1. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Borrowing in Today’s Banking Environment July 25, 2012 Presented by Charlie Crawford

2. F IRST C LASS S ERVICE. F IRST N AME B ASIS.

3. Banking in Georgia 238 banks chartered in Georgia – 81 percent of Georgia’s banks are well capitalized based on regulatory guideline for having 10% or higher total risk-based capital ratio.

4. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Banking in Georgia

5. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Decline of Troubled Banks

6. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Banking in Georgia 6 Georgia banks closed in 2012 (23 Georgia in 2011, 21 in 2010) 26 Georgia banks received TARP funds ($6.2 billion) in October of 2008 – Most have not repaid

7. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Signs of Stabilization Credit quality continues to improve Income within the industry is improving

8. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Signs of Stabilization

9. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Signs of Stabilization

10. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Industry Shift The number of bank branches in the US has fallen for the second year in a row – Consolidation of the industry – New technology allows clients choices

11. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Technology Influence Remote Deposit Capture (RDC) – 2.1 billion checks are projected to migrate to RDC from other channels by 2016, with adopters depositing 73% of their paper checks via RDC.

12. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Economic Hurdles

13. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Regulatory Environment New rules and regulations is hindering banks’ ability to serve their communities Regulatory examination pressures causing some bankers to resort to balance sheet shrinkage and curtailment of lending.

14. F IRST C LASS S ERVICE. F IRST N AME B ASIS. SBA Lending Georgia SBA Lending Hits All-Time High – Approving over $1B in guaranteed loans to small businesses in Georgia – Georgia leads the SBA's Southeast Region in volume

15. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Lending Today C&I Loans

16. F IRST C LASS S ERVICE. F IRST N AME B ASIS. C & I Lending Migration from real estate lending to various forms of C&I lending For the Atlanta Region, C&I volume increased by ~$38.1B in 2011, or 15% Increases in capital levels led to a reduction in overall concentration levels for the Region

17. F IRST C LASS S ERVICE. F IRST N AME B ASIS. C & I Lending The C&I delinquency rate for the Atlanta Region (2.11%) is notably above the national average (1.38%) Uptick in banks with C&I concentrations exceeding 100% of Total Capital Banks will need to implement and/or strengthen C&I credit underwriting and administration practices

18. F IRST C LASS S ERVICE. F IRST N AME B ASIS. C & I Lending C&I Loans typically take the form of: – Short-term working capital loans (financing accounts receivable, inventory, etc.) – Seasonal loans – Term loans (to finance capital assets) – Other loans to individuals for various business purposes

19. F IRST C LASS S ERVICE. F IRST N AME B ASIS. C & I Lending Risks On the Borrower Side – Faulty business plans – Poor management – Competition – Economic conditions

20. F IRST C LASS S ERVICE. F IRST N AME B ASIS. C & I Lending Risks On the Bank Side – Inadequate knowledge of business line – Lax supervision and monitoring – Weak management information systems – Fraud – Economic conditions – Inappropriate loan structure (margins, liquidation, etc.) – Concentrations

21. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Recent Bank Credits $1,000,000 Term Loan for an Owner Occupied Warehouse – Prime + 1.75% floating, with a 5.00% floor

22. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Recent Bank Credits $700,000 SBA 504 Loan to finance a business acquisition – P + 2.50% floating for a 10 year term

23. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Recent Bank Credits $2MM Revolving Line of Credit for business operations – Prime + 3.50% floating, with a 6.75% floor

24. F IRST C LASS S ERVICE. F IRST N AME B ASIS. “New Normal” Commercial Loan Underwriting – Cash Flow is key – More documents may be required – Requirement of more real equity Loan Participations Between Banks – Banks are hesitant to participate with others due to considerable losses from the past

25. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Tips on requesting a loan Find a bank that fits you Plan to establish a full banking relationship Clearly articulate your need Come prepared with full financial information Be prepared to offer collateral Plan to give your personal guaranty

26. F IRST C LASS S ERVICE. F IRST N AME B ASIS. What borrowing may look like for you today Healthy banks want / need to make more loans Expect to have more equity in your transaction and an emphasis on multiple sources of repayment You will be rewarded if you are willing to establish a relationship beyond the loan transaction

27. F IRST C LASS S ERVICE. F IRST N AME B ASIS. Questions? July 25, 2012 www.PrivateBankOfBuckhead.com