Installment Lending: Post Payday

1
Installment Lending Post Payday

• PDLBA
• November 14, 2006

Trent Sorbe tsorbe_at_firstcommunity.biz (605)696-173
9
2
Bank Installment LendingPost Payday Lending

• First Bank of Delaware
• Similar to AFP
• Currently restructuring
• First Bank Trust (fka Community SB)
• First Bank Trust

3
Regulators Approach to Use of Third Parties and
Outsourcing

• Expectations continue to increase
• Bank responsible to regulators and customers for
  activities of third parties
• Reputation of partner and risk to banks
  reputation
• Managing it like its your own
• Full time vendor management and oversight process

4
Feb. 17, 2006 Lessons Learned
Regulatory Expectations
Straightforward Product X
Minimal Reliance on Third Party for Product Underwriting and Delivery X
Thorough Underwriting X
Bank Actively Involved in Delivery X
Key Operations Centralized X
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Bank-Model Loan Origination Process
Website Loan Application
E-mail or Discuss Approval Loan Terms
Approve
Borrower Sends to Company Voided Check and
Verification of Employment (and Income if
applicable)
Automated Loan Underwriting
Decline
Loan Agent Takes Application
Direct Call
Loan Application Ends
Documentation is Manually Approved by
Underwriting Dept.
Documents Reviewed by Funding Dept. and Loan
Funded by Bank
Marketer/Bank Calls Employer to Verify
Loan Documents E-mailed to Borrower
Borrower Signs Loan Documents Electronically
Yellow Marketer functions Blue Bank
functions White System or Borrower Functions
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Another Option Lines of Credit

• Advantages
• Less paperwork
• Uniform upfront TILA disclosures
• No signatures
• New advances easy and fast no documentation
• Disadvantages
• Periodic statements

7
Revel Advance Terms

• Offered in conjunction with the Revel Prepaid
  MasterCard
• Line of credit up to 1,000 (200 initially)
• Credit limit Established based on direct
  deposit activity to the card and verified net
  income
• Risk-Based Pricing
• Monthly maintenance fee (when there is a balance
  outstanding) ranging from 4.95 - 9.95
• Cash advance fee ranging from 8 - 12
• Minimum payment 20 of credit limit
• Abuse Prevention
• Ensures fixed payment amount for customer
• Repayment automatically from the Revel Card and
  tied to date direct deposits are historically
  made

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Revel Advance Other Features

• Loan repayment performance will be reported to
  the credit reporting agencies
• Revel card fees are in line with Wells Fargos
  Direct Deposit Advance fee structure a program
  touted as a viable short term credit alternative
  by the CFA and CRL