Due Diligence Package

Transcription

1 Due Diligence Package March 11, 2014

2 March 11, 2014 Dear CU Business Group Credit Unions: Thank you for your continued interest and support of CU Business Group. With a staff of 32 business services professionals, CU Business Group now serves more than 450 credit unions in 45 states. Since our inception in 2002, we have reviewed over $4 billion in member business loans on behalf of our credit unions. As CU Business Group continues to grow and to provide your credit union with the business services support you need, we know how important it is for you to monitor the safety and soundness of your service providers. That s why we ve put together this comprehensive information package, designed as a resource to have all your CUBG due diligence needs in one place. Ownership CU Business Group is owned by 7 corporate credit unions. We operate independently from our corporates, both financially and operationally. We are a profitable entity and make a positive contribution to our owners bottom lines. CUSO Rule Compliance CUBG s interpretation of the 2013 NCUA CUSO rule is that the rules apply to credit unions that have an ownership stake in or make loans to a CUSO. CUBG credit unions do business with CU Business Group but do not make loans to or hold ownership in CU Business Group. Therefore, these CUSO regulatory requirements do not apply to your credit union s relationship with CU Business Group. CU Business Group does comply with all the regulatory requirements of NCUA regulation for Corporate Credit Union Service Organizations, which requires us to report financial and operational results quarterly to the NCUA and monthly to our Corporate Credit Union Owners. SSAE16 Compliance CU Business Group is committed to providing our credit unions with the most secure operating environment possible. We treat member information with the utmost care and confidentiality. To that end, CU Business Group obtained a SSAE16 type II audit report which evaluates the controls of our key systems and operating processes. The most recent report is included in this document, and CUBG will be obtaining an updated report this spring, which should be available by the end of July. If you have any questions or would like further information, please don t hesitate to contact me. Sincerely, Larry Middleman, President/CEO CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

3 Table of Contents Financial Condition 4 Our Track Record 6 JKL Risk Management Third Party Loan Review 7 Staff Resumés 9 CUBG Business Continuity Policy 21 CUBG Privacy Policy 22 SSAE16 Report 24 Insurance Coverage 63 Vendor Due Diligence Recap 64 Scope of Services 65 CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

4 CU Business Group Income Statement For the Years Ending December 31, 2012 and 2013 (unaudited) Revenues Underwriting $803,810 $801,325 Documentation 307, ,267 Risk Monitoring 522, ,683 Participations 85,075 36,163 Loan Sourcing n/a 164,251 Loan/Participation Servicing 176, ,010 SBA 54,842 59,717 Membership 887, ,852 Education 137, ,675 Projects and Consulting 397, ,270 Treasury Management 46,987 48,930 Other Revenue 21,267 37,299 Total Revenues 3,441,665 3,965,441 Expenses Compensation 2,004,901 2,259,698 Benefits 479, ,358 Travel/Staff 75,305 80,750 Systems and Hardware 241, ,818 Office Operations 144, ,163 Office Lease and Relocation 132, ,219 Administrative Services 187, ,704 Total Expenses 3,265,055 3,795,710 Net Income $176,610 $169,731 4

5 CU Business Group Balance Sheet December 31, 2013 (unaudited) ASSETS Current Assets Cash and Overnight Investments $1,816,515 Accounts Receivable 384,643 Total Current Assets $2,201,158 Property and Equipment (net) Furniture & Equipment 51,268 Computer Hardware & Software 37,638 Other Property & Equipment 70,442 Total Property and Equipment 159,348 Other Assets Prepaids and Other Assets 375,809 Total Other Assets 375,809 Total Assets $2,736,315 LIABILITIES AND CAPITAL Current Liabilities Deferred Membership and Other Revenue 417,847 Accounts Payable 349,764 Total Current Liabilities 767,611 Long-Term Liabilities Deferred Revenue 146,688 Total Long-Term Liabilities 146,688 Total Liabilities 914,299 Capital LLC Owner Contributions 1,652,285 Net Income 169,731 Total Capital 1,822,016 Total Liabilities & Capital $2,736,315 5

6 Three-Year Business Lending Track Record Business Loan Delinquencies as a Percent of MBL Outstandings All Banks MBL Delinquencies Dec. 31, Sept. 30, 2013 Banks < $1B Assets All Credit Unions CU Business Group "CUBG credit unions" are those credit unions for which we regularly underwrite *Delinquencies are defined as 30+ days past due 0.67 December 31, 2011 December 31, 2012 September 30, 2013 Business Loan Charge-Offs as a Percent of MBL Outstandings All Banks MBL Charge-Offs Dec. 31, Sept. 30, 2013 Banks < $1B Assets All Credit Unions 0.98 CU Business Group *Charge-off figures are annualized for comparability Source: FDIC call report and NCUA 5300 reports December 31, 2011 December 31, 2012 September 30,

7 February 12, 2014 JKL RISK MANAGEMENT, INC SW Chesapeake Ave. Portland, OR Phone: Larry Middleman President/CEO CU Business Group 9600 NE Cascades Parkway, Suite 250 Portland, OR Dear Larry, JKL Risk Management, Inc. has been conducting credit reviews of CUBG underwriting since March of Reviews focus primarily on underwriting, loan structuring, risk assessment and grade assignment along with compliance with CUBG Policy and NCUA rules and regulations. Also included are complete reviews of appraisals and financial information provided by the credit applicant. File sample includes all CUBG underwriters and a variety of transaction types and client credit unions. Following each review an exit discussion is held and a report is issued. The most recent review was conducted in February 2014 in which 34 transactions to 26 borrowers were reviewed. No risk rating change recommendations and only one file comment were made at this review. These results demonstrate a dramatic improvement during the past two to three years in quality of underwriting, risk assessment and loan structuring. Risk analysis has improved considerably in the past two years as each individual credit is rated based on its own specific risk characteristics. The Summary presentation at the beginning of the Credit Presentation provides a concise description of the overall results of the credit analysis and leads to a more accurate rating. Reviewer encourages the continued use of the Strengths and Weaknesses section of the Summary presentation as these often raise risk issues not otherwise addressed within the risk matrix. CUBG underwriting staff has remained stable during this review period and the reviewer is aware of ongoing training and mentoring programs which are reflected in the review results. Continuing education and training is extremely important for all staff. A new Chief Credit Officer was hired very recently who has the strong bank lending background needed to continue to lead CUBG underwriters as transactions become more complex. CUBG underwriting format, narrative content, supporting spreads and critical cash flow analysis exceeds that of many smaller community banks and provides the information necessary to make a sound credit decision. Sincerely, Jude Leagjeld JKL Risk Management, Inc. 7

8 Jude Leagjeld is the principal and owner of JKL Risk Management, a consulting firm specializing in Credit Review and Portfolio Management Services including Policy Review, Regulatory Reporting and Safety and Soundness Compliance for Banks and Credit Unions in Oregon and Washington. Jude spent 16 years in credit administration at US Bancorp, a $30 billion commercial bank headquartered in Portland, Oregon. In that capacity, Jude oversaw commercial loan portfolios up to $800 million, ensuring quality of underwriting and portfolio management as well as problem loan identification and restructuring. JKL Risk Management has served 17 financial institution clients in Oregon, Washington and Arizona during the previous ten years. For more information call or Judeleag@aol.com. 8

9 Resumés of Key Staff CU Business Group s Collective Business Lending Experience CU Business Group has a team of seasoned, experienced commercial lenders available to our credit unions. We are familiar with any type of collateral, including buildings, equipment, livestock, crops, aircraft, inventory, accounts receivable, land, and other fixed assets. Our veteran staff has experience in virtually all types of loans, including commercial real estate, term and equipment loans, lines of credit, faith-based, taxi medallion, and SBA loans. Our team has accumulated over 200 years of collective experience over their careers underwriting loans in a wide range of industries, including retail, hospitality, agriculture, marine/aircraft, manufacturing, wholesale, distribution, transportation, and many others. In fact, it is easier to state the industries where CU Business Group does not meet the regulatory experience requirements those are gaming and adult entertainment. The following pages show detailed resumes of our key underwriting and operations staff. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

10 Larry Middleman, President/CEO Larry is the President/CEO of CU Business Group and brings 34 years of banking expertise to the credit union industry. His background is primarily based in community banking where he has extensive experience in leading business banking and cash management practices, including product development, pricing and sales. Larry founded CU Business Group in The corporate credit union owned CUSO now works with more than 400 credit unions in 45 states across the U.S. CU Business Group helps credit unions to create and deliver all aspects of business services. Larry is a frequent speaker on a variety of business services topics. Larry entered the credit union industry in January 2001 as Senior Vice President & Chief Financial Officer of Northwest Corporate Credit Union. He founded CU Business Group as a wholly-owned CUSO of Northwest Corporate in July Since then, the CUSO has expanded its ownership to seven corporate credit unions that serve over 5,000 credit unions in all 50 states. Larry s banking experience includes seven years as Chief Financial Officer of First Independent Bank, a $600 million community bank with 20 branches. At First Independent Larry was responsible for all aspects of deposit operations, including the branch network, data processing, central operations, as well as product development and pricing. He led the bank s sales and marketing efforts while expanding business banking products and services, allowing First Independent to acquire a significant market share of business clients in the bank s market area. As a member of the Executive Committee, Larry also oversaw the finance, technology and commercial lending areas. Larry also gained significant expertise in the financial consulting division of U.S. Bancorp, a large regional bank, where he led the strategic planning and budgeting process for over 500 branches. Prior to his time at U.S. Bancorp, he was a manager in the Arthur Andersen / Andersen Consulting specialty services practice. Larry led Andersen s financial services consulting team that worked with banks and credit unions throughout the western United States to expand product lines, improve efficiency and increase profitability. Larry is a Certified Public Accountant and received his Bachelor of Science degree with honors from Portland State University. He has been closely involved with Big Brothers Big Sisters of SW Washington since 1999, serving as Board President for three years. Larry is an avid golfer and also enjoys soccer and surfing as hobbies. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

11 Jim Clark, Senior Vice President/Chief Credit Officer Jim has 30 years of commercial lending and banking experience. As a veteran credit administrator, Jim has demonstrated success in all facets of commercial lending, for both national and community financial institutions. From rural farmland to urban industrial areas, Jim has experience in originating, documenting, and servicing all types of business loans including commercial real estate, lines of credit, term loans, and government guaranteed loans. In particular, Jim has significant expertise in commercial and industrial and agricultural lending. Additionally, he has several years of hands-on experience in originating and managing complex commercial real estate loans. Jim s experience in credit administration includes managing credit activities, ensuring compliance, establishing lending policies, maintaining high quality loan portfolios, and managing loan growth. In the course of his career, Jim has held several executive level positions including commercial loan officer, credit administrator, and president and CEO. At each financial institution, Jim has managed to the institution s individual strengths, weaknesses, and objectives in commercial lending, and adapted his prior experiences to new opportunities. In his role as CUBG s Chief Credit Officer, Jim is responsible for overseeing the credit policy and detailed guidelines for all aspects of business lending through CUBG, as well as directing the CUSO s business lending team. Jim is also actively involved in providing guidance to credit union business lending staff in analytical techniques and underwriting best practices. Jim graduated from Oregon State University s College of Business. He attended the Western Agricultural Credit School and the Pacific Coast Banking School. Jim has also led classes in banking finance at Oregon State University. In his free time, Jim enjoys horses and water sports with his family, as well as supporting his children in their passions of theatre and crew. He is also on the Board of Directors for both the Peace Health Hospital Systems and the Blue Earth Federal Cooperative, an organization which works to create community opportunities for the confederate tribes of the Coos Lower Umpqua and the Siuslaw Indian Tribes. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

12 Michael Mucilli, Senior Vice President/Consulting Group Michael brings over 36 years of banking expertise in commercial lending, operations, and administration to CU Business Group. He has a wide variety of commercial lending and deposit operations experience. He also has experience with SBA lending and staff training and education. Michael founded CU Business Group s East Coast operations in 2003, and has gained significant experience in credit union business services since then. He assists credit unions with business services planning, program development, and account pricing. He regularly presents education sessions on all aspects of business services to credit unions across the country. Michael also performs specialized loan review projects for credit unions with in-house programs, and leads CUBG s regional in-person training courses on business lending. Prior to joining CU Business Group, Michael was Senior Commercial Loan Officer for Mohawk Community Bank, a $750 million upstate New York financial institution. His commercial lending includes all types of commercial real estate loans, equipment financing, lines of credit and other business loans. His experience also extends heavily into Small Business Administration lending, where he financed many local businesses and projects using SBA s guaranteed loan programs. He also served on the Montgomery and Saratoga County Economic Development Loan Fund Boards, integrating financing packages to meet the needs of all businesses. Prior to Mohawk Community Bank, Michael was Director of Collections and Director of Consumer and Home Equity Lending at Amsterdam Savings Bank in New York. He has extensive experience in both direct and indirect lending, where he originated portfolios of auto, mobile home and recreational vehicle loans. He was also responsible for administering the bank s credit card program, as well as the group insurance and dealer programs. Michael also had 12 years experience as a branch manager with the bank, dealing with business deposits and relationships on a daily basis. Michael is a former instructor for the American Institute of Banking. He is Chairman of the town of Perth s Planning Board. He was Treasurer of Big Brothers Big Sisters in Montgomery County from and spent 25 years volunteering for the local United Way. He has also been a youth baseball coach, Boy Scout leader and Cubmaster. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

13 Mike Smith, Vice President/Senior Business Services Officer Mike brings over 21 years experience in commercial banking, education and business consulting to CU Business Group. He has extensive experience in all facets of commercial/small business lending and deposit services. Mike joined CUBG in 2008 and works primarily with credit unions in the Midwest on developing and growing their member business services. He also takes a lead role in CUBG s education curriculum, teaching a variety of business lending and deposit courses across the country. Prior to joining CU Business Group he worked as a commercial loan officer, college instructor and administrator and business consultant. He began his banking career at Farmers State Bank in northeastern Indiana where he served as a consumer loan officer, credit analyst and commercial lender. While at FSB he gained experience in direct and indirect auto lending, agriculture loans, commercial credit analysis, loan reviews, compliance and business development. After relocating to Texas Mike worked as a Small Business Loan Officer with Comerica Bank where he marketed business loan and deposit products to small owner managed businesses. He then became the Director of the Small Business Development Center at Lone Star Community College in Houston, where he helped entrepreneurs start over 100 new small businesses and secure in excess of $25 million in capital for startup and expansion. Additionally, he served as an adjunct instructor in the college s department of business and has developed a myriad of workshops and academic courses designed to help small businesses start and grow. Most recently Mike was Vice President at the $2 billion State Bank in Texas. He served as a commercial loan officer responsible for commercial real estate, equipment, working capital, agriculture and consumer loans. He helped start a specialized group focused on serving the financial needs of professional practices and healthcare providers. His banking experience also includes branch management, operations, compliance, documentation, collections and workouts. Mike is a graduate of Purdue University and enjoys golf, fishing, and horseback riding. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

14 Mark Olague, Vice President/Senior Business Services Officer Mark has 37 years of financial services experience and is a senior lender at CUBG. His previous experience includes time at national banks, community banks, and prior to coming to CUBG, seven years in the credit union industry. Mark is experienced in all facets of banking and finance with an emphasis on commercial lending, operational support, and business development. Mark joined CUBG in 2011 and works with credit unions on commercial lending program development and a variety of special projects. Prior to joining CUBG, Mark served as Business Relationship Manager for Arizona s largest credit union with $2.8 billion in assets. There he was responsible for a $112 million business loan portfolio. He managed overall business lending operations including staff, loan originations, the approval process, portfolio management, and special assets. Prior to that, Mark served as the Member Business Lending Manager for a $600 million credit union in Arizona. The credit union recruited him to build their business program from the ground up. With limited resources on-site, Mark chose CU Business Group as his partner for the credit union s program. Mark is well-versed in all aspects of business lending including commercial credits, SBA lending, commercial real estate, term loans, lines of credit, commercial and industrial loans, construction loans, and agricultural loans. Additionally, Mark has extensive experience in risk management and maximizing portfolio growth through the planning, development, and implementation of lending and deposit strategies. Mark s experience extends to business deposits and relationship management. In his role at CU Business Group, Mark consults with credit unions on all aspects of business services and planning, starting, expanding or advancing their business services programs. With his extensive lending experience he also does many independent loan reviews and special projects for credit unions across the country. When he is not visiting with credit unions, Mark is working with the staff in CUBG s Portland office to assist credit unions with various lending and deposit services. Mark has a Bachelor of Science in Business Administration from the University of California, Bakersfield. In his spare time enjoys playing tennis, reading, and watching sports. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

15 Scott Humphreys, Vice President/Senior Business Loan Officer Scott joined CU Business Group in 2003 and is a Senior Business Loan Officer. During his time at CUBG, Scott has helped hundreds of credit unions to analyze and underwrite business loans. Scott assists credit unions with loan structure, pricing, and all other aspects of putting together business loans. He also takes an active role in CUBG s education curriculum through his involvement with leading webinars on a variety of business lending topics. During Scott s time at CU Business Group, he has underwritten a vast array of business loans, including commercial real estate, term and equipment loans, lines of credit, and dealer flooring. He has underwriting expertise in a variety of industries, including faith-based lending, retail, income properties, marine loans, service industries, construction, hospitality, taxi medallion lending and the medical industry. Prior to joining CU Business Group in 2003, Scott worked as a Portfolio Manager and Business Development Officer for GMAC-RFC Health Capital. While at Health Capital, Scott managed a $130 million portfolio in multiple states across the country. In his role as Portfolio Manager, Scott assisted with loan closings, negotiated loan terms, developed workout strategies and presented management reports monthly on all accounts. Scott was an integral part of the company s growth from $40 million in assets to $185 million. He also assisted in developing the company s pricing model. Scott s career includes over six years of asset-based lending experience, including revolving lines of credit, equipment term loans, commercial real estate loans and floor plan lines of credit in many different industries. Scott earned his Bachelor of Science degree in Business Administration from Northern Arizona University in Flagstaff, Arizona. Scott s interests include water polo, biking, skiing, golf and running in Oregon s annual Hood to Coast race. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

16 Coletta Bruce, Vice President/Senior Business Loan Officer Coletta Bruce is a Vice President/Senior Business Loan Officer for CU Business Group. She brings over 34 years of financial and banking industry experience to CUBG. Coletta joined CUBG in Coletta s primary role at CU Business Group is managing the SBA lending program and underwriting commercial loans. Coletta assists CUBG credit unions with all aspects of SBA lending. This includes helping credit unions become SBA approved lenders and training them on the SBA lending process. Coletta also helps credit unions to interpret and follow the SBA s Standard Operating Procedures and assists credit unions with establishing their own SBA lending policies and procedures. Additionally, Coletta coordinates CUBG s SBA loan packaging, Authorization, and servicing and reporting through Cortland Capital Management. She also provides credit unions with guidance in SBA loan pricing strategies and business development. With nearly 20 years of SBA lending experience at banks and credit unions, as well as USDA lending experience, Coletta has extensive knowledge of government guaranteed lending programs. Coletta s experience covers all aspects of SBA lending, including underwriting, supervision of the documentation process, portfolio maintenance, servicing, and reporting. Additionally, Coletta has significant experience in originating commercial and industrial, commercial real estate, and construction loans and portfolio management. Over the years she has served as a community banking relationship manager, loan administration officer, and vice president. Most recently, Coletta developed an SBA lending program for a large Northwest credit union. Under her direction, the credit union gained SBA preferred lender status after just six months and was named the most active credit union SBA lender in its district for Coletta attended the American Institute of Banking and the National Graduate Compliance School and has an SBA lender diploma from the National Association of Government Guaranteed Lenders. In her spare time, Coletta enjoys spending time with her grandchildren, walking, reading, and crocheting. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

17 Rachel Snyder, Vice President/Administrative Services Rachel has 19 years of experience in the credit union industry. She began working with CU Business Group at the organization s inception in 2002 and has since then held a variety of intergral roles at the CUSO. Over the years, Rachel has assisted credit unions of all sizes and experience levels with their business services needs and been instrumental in the development of CUBG s extensive network of education and training programs. Rachel has also been a key part of the team that develops the deposit and lending products and services CU Business Group offers to the credit union industry today. Rachel s responsiblites at CU Business Group include consulting with credit unions on all aspects of business services, with an emphasis on advanced deposit products such as merchant bankcards, remote deposit capture and ACH origination, as well as other package products. Her background includes significant experience in the credit union industry at both natural person and corporate credit unions. Rachel has worked with several small businesses and non-profit associations throughout her career, giving her an in-depth understanding of the financial needs of the organizations CUBG s credit union clients strive to serve every day. Additionally, Rachel s responsibilities at CU Business Group include managing CUBG s education and training programs including webinars, regional training sessions, custom training for credit unions, and CUBG s annual national business services conference. Rachel also oversees information technology at CUBG, managing vendor relationships and SSAE16 compliance. Rachel is also responsible for general office administration and human resources at CU Business Group and has both her Credit Union Management and Senior Professional in Human Resources certifications. In her spare time, Rachel enjoys various volunteer activities and spending time with her family. She was a founding member of the Board of Directors for Young Credit Union Professionals and has worked on several CU for Kids fundraising initiatives in the Northwest. She is currently serving as a Board Member and coach for the recreational girl s softball program in her community. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

18 Dan Goodrich, Senior Business Loan Officer Dan Goodrich is a Senior Business Loan Officer at CU Business Group. Dan brings 38 years of financial and banking industry experience with him to CUBG, including significant experience in commercial real estate, and managing problem loans, as well as collateral revaluation. Dan joined CUBG in One of his major roles at CU Business Group is managing CUBG s specialized loan sourcing program. Dan uses his industry knowledge and connections to locate large financing opportunities in major markets, then works with credit unions in those areas to find a lead lender and offer the loan out for participation. This allows credit unions to represent a significant commitment of capital for financing commercial real estate. Dan also focuses on assisting credit unions with complex credits, collateral revaluation, and other special projects. He often leads research and development initiatives to bring new products and services to the industry. Dan advises credit unions on problem loan situations and executing the best possible workout solution. His expertise in dealing with problem loans lies primarily in the area of commercial real estate, and was attained through his experience in a variety of credit and asset management positions, including special assets manager and chairperson of the senior loan committee for a large regional bank. Dan also has an extensive background in originating all types of business loans, from SBA to construction and permanent commercial real estate loans to multifamily Fannie Mae loans, and has served as a commercial loan officer and national production manager in commercial real estate lending. Dan has managed direct commercial real estate loan origination, correspondent and participation lending, and Small Business Administration lending. Dan has also served as the chairman of the Network for Oregon Affordable Housing (NOAH), a public benefit non-profit lending consortia, and as an NOAH loan officer. NOAH originates permanent loans that provide affordable and special needs multifamily housing units to families. In his free time, Dan serves on the Budget Committee for the City of Tigard, Oregon and is an avid cyclist, golfer and skier. He and his wife also enjoy wine tasting and spoiling their three grandchildren. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

19 Derek Anderson, Assistant Vice President/Risk Monitoring Officer Derek Anderson began his credit union career in 2008 as a Business Loan Analyst for CU Business Group. He now serves as CU Business Group s Risk Monitoring Officer and oversees the credit analysts. Derek developed his commercial lending expertise under the guidance of CU Business Group senior staff members. As a Business Loan Analyst, he analyzed borrowers and reviewed tax returns and financial statements for credit unions across the country. His experience in business lending includes all types of business loans, including commercial real estate, various term and equipment loans, and specialized lending areas such as agriculture, construction, and lines of credit. In his role as Risk Monitoring Officer, Derek manages a staff of seven credit analysts and coordinates with CU Business Group s Underwriting Department to oversee the review of more than $1 billion in business loans annually. Derek and his team currently perform loan review services for 115+ credit unions on more than 700 loans, a number which is continually growing. In addition, Derek and the analysts frequently perform large volume annual review projects for CU Business Group credit union clients. Derek also regularly assists credit unions with managing workout loan situations and troubled debt restructuring, including developing formal workout plans and recommending appropriate loan loss reserves. Derek holds a Bachelor of Science degree in Real Estate Finance from Portland State University where he focused on real estate management, appraisal, and market analysis. In his spare time, Derek enjoys outdoor activities such as snowboarding, bike riding, hiking, and fishing, as well as spending time with friends and family. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

20 Dina Kroshkin, Assistant Vice President/Business Loan Officer Dina Kroshkin joined CU Business Group in 2010 as a Business Loan Officer. Dina has been in the financial services industry since 2001 and brings eight years of experience in commercial lending to her role at CUBG. Dina coordinates CU Business Group s participation network including underwriting, participation agreements and matching potential buyers and sellers of participation loans. In this role, she screens participation loans before the participation offer goes out, places the loan with interested parties, and manages the transaction through closing. Dina is also working closely with CUBG senior staff to develop a specialized loan sourcing program in major markets. Prior to joining CU Business Group, Dina worked for Vancouver, Washington based Columbia Credit Union where she participated in building a successful small business loan program. There Dina worked her way up to Lead Commercial Credit Analyst and was responsible for coaching junior analysts, managing the team s pipeline, and ensuring that annual reviews were completed and financial covenants tracked. Dina s most recent role at Columbia CU was as a Business Loan Officer. In this capacity, she performed full underwritings including financial analysis on new and renewal loan requests for lines of credit, asset-based lines, commercial real estate, equipment financing loans, and SBA 7(a) and Express loans. Dina also served as facilitator of the credit union s Loan Review Committee meetings and participated in the process of creating commercial lending policies and procedures. Dina has her Bachelor of Arts degree in Finance from Washington State University in Vancouver, Washington. Dina is a Latvian native and has lived in the United States since she was 14 years old. In her spare time she enjoys mentoring, community service, and the outdoors. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

21 Business Continuity Plans at CU Business Group CU Business Group s business continuity planning provides for the recovery and restoration of all critical operations. Our process consists of three major components: Business contingency plans and business contingency testing, and information technology security. This program is managed by CUBG s senior staff who regularly meet to discuss the overall program and make adjustments as needed. Business Contingency Plans CU Business Group maintains business contingency plans to respond to a range of incidents from worstcase scenarios such as a loss of our data center, building or staff, to lesser occurrences like power outages. These plans have been tested and are kept up to date to accommodate changes in our business contingency requirements. CUBG also obtains a general overview of Business Contingency Plans from our third party vendors to ensure preparedness and continuity with those parties. An outline of the key elements of our plan is included in our SSAE16 report. Business Contingency Tests All contingency plans go through periodic testing, ranging from theoretical discussions on various emergency scenarios to drills in which we practice our recovery plans. In addition, our Information Technology staff performs periodic disaster recovery tests to ensure that we can quickly regain our systems in the event of an emergency. Information Technology Security Confidentiality and data security remain a top priority at CU Business Group. To mitigate computer attacks, we have implemented controls monitored by a dedicated team of information security specialists. We also maintain a solid network of redundant systems and off-site data storage to ensure that all source data is recoverable in a disaster. These systems are monitored and tested on a routine basis. Further details are shown in CUBG s SSAE16 report. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

22 CU Business Group Privacy Policy Disclosure of Information Collected Information collected is never sold, given, or disclosed to an unaffiliated third party except as required by law or authorized by individual credit unions. General Compliance For security purposes and to prevent disruptions in services provided to credit unions, CUBG employs hardware and software to monitor network and systems. Information Collected from Credit Unions We collect and store information regarding your credit union to the extent necessary to meet our service and support obligations under our Service Agreement. This information is used to perform processes related to credit underwriting, loan document preparation, collateral perfection, and risk monitoring. Credit union information is collected for statistical purposes and to create such outputs as credit presentations, loan documents, and accounts receivable invoices. Computer software programs are used to store information and to create summary statistics. These summary statistics are used for such purposes as assessing trends in business loan activity including volumes, loan types, and loan decisions. It is also used to evaluate and determine the technical design and specifications of CUBG systems; and to identify potential system enhancements and problem areas. Other than the name of any credit union contact staff, no personal information is collected or used in this analysis. CUBG collects no information that would identify credit union staff personally other than their name. CUBG periodically receives requests from unaffiliated third party credit unions regarding business references from existing member and affiliate credit unions. On these occasions, CUBG communicates the credit union s name, address, phone number and primary contact name. CUBG obtains written or verbal authorization from our credit unions to disclose this information as a part of its ongoing marketing efforts. Information Collected from and Collected for Loan Origination Documents We collected and store information regarding credit union business members to facilitate CUBG s credit underwriting duties, preparation of loan documents, collateral perfection, and risk monitoring responsibilities. Business member information is collected to create such outputs as credit presentations, loan documents, and accounts receivable invoices. Computer software programs are used to store information and to create CUBG s service and product outputs. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

23 Information Collected From and Shared With Third Party Vendors We share business member information with CUBG-approved third party vendors to facilitate our credit underwriting duties, preparation of loan documents, collateral perfection, and risk monitoring responsibilities. These third party vendors are used primarily for business and consumer credit reports, environmental reports, flood certifications, UCC filings and UCC searches. For security purposes, CUBG requires that all third party vendors using web-based systems maintain websites with log on and log off procedures utilizing proper security procedures and controls when conducting transactions. In addition, third party vendors that provide access to non-public information or provide non-public services are required to do so on a secure socket layer (SSL). CUBG only shares the minimum amount of business member information needed to obtain the vendor s product or service. This most commonly includes the business member s name and address, the name and address of any guarantors, the tax identification number of the business member and any guarantors, and the credit union s name and address. The third party vendor uses the information that we send to them to fulfill or respond to our request for their service or product. They may store these requests to provide them with information to make future operational improvements and to facilitate future requests for their service or product by CUBG, such as amendments to UCC filings. The vendor may forward our request for their service or product to other employees within their company who are better able to fulfill our order. The vendor may also use the request for their service or product to help them do their work. CUBG does not authorize these vendors to create individual profiles with the information that we provide to them to obtain their service or product. Information Collected from and Forwarded by Electronic Mail Messages and Electronic Forms When you send us information in an message or by filling out a form that is ed to us, CUBG uses this information to process or complete our service for your credit union. CUBG may store this information for future reference and also for use by management, legal counsel, outside accounting firms, and regulators. Your may be forwarded to other CUBG employees or affiliated parties if they are able to respond to your request more effectively. CUBG may also use this information to help us do our work and make future improvements to our processes. CUBG provides a Secure Document Transfer System to facilitate the transfer of sensitive and confidential information between credit unions and CUBG staff. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

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63 CU Business Group Insurance Coverage CU Business Group contracts with CUNA Mutual Group and the CUMIS Insurance Society, Inc. and Philadelphia Insurance Companies for the following insurance coverage: Special Insurance Package Policy Directors, Volunteers, & Employees Original Effective Date Annual Aggregate Limit of Liability Provider 09/01/2002 $1,000,000 CUNA Mutual Fiduciary 09/01/2002 $100,000 CUNA Mutual Employment Practices 09/01/2002 $500,000 CUNA Mutual Professional Liability 09/01/2002 $5,000,000 Philadelphia Insurance Companies Credit Union Bond Bond Period Aggregate Liability Provider Bond Annual $500,000 CUNA Mutual CUNA Mutual Group CUMIS Insurance Society PO Box Mineral Point Road Madison, Wisconsin (800) Philadelphia Insurance Companies One Bala Plaza, Suite 100 Bala Cynwyd, PA (877) CU Business Group also maintains additional business insurance coverage for our property, equipment and employees. These coverage levels are reviewed each year and compared to our current and projected volumes to ensure that the level of coverage is adequate for our business risk. CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

64 Vendor Due Diligence Recap The following shows the results of CU Business Group s annual due diligence on all major vendors: Areas Reviewed Vendor Products Used Vendor Pricing Operations/ Systems Quality of Performance Cortland Capital Market Services, LLC SBA packaging and documentation, SBA and C&I loan servicing CSC UCC management Environmental Data Resources, Inc. Real estate environmental due diligence Expert Business Development Lead generation and tracking Financial Tools, Inc. Cash Suite for financial analysis, Aim/Aim Tracker Fundtech Suite of NetDeposit products including remote deposit capture and ACH origination Harland Financial Solutions LaserPro documentation software ISOutsource Data backup and disaster recovery, Network server monitoring Kroll Factual Data Credit reports Paychex Payroll and HR services The Robert Pfaendler Company Recruiting services Total Merchant Concepts, Inc. Merchant services Zixcorp encryption services CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free

65 CU Business Group Products and Services Strategic Consulting Board and management education Strategic options for building your business services program including recruiting/interviewing Market demographics, program potential and breakeven analysis customized for your credit union Business Deposits Structure and pricing of core deposit accounts and package services Treasury management products including remote deposit capture, ACH origination and merchant services Operations, compliance, and systems guidance and expertise Marketing ideas, templates and resources; training in high-performance sales techniques Business Loan Consulting Policy development, forms, and procedures Processes, work flows, quality control steps Contract loan administration Education and training in operations, compliance and all aspects of business lending Business Loan Origination Commercial real estate, term, lines of credit, construction, agriculture, SBA Complete analysis and risk-rated credit presentation Assistance with pricing and loan structure Loan documentation compliant in all 50 states Easy and fast equipment purchase financing Loan and Participation Servicing Book your loan or participation on CUBG s system Includes funds management/distribution reporting and all detailed accounting Risk Monitoring Periodic financial review and analysis of business loans, including updated risk ratings Tools and consulting for proper MBL portfolio monitoring Expertise in problem loans and workouts available to your credit union on demand Loan Participations Established network makes buying or selling easy Standardized processes, parameters and legal agreements Expertise to guide your credit union through the entire process CUBG will service the entire participation and serve as one point of contact for all participants Business Loan Portfolio Review and Quality Control Independent loan reviews for quality assurance and management comfort Education Complete webinar program covering a variety of important business services topics Regional in-person courses covering a variety of business lending and deposits topics Two national business services conferences held annually Customized training to fit your credit union s or association s need CU Business Group, LLC 9600 NE Cascades Pkwy., Suite 250 Portland, OR Toll-free