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Strategic Loan Participation: Enhancing Liquidity Through Real Estate Partnerships

To mitigate concentration risk, we are engaging in loan participations for commercial real estate loans in Boston and San Diego. We have established partnerships amounting to $1.6M, with a pass-through rate of 4.25%. By pooling our loans, we maintain vital liquidity ratios (5% liquidity, 40% NEV, 10.25% capital). Recent pools of $3M and $5M offer a mix of variable-rate loans with average FICOs of 770, ensuring robust options for credit unions while supporting member services.

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Strategic Loan Participation: Enhancing Liquidity Through Real Estate Partnerships

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  1. “Collaboration”Loan Participations

  2. Partnership In order to limit our concentration to one member, we began participating out some of our commercial real estate loans. Boston and San Diego Partnership: • $1.6M Total ($600 San Diego and $1M Boston) • 43% Partnership • Pass through rate of 4.25% • Third party servicer 2

  3. Participation Pools Our loan to share ratio has exceeded 100%; therefore, we began to pool our real estate loans and participate them out to other Credit Unions. This allows us to continue to service our members and maintain our 5% Liquidity ratio, 40% NEV ratio, and 10.25% Capital ratio. Custom pools can be created. Following is an example of two recent pools: • $3M and $5M Pools • 70-80% LTV Real Estate Loans • Average 770 FICOs • Mix is mainly variable rate loans (single family, owner occupied, regionally diversified) • Pass through rate is 2.90% • Option to review files • We keep 10% of the pools 2

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