ch capital - fmp total

8/3/2019 CH Capital - FMP Total

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SBA 504 Secondary Market Agents

CH Capital Partners LLC

forNorthwest Region

Asian Banks

Financial and Serving proposalBank Holding

Companies


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Privacy and Confidentiality

This is privileged information and is not intended for publicuse. CH Capital requires that this information be held strictlyconfidential.

Non-Disclosure Agreements are requested between bothparties for this and future information and material to beexchanged.

Private Internal use only for Hanmi Bank and CHCapital Partners Sr. Management


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CH Capital Partners & Hanmi Financial

Executive Management

Sok H. Cordell -shareholder

Sr. Managing Director OR

Chris Chu Sr. Managing Partner WA

Co-Chief Credit Officer

Shawn Park - shareholder

Sr. Managing Partner WA

Shawn MacDonald

Sr. Managing Partner CA

Co-Chief Credit Officer

Partners

Mark Pizzuti (Managing Partner) OR

Mark Hetrick (Managing Principal) OR

Troy Willis (Managing Partner) OR

Jim McConnell (Managing Partner) AK

John Delano (Managing Partner) AK

Steve Raycroft (Managing Partner) TX

Bruce Johnson (Managing Partner) TX

Nicole Whamond (Operations) OR

Kendra Schwindt (Marketing) WA Sheila Nordgren (Assistant) WA

Ellen Sim-Cordell (temp employee) OR


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Sok H. Cordell Sr.

Managing

Director

Nicole Whamond Sheila Nordgren

Chris Chu Sr.

Managing

Partner Co -CCO

Shawn

MacDonald Sr.

Managing

Partner Co CCO

Ellen Sim-Cordell

Shawn Park Sr.Managing

Partners

Mark Pizzuti

Managing

Partner

Mark Hetrick

Managing

Principal

John Delano

Managing

Partner

Jim McConnell

Managing

Partner

Terry Painter

Bruce Johnson

Troy Willis Kendra Schwindt

CH Capital Partner LLC

Expertise

Process

Execution


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CH Capital Partners

EPE Program

Expertise

We have over 100 years of SBA finance expertise through community banks, commercialnational banks, Investment banks

Process

Tri-Merge Underwriting Process Simultaneously send out Underwriting in all the same format of the first lien bank, CDC and

FMPP for quick and fast turn around

Try to start to finish within 40 to 45 days

Worked through various processors with an efficient system for communicating with all threeprocessing facilities and making sure all documents are delivered for smooth processing forSBA 504 Loans

Execution Documentation

Clear delivery of loans and funding conditions

Created Multi funding systems banks, non-banks, hedge funds and REITS.


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SBA 504 FMPP

Reasons why SBA created the FMPP market

SBA 504 loans originated in 2007, was approximately 4 to 5 Billion Dollars

SBA 504 loans originated in 2009, was approximately 250 million Dollars

Secondary Market Poolers in 2007 was Lehman Bros, GE, Sterling out of Texas,Community South, Excel National Bank, and Zions

Secondary Market Poolers in 2009 was Zions Bank SBA wanted to initiate SBA loans, so they created SBA 504 FMPP Program


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SBA 504 Non-Bank Lender Program

General Description Of SBA 504 Loan Program

The SBA 504 loan program is a long-term financing tool for economicdevelopment within a community

The 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings

A Certified Development Company is a nonprofit corporation set up tocontribute to the economic development of its community

CDCs are licensed by the SBA as the sole funding source for the SBA504 second lien Debenture

Only owner occupied commercial real estate properties are eligible,SBA defines owner occupancy as the small business borrower

occupying at least 51% or more of the subject property Businesses must be determined to be small per SBA standards. That

equates to a maximum $8.5MM business net worth and a maximum$3.5MM average net income over the prior two years


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SBA 504 Non Bank Loan Program

A Typical 504 Project Includes

A loan secured with a senior lien from a private-sector lendercovering typically 50% of the project cost

A loan secured with a junior lien from a CDC (backed by a 100

percent SBA-guaranteed Debenture) covering 30% to 35% ofthe project costs for special purposes properties, such as hotels.

A contribution of at least 15% (existing business) to 20% (newbusiness) equity from the small business applicant

The first mortgage lender must also make a 90 day (plus)second mortgage interim loan to allow for CDC/SBA funding

SBA pays off this interim loan at the time of CDC/SBA funding(normally 90 days after escrow closing)


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SBA 504 program

SBA 504 program has been in existence for over 30 years

In 2007, SBA 504 loan volume was approximately 6.4 billion in the secondarymarket

In 2009, after 2008 and 2009 financial crisis, the total loan volume shrunk to $255million

In 2009, Congress passed the ARRA 2009 (recovery act) which created the SBA504 FMPP (first mortgage purchase program)

In this act, it was to spark lending to the small business community.

Why no one know, it is because Federal government depends on CDC (communitydevelopment companies) a non-profit 501c3 organizations to spread the word.


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Disciplines

Banking andCredit Services5

Non-Qualified Executive Benefit Plans

Key Person Insurance

Deferral Plans

Wealth Transfers

Objective, Institutional Investment Consulting Process

Asset Allocation Modeling and Investment Policy Statement

Access to Best in Class Investment Managers

Alternative Investments

Structured Investment Products [Co-investment with Wachovia Investment Banking]

Plan and Execute Private Charitable Strategies

Full Administration of Family Foundations and Charitable Trusts

Personalized, Coordinated, Objective Process

Cash Flow, Investment and Insurance Planning

Income and Estate Tax Planning

Business Succession Planning

Debt Management Solutions Flexibly Structured to Meet Individual and Family Needs

Deposit Services

Electronic Banking

Charitable Services

Investment Consultingand Management2

Executive Benefitsand Insurance Services4

Investment CustodialServices2

Personalized Service with a Competitive Fee Structure

Custodial Professionals Work Directly with Cl ients Professional Providers

Financial, Estateand Tax Planning1

Trust Services3 Experience in Trust and Estate Management for Nearly 200 Years

Execute Complex Trust Structures


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CH Capital Partners LLCs role

CH Capital Partners LLC approves the FMPP (first mortgage purchase program)qualification

We represent all the poolers through various contracted relationships

50% LTV

Bank holdan 50% LTV

loan

40% LTV

10%

Equity

Injectionfrom

Borrower

50% LTV 40% LTV

10%

Equity

Injectionfrom

Borrower

Typical SBA 504 deal Typical SBA FMPP 504 deal

5% sells to

the Pooler

80%becomes a

AAA governmentbond and sold off

to investors

Bank holds

15%of the

50%Lien

loan

Secondary Market AAAbond 80%

Investment Bankshold 5%

Communitybanks hold15%


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Traditional Structure

Bankruptcy

RemoteSpecialPurposeVehicle(SPV)

Originator(1)(2)

TrusteeServicer(1)

Investors

InternalCreditEnhancement

ExternalCreditEnhancement

True Sale

Services

Service Fee

Trustee Fee

Services

$ Assets

$Principaland

Interest

(1) Originator and Servicer often are the same entity(2) Sometimes Servicer/Originator may take a subordinate position in the pool providing

some of the structural credit enhancement


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What is FMP

What is 15% hold

What is SBA 504 Poolers

Who is the players

Why is the market so confused


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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 liquidationproceeds

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


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SBA 504 Non Bank Loan Program

Second Mortgage

For those non-bank lenders that choose to fund interim second mortgage loan

1% loan fee

A referral fee in not normally expected on the second mortgage

9% rate is the current market rate

Typical 60 day term for projects involving no construction

If light construction is required, borrower to expects to pay a construction loan fee plusfund control and inspections

Loan to be paid off by CDC/SBA loan


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SBA 7a versus SBA 504 FMPP

SBA 7a Interest rate risk

1994 to 2011 was the greatest bond market ever

2011 to 2015 will be the worst bear bond market ever

Prime sitting on 3.25% with 2.75% is the max mark up, the probability for prime to go

up to 5 to 5.25 is very likely likely of default is very high

SBA 504 Stable income premium model or excess servicing model

Larger deals means larger depository relationship; through Wells Fargo or US bankFBO Hanmi Bank

Cross sell for depository business, non core clients


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One

Application Intake

Full Package Only

Do not waste time with incomplete files

Two

FMPP Approval

CDC Approval

Hanmi Credit Approval

Three

Condition of the loan

Terms of the loan

Deposit Banking Relationship goal

Four

Packaging

90 days of payment for closing

Financial UCC Sweep prior to funding

CH Capital Partners LLC Process


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CH Capital Partners Process

Eligibility Test

2 days at most after receiving the file

Application and all CDC forms done through Adobe or Echosign

LOI from CDC

Deliver through Microsoft SharePoint a full package as the way the CDCsrequested they like to see the document 2 days touch and go system

Third Party Orders Title

Appraisal

Phase I

2 weeks at the latest


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Collaboration through Technology

LMS which is the SBA 504 loan origination and document management system, butalso have access to all PFCS 2000, SBA open, Fiserv, Moodys, T-Soft, and the listgoes on. So if we run into a lender who uses certain software , we will give it tothem their way.

Microsoft SharePoint creates a proprietary system where all lenders (CDCs, banks,

non- banks, third parties) are looking same items Giving CDCs what they want, giving banks what they want, giving borrower what

they want

Reduce time. Electronic signature. Most of time is wasted in documentmanagement, current markets choice is email. Most of the time, when e-mailingfrom one remote place to another, people can lose files, very easy to say I did notreceive it. Electronic signatures on the SBA application and using Microsoft

SharePoint to make sure the processor to the CCO of the CDC, and bankers fromsmall to large all are looking at the same thing and same file. Our MicrosoftSharePoint is created in a organized folder system with adobe as digital signaturedelivery system in which a booklet is created with ADOBE: CH Capital and all ofour lenders have access to the database under secure logins.


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ch capital - fmp total

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