ¨ No Net Interest Rates under 4% ¨ n n n SBA Rated “ 4” or better Not more than 29 days pass due – ever! Buyer can re-underwrite all or a sample of the PLs purchased Confidential 13

Highly Diversified Credit Risks n 5 loan participations per $1 million of SBA Tails Highly Diversified Credit Risks n 5 loan participations per $1 million of SBA Tails vs. typically one loan per PL ¨ Very unlikely more than one loan defaults due to the pre-screening criteria – 20% max. limit n Recoveries average 90%, with Charge-Offs: ¨ SBA Tails PLs = 2% per $1 million ¨ Other PLs = 10% per $1 million ¨ 5 times lower exposure to charge-offs Confidential 14

Advantages for Credit Unions? n Safe & Sound… means of increasing business loans with Advantages for Credit Unions? n Safe & Sound… means of increasing business loans with high yields ¨ n n Simple way of getting to understand SBA lending Relative straightforward process to become a SBA Participating Lenders ¨ n Most credit unions are not near their lending limits No Fees or production requirements Third-Party underwriting & back office providers Variable costs ¨ No additional low cost services ¨ Confidential 15

Purchase Process n Lead Georgia chartered credit unions can ¨ Buy for their own Purchase Process n Lead Georgia chartered credit unions can ¨ Buy for their own account up to their regulatory limit – 12. 25% of assets as business loans ¨ Act as a “conduit” to resell to n n Federal credit unions nationwide State chartered credit unions in other states Without the “Field of Membership” requirements End-Buying Credit Unions ¨ Need only be SBA Participating Lenders n 6 -8 weeks after the submission of application Confidential 16

Summary n n n Non-Recourse Sale ¨ 60% of the 25% non-guaranteed retained portion Summary n n n Non-Recourse Sale ¨ 60% of the 25% non-guaranteed retained portion or 15% of the loan Gross Adjusted Yield – At least 4. 00%, variable rate reset monthly or quarterly Lifetime Adjusted Yield – At least 3. 50% Complies with NCUA 701. 22 and SBA 120. 432 (Credit Unions need to become SBA Participating Lenders prior to the purchase) Risk Adjusted for NAICS Charge-Off rates, highly diversified by having 5 loans participations per $1. 0 million unit Consistent underwriting controlled by SBA credit criteria NO FIELD OF MEMBERSHIP REQUIREMENTS– with certain capital requirements Classified as business loans (not as investments), with a limit of 12. 25% of asset Third-party servicing and collections Premium amortized over 7 years for 20 - year or greater terms and 5 years for terms under 20 years Sold in $1. 0 million units, ideally in $5 million amounts Confidential 17

Contacts n Robert J. Daniel, SE Area Director ¨ Cell: 678 -525 -9872 ¨ Contacts n Robert J. Daniel, SE Area Director ¨ Cell: 678 -525 -9872 ¨ bob 1 [email protected] com n Walter H. Roder, Managing Director ¨ Cell: 678 -371 -3352 ¨ [email protected] com n For more details - http: //sbatails. vpweb. com Confidential 18