ch capital bank presentation 1-3-2011

8/3/2019 CH Capital Bank Presentation 1-3-2011

1/13

Re-Positioning Today for a Prosperous Tomorrow

CH Capital Bank Program


2/13

Challenges

Expressed By Industry Participants

Current level of non-performing assets

Capital levels

Liquidity & funding Reduced level of earnings

Inability to service existing customers

Take advantage of environment to convert desired

prospects


3/13

Goals Expressed by Many Bankers

Reduce current level of non-performing assets to deployfreed-up liquidity into earning assets (new loans, securitypurchases, etc.)

Reduce loan concentrations, principally commercial realestate

Improve capital levels to provide flexibility in executingstrategic plans and reduce regulatory pressure

Restructure the liability side of the balance sheet to reduce

high cost borrowings, restrictive borrowings and in general,lower cost of various funding sources

Normalize ALLL expense


4/13

How We Plan to Assist in

Achieving Goals

Establish plan to re-structure balance sheet

Establish and assist in the execution of a capital plan

Establish and assist in the execution of a reduction innon-performing asset levels

Identify funding sources that meet ALCO objectives

(lower cost, less volatile and properly support the asset

side of the balance sheet)


5/13

Strategic alliances/partnerships established with: Private Equity firms and Hedge Funds

Institutional Investors and Mutual Funds

Investment Banks

Community Development Corporations

Wealth Management service providers

Expertise in the following commercial loan programs: SBA 504, 7(a) and all other SBA loan product

enhancements

FHA, HUD, Fannie Mae & Freddie Mac USDA rural development enhancement programs

Tools Available to Achieve Goals


6/13

Tools Available to Achieve Goals(continued)

We possess expertise in:

New market tax credits

Low income housing tax credits

CMBS lending

Loan pooling for partial or full sale/partial or non-recourse

Other capabilities include:

Interest rate hedging

Mezzanine and subordination financing

Bank owned life insurance (BOLI)


7/13

Who We Are:

CH Capital Executive Team

Combined 100+ years in the financial services industry

Experience in:

Money Center and Regional Bank: XX years Investment Bank: 16 years

Community Bank: XX years

All have held Executive or Senior Management positions

Roles in: production, asset/risk/project management


8/13

CH Capitals Objective

To assist you in todays environment

Prove our worth

Become a long-term strategic business partner for

the bank

the holding company

the banks clients

To provide you with access to the tools that:

make you a stronger force

are not cost effective for the bank to house internally manage risk and assist in the achievement of strategic plans

enhance the banks product offering to its clients


9/13

Pressing Issue 504 Refinance Program

Program enhanced in 2009 as part of the Recovery Act Allows existing loans on Banks books for possible refinance into

the program including existing 504 loan transactions

Refinance owner occupied commercial real estate (CRE) up to

125% Loan-to-Value with a 1.10 times debt coverage ratio Program enhancements revert to previous parameters

effective October 2012

Benefit to Bank

SBA enhancement allows for reduction of risk and reduction ofexposure (SBA 2nd lien of 40% held by SBCDC)

Allows for reduction in capital requirements (reduction inexposure), reduction in CRE concentration & free up reserves


10/13

SBA 504 Refinance Program:

CH Capital Capabilities

Facilitating the profiling of existing CRE portfolio for

qualifying loans/projects

Have established streamlined processing with CDCs to

reduce time by xx%

Have willing Partners to purchase 1st lien positions should

Bank wish to further reduce CRE concentration and

additional capital pressure

Program has been a moving target we are queued into

changes/enhancements as they occur


11/13

How the SBA 504 Works

Section 503 Diagram

Borrower CSA

Pooloriginator

Investor

SellerSBA

504 debentureclosed (after2/17/09)

Holds minimum 15% unguaranteedprincipal portion

Services loanLiquidates loanMay sell 15%, buyer assumesobligations of seller (SBA approvalrequired)

Collects:1. Servicing fee (50 bp) on 85% of

loan sold2. Interest and Principal (15%

retained portion)3. Liquidation proceeds (15%

retained portion)

Holds minimum 5% unguaranteedprincipal portion (forever)

Collects:1. Net Interest and Principal (5%retained portion)2. Liquidation proceeds (5% retainedportion)3. Buy/sell spread

Oversees servicing and liquidationsMay purchase loansConducts pre-sale review (PCLPlenders, etc.)

Conducts purchase review (closing,servicing and liquidation)

Liquidation proceeds (80%)

Purchases guarantee

Sells 80% of loanprincipal in Pools

100%guaranteed by SBA Makes interest andprincipal payment ifborrower does not

Purchasesdefaulted loans from

5% of principal andnet interest paid byborrower

5% of liquidation

proceeds

15% of principal andinterest paid by borrower

100% servicing fee onthe 85% sold

15% of liquidationproceeds

Interest & principalpayments

80% of principal80% of net interest,minus the guarantee fee

CSA collects ongoingguaranty fee and sends toSBA

Interest = full interest paid by borrowerNet Interest = full interest minus servicing feeServicing Fee = 50bp per annum on the outstanding principalbalance paid to the originating bank to service the loan-paid by theborrower, which is included in the interest rate (Note: 50bp is theminimum--originating bank could retain a higher servicing fee)Guarantee Fee = subsidy rate basis points per annum on theguarantee portion of the principal balance of the loans in the Pool-paid from borrowers interest payment

Sells 85% of the loan for cash


12/13

FHA Loan Process

FHA HUD Loan

60 days,commitment letter

1 to 2% deposit forrate lock,

refundable atclosing

Get the loan forsyndication,

preflight documentsfor close

6 to 9 months toclose the loan


13/13

Bank Process to Sell Off

Distressed Assets

Sell the assets100%, sell 15%or keep it on thebalance sheet

Premiumcompensationand servicingincome

CH CapitalPartners LLC duediligenceProcess

Brokering thedistressedassets to theprimary market

Decide to add upcapital from sales

to sell thedistressed asset

to third party

FMP qualified ornot qualified

Choices the bankhas for the 504

program

125%, 40% DTIand reasonable

income forborrowers

considered addback

ch capital bank presentation 1-3-2011

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