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Government Guaranteed Loan

Products

Overview, Features & Benefits

First Quarter 2014

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Government Guaranteed Loans & Pools

• Small Business Administration 7(a)– Individual Loan Basis– SBA Loan Pools / Undivided

Interest

• U.S. Department of Agriculture– Farm Service Agency– Rural Development

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U.S. Small Business Administration

• Investing In SBA 7(a) Loans– Individual Basis– Securitized Pool Basis

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Advantages of Investing In Government Guaranteed Loan Products

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The Guarantee

• Full Faith & Credit of the United States Government for both principal and accrued interest

• Unconditional and irrevocable

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Advantages of Investing In Government Guaranteed Loan Products

Capital

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Capital

• Pools are 0% Risk Based Capital• Loans are 0% or 20% Risk Based

Capital, depending on the bank regulatory authority

– Please contact your regulatory authority for specific risk based capital classification

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Advantages of Investing In Government Guaranteed Loan Products

Servicing

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• Self managing asset• Book monthly principal

& Interest• Contact Coastal

customer service for support

Servicing

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Advantages of Investing In Government Guaranteed Loan Products

Liquidity

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Liquidity

• Active secondary market• Fixed rate bid

- offered as a spread to Treasuries

• Adjustable rates offer more stable market values - less dependent upon prevailing interest

rates

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Advantages of Investing In Government Guaranteed Loan Products

Pledgeability

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Pledgeability

• May be eligible collateral for:– Public funds– Federal Home Loan Bank advances (Topeka)– Federal Reserve Advances– Treasury Tax & Loan accounts– Please check with regulatory authorities for

specifics

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Advantages of Investing In Government Guaranteed Loan Products

CRA Investment

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CRA Investment

• Government Guaranteed Loans and Pools are socially responsible investments providing capital for the United States small business community.

• Investing in this program has been considered to be CRA positive. Check with your regulators.

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Advantages of Investing In Government Guaranteed Loan Products

Cash Flow

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• Monthly payment of principal and interest on all pools and most loans

• Guaranteed principal and accrued interest on all products

Cash Flow

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Advantages of Investing In Government Guaranteed Loan Products

Enhanced Yields

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• Significant spreads to comparable Treasuries

• Minimize interest rate risk with adjustable rates, no periodic caps and in most cases no life caps

Enhanced Yields

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United States Department of Agriculture Loans

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United States Department of Agriculture Loans

• USDA Loans consist of two categories:–Rural development–Farm Agriculture Services

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United States Department of Agriculture Loans

• Rural development loans:–Rural Business Cooperative Services• Business & Industry loans

–Rural Housing Service• Community Facility loans

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United States Department of Agriculture Loans

• Farm Agricultural Services:–Farm Service Agency (FSA)

• Farm Ownership• Operating Loans

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United States Department of Agriculture Loans

• FSA Loans are all agricultural loans–The FSA guarantees loans made by eligible agriculture lenders to farmers and ranchers for farm ownership, improvements, and operating purposes.

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Borrower

Lending Bank

Investor

COASTAL

United States Department of Agriculture Loans

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DisclaimerNothing contained herein is an offer to sell or the solicitation of an offer to buy any financial instrument. The opinions and recommendations presented do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. Investors must make their own independent decisions regarding any securities or financial instruments mentioned herein and seek professional advice, including tax and accounting advice. Any indications of market valuation contained herein are based on current information that we consider reliable, but we do not guarantee it is accurate or complete and users should make whatever additional determinations of market value they deem appropriate. All assumptions, opinions and estimates constitute Coastal Securities, Inc.’s (CSI) judgment as of this date and, along with prices and yields, are subject to change without notice. Past performance is not indicative of future results. The yield and/or average life shown on loans, SBA pools, CMOs or mortgage backed securities consider prepayment assumptions that may or may not be met. Changes in prepayments may significantly affect yield and/or average life. CSI does not accept orders or instructions transmitted via email or left on any phone voice or text mail system. Please be aware that communications received by or sent from our email system are not confidential and are subject to review by supervisory personnel.