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MortgageStrategy

InformationfortheBoardofDirectors
andSeniorManagementTeam
October2015

Currentsituation
Weoperateasabrokerforahandfulof
companiesthatagreedtobuyourloans
4originatorswhodedicatepartoftheirtimeto
secondarymarketloans
Ourproductionisinconsistentandnotvery
profitable
Ourproductsanddeliveryarenotcompetitive
Weeitherneedtogrowtoaprofitableand
competitivelevelorexitthelineofbusiness

Mortgagemodels
Broker
Originate loans funded by third
parties
Loans closed in third party name
Loans never held by us
Minimal level of products
Little customer pricing
flexibility
Underwriting done by third
party
Underwriting standards
determined by third parties
Low risk
Low return
Best suited for annual
production under $100 million
Loans locked with third party
No interest rate risk
Buyback risk generally limited
to fraud

Correspondent
Originate loans in our name

Direct
Originate loans in our name

Loans closed in our name


Loans held for sale on our
balance sheet for 30 45 days
until sold to third parties
Medium level of products
Moderate customer pricing
flexibility
Underwriting in house for most
products (can be outsourced)
Underwriting standards
determined by third parties
Medium risk
Medium return
Best suited for annual
production from $100 million to
$500 million
Loans locked with third party
Little interest rate risk
Limited buyback risk

Loans closed in our name


Loans held for sale on our
balance sheet for 30 45 days
until sold to third parties
Maximum level of products
Maximum customer pricing
flexibility
Underwriting in house
Underwriting standards
determined by us
High risk
High return
Best suited for annual
production over $500 million
Loans locked internally
Maximum interest rate risk
Maximum buyback risk

Currentopportunity
Startupapurchasebasedmortgagebusinessin
MiddleGeorgia
HeadquarteredinWarnerRobins,possible
operationsalsoinMacon
LedbyacandidatethatBillDanielintroducedto
theBank
Currentlyheworksforalargebankwitha
significantmortgagedivision
SalesmanagerforAtlantaregion,basedin
Marietta
SuccessfulinrecruitingoriginatorsintheAtlanta
market
Hasrunhisownmortgagecompanyinthepast

Currentopportunity(continued)
Consultantwithsignificantexperienceinstarting
andrunningmortgagecompanieswhohas
agreedtohelpussetuptheoperationsofthe
mortgagedivision
Candidateforanoperationsmanagerwith
significantexperienceandknowledgeofmiddle
Georgiamarkets
Windowofopportunitytogainmarketshareand
recruitoriginatorsbasedonthetimingandthe
previousemployerofallthreeindividuals

Currentopportunity(continued)
PattiDeal/RobinBratcherwouldhandlein
housemortgageloansandwewillcentralized
thatprocess
Otheroriginatorswillfocusontheirprimaryjob
duties generallycommercialandsmallbusiness
lendinganddeposits
Windowofopportunitytogainmarketshareand
recruitoriginatorsbasedonthetimingandthe
previousemployerofallthreeindividuals

Comparison
Secondarymarketmortgageloanstodaycome
primarilyfromourbranchnetworkorfrom
callingonindividualcustomers
Theproposedmodelwillgeneratestandalone
businessindependentofourbranchnetwork
Primaryoriginationwillcomefromreferralsfrom
realtorsonpurchasetransactions
Thisprovidesamorestablerevenuesourcethan
brancheswhichrelymoreheavilyonrefinance
activity

Personneltiming
Lookingtostartwithkeypersonnelhiresinthe
next10to20days
WouldliketobringoriginatorsoverinJanuary/
Februaryintimetopickupthespringhome
purchasebusiness
Add7originatorsinthefirst12months
Add5originatorsinthenext12months
14totalstaffbytheendofyear1
22totalstaffbytheendofyear2

Compensation
Divisionpresident
Salaryplusabonusbasedona%ofdivisionprofits

Originators
Commissionbasedona%ofloansoriginated

Operationsmanager
Salaryplusadiscretionarybonus

Processors
Salaryplusaperfilefee

Operationsstaff
Salaryplusaperfilefeeforsomepositions

Georgiamortgageoriginators

MortgageoriginationsbyMSA

Marketopportunity WarnerRobins

Proformafinancials

PlantersFIRST
Mortgage Pro Forma Projections
Q4 2015
750,000
5
150,000

Q1 2016
4,500,000
30
150,000

Q2 2016
10,000,000
67
150,000

Q3 2016
15,750,000
105
150,000

Q4 2016
21,000,000
140
150,000

Net interest income


Gain on sale
Origination fees
Other fees
Total revenue

859
13,875
7,500
6,375
28,609

5,156
83,250
45,000
38,250
171,656

11,458
185,000
100,000
85,000
381,458

18,047
291,375
157,500
133,875
600,797

24,063
388,500
210,000
178,500
801,063

Fixed expenses
Variable expenses

96,820
22,550

117,420
156,000

126,690
278,933

162,225
391,644

131,325
538,731

Total expenses

119,370

273,420

405,623

Quarterly net income

(90,761)

(101,764)

(24,165)

553,869
46,928

670,056
131,006

Annual net income

(90,761)

Originations
Number of loans
Average size

52,005

Annual originations
Percentages of origination
Gain on sale
Origination fee
Other fees

Expenses
Net income

51,250,000

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

15.92%

6.08%

4.06%

3.52%

3.19%

-12.10%

-2.26%

-0.24%

0.30%

0.62%

PlantersFIRST
Mortgage Pro Forma Pro
Q1 2017
24,500,000
163
150,000

Q2 2017
30,500,000
203
150,000

Q3 2017
34,500,000
230
150,000

Q4 2017
34,500,000
230
150,000

Q1 2018
34,500,000
230
150,000

Q2 2018
34,500,000
230
150,000

Q3 2018
34,500,000
230
150,000

Q4 2018
34,500,000
230
150,000

Net interest income


Gain on sale
Origination fees
Other fees
Total revenue

28,073
453,250
245,000
208,250
934,573

34,948
564,250
305,000
259,250
1,163,448

39,531
638,250
345,000
293,250
1,316,031

39,531
638,250
345,000
293,250
1,316,031

39,531
638,250
345,000
293,250
1,316,031

39,531
638,250
345,000
293,250
1,316,031

39,531
638,250
345,000
293,250
1,316,031

39,531
638,250
345,000
293,250
1,316,031

Fixed expenses
Variable expenses

109,695
673,310

118,965
819,507

123,600
917,659

123,600
917,659

123,600
917,659

123,600
917,659

123,600
917,659

123,600
917,659

Total expenses

783,005
151,568

938,472
224,976

1,041,259
274,772

1,041,259
274,772

1,041,259
274,772

1,041,259
274,772

1,041,259
274,772

1,041,259
274,772

Originations
Number of loans
Average size

Quarterly net income


Annual net income
Annual originations
Percentages of origination
Gain on sale
Origination fee
Other fees

926,088

1,099,088

124,000,000

138,000,000

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

1.85%
1.00%
0.85%
3.70%

Expenses

3.20%

3.08%

3.02%

3.02%

3.02%

3.02%

3.02%

3.02%

Net income

0.62%

0.74%

0.80%

0.80%

0.80%

0.80%

0.80%

0.80%

Otheradvantages
Thismodelprovidesforinexpensiveexpansionto
othermarketswhencomparedtoafullbranch
Possibilitiesinclude
WarnerRobins
Tifton
Albany
Athens
Other

Mortgageisoftenaleadproducttodevelopnew
customerrelationships
Experienceinnichebusinesscanleadtoother
nichebusinesses

Riskdiscussion
Majorrisks
Interestrate
Buyback/credit

Interestrateriskmitigation
Centralizedlockdesk
Centralizedmonitoringoflockactivity

Buyback/creditriskmitigation
Centralizedunderwriting
Correspondentmodel

Otherrisks

Execution
Reputation
Compliance/regulatory
Other

Riskoversight
Boardmonitoringandreporting
Mortgageadvisoryboard/committee
Seniormanagementoversight
Roleofthirdpartyreview
Audit
Compliance
Qualitycontrol

Roleofinternalaudit/compliance

HeathFountain Mortgage
ExperienceatHBOS
2010 2012 Mortgageoperationsreportedto
meandproductionreportedtoourChief
BankingOfficer
2012 2015 Entiremortgagedivisionreported
tomeandourChiefBankingOfficerjointly
Servedasamemberourmortgageadvisory
board
Servedasamemberofourmortgagerisk
committee
2014originations>$1billion
2015originations approx.$1.8billion

Nextsteps
Negotiatecontractwithdivisionleader
Recruitoperationsmanager
Bringthosetwoonboard
Communicatedetailplanwithregulators
Establisharrangementswithcorrespondent
lenders
AcquireofficespaceinWarnerRobins/Macon
Addbackofficestaff
Addoriginationstaff
Brandingdecisions

Questions&Answers

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