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? How you can increase your credit union’s net income by up to 88%... With a single stroke of a pen! Confidential

How? By adding… High-yield, low risk loan participations – 4.00% Gross Adjusted Yield Adjusted for charge offs and premium amortized over 4-7 years 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

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

What Do We Do? We… 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” Provide a “fair & balanced” method of determining the pricing & terms between buyers & sellers Confidential

Regulatory Rules – Credit Unions Need to be a SBA Participating Lender 120.432 Complies with the NCUA Loan Participation Rules 701.22 More information is available on the "Legal Guidance" tab of our website http://sbatails.vpweb.com Confidential

No Field Of Membership Required – Breakthrough! 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 Purchasing credit unions need to be: “Well Capitalized” Status CAMEL #1 & #2 or 702 Capital Ratios Confidential

Market for SBA Tails? 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 $360 BILLION or 60% of the retain portion are sellable under the SBA Tails program At least 50% owned by community banks $180 BILLION Plus $2.4 BILLION of new originations each year $1.2 BILLION owned by community banks Confidential

Who Are Sellers? Community Banks Why? Banks can now sell another 15% at a premium, on a non-recourse basis, resulting in: 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

Regulatory Rules – Banks No additional requirements, except “Prior Written Notice” to the SBA Area Office 120.432 Need to retain at least 5% 701.22 That is it! Confidential

Who Are the Buyers… Credit Unions Why? 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 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

Impact on Earnings… Up to an 88% Increase 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 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

Credit Criteria for LP Purchases Determine the expected premium with our Pricing Calculator©, based on Net Interest Rates of the selected loans Selection Criteria – based NAICS Code data: No Default Rates over 20% No Charge Off Rates over 3% No Net Interest Rates under 4% 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

Highly Diversified Credit Risks 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 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

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

Purchase Process 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 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 6-8 weeks after the submission of application Confidential

Summary 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

Contacts Robert J. Daniel, SE Area Director Cell: 678-525-9872 bob1daniel@yahoo.com Walter H. Roder, Managing Director Cell: 678-371-3352 wrodering@netzero.com For more details - http://sbatails.vpweb.com Confidential