Government Guaranteed Loan Products Overview, Features & Benefits First Quarter 2014

2 Government Guaranteed Loans & Pools Small Business Administration 7(a)Small Business Administration 7(a) –Individual Loan Basis –SBA Loan Pools / Undivided Interest U.S. Department of AgricultureU.S. Department of Agriculture –Farm Service Agency –Rural Development

3 U.S. Small Business Administration Investing In SBA 7(a) LoansInvesting In SBA 7(a) Loans –Individual Basis –Securitized Pool Basis

4 Advantages of Investing In Government Guaranteed Loan Products

5 The Guarantee Full Faith & Credit of the United States Government for both principal and accrued interestFull Faith & Credit of the United States Government for both principal and accrued interest Unconditional and irrevocableUnconditional and irrevocable

6 Advantages of Investing In Government Guaranteed Loan Products Capital

7 Capital Pools are 0% Risk Based CapitalPools are 0% Risk Based Capital Loans are 0% or 20% Risk Based Capital, depending on the bank regulatory authorityLoans are 0% or 20% Risk Based Capital, depending on the bank regulatory authority –Please contact your regulatory authority for specific risk based capital classification

8 Advantages of Investing In Government Guaranteed Loan Products Servicing

9 Self managing assetSelf managing asset Book monthly principal & InterestBook monthly principal & Interest Contact Coastal customer service for supportContact Coastal customer service for support Servicing

10 Advantages of Investing In Government Guaranteed Loan Products Liquidity

11 Liquidity Active secondary marketActive secondary market Fixed rate bidFixed rate bid - offered as a spread to Treasuries - offered as a spread to Treasuries Adjustable rates offer more stable market valuesAdjustable rates offer more stable market values - less dependent upon prevailing interest rates - less dependent upon prevailing interest rates

12 Advantages of Investing In Government Guaranteed Loan Products Pledgeability

13 Pledgeability May be eligible collateral for: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

14 Advantages of Investing In Government Guaranteed Loan Products CRA Investment

15 CRA Investment Government Guaranteed Loans and Pools are socially responsible investments providing capital for the United States small business community.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.Investing in this program has been considered to be CRA positive. Check with your regulators.

16 Advantages of Investing In Government Guaranteed Loan Products Cash Flow

17 Monthly payment of principal and interest on all pools and most loansMonthly payment of principal and interest on all pools and most loans Guaranteed principal and accrued interest on all productsGuaranteed principal and accrued interest on all products Cash Flow

18 Advantages of Investing In Government Guaranteed Loan Products Enhanced Yields

19 Significant spreads to comparable TreasuriesSignificant spreads to comparable Treasuries Minimize interest rate risk with adjustable rates, no periodic caps and in most cases no life capsMinimize interest rate risk with adjustable rates, no periodic caps and in most cases no life caps Enhanced Yields

20 United States Department of Agriculture Loans

21 United States Department of Agriculture Loans USDA Loans consist of two categories:USDA Loans consist of two categories: –Rural development –Farm Agriculture Services

22 United States Department of Agriculture Loans Rural development loans:Rural development loans: –Rural Business Cooperative Services Business & Industry loansBusiness & Industry loans –Rural Housing Service Community Facility loansCommunity Facility loans

23 United States Department of Agriculture Loans Farm Agricultural Services:Farm Agricultural Services: –Farm Service Agency (FSA) Farm OwnershipFarm Ownership Operating LoansOperating Loans

24 United States Department of Agriculture Loans FSA Loans are all agricultural loansFSA 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.

25 Borrower Lending Bank Investor C OASTAL United States Department of Agriculture Loans

26 Disclaimer Nothing 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 or left on any phone voice or text mail system. Please be aware that communications received by or sent from our system are not confidential and are subject to review by supervisory personnel.