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NBF Capital

About Us

NBF Capital, LLC is a thriving group of Financial Service Companies which maintains headquarters
in Salt Lake City, Utah. Founded in 2002, NBF Capital LLC strives to meet the financing needs of multiple constituencies across numerous industries.

NBF Capital, LLC
333 North 300 West
Salt Lake City, UT 84103-1215
801-453-8030 - Office
801-453-8031 - Fax

866-846-8030 - Toll Free

Send Payments to NBF Capital, LLC
P.O. Box 4046
Salt Lake City, UT 84110-4046

History of NBF Capital, LLC

Small Ticket Leasing Strategy

Sub-Prime Residential Mortgage Loan Strategy

Sub-Prime Mortgage Products

Summary of NBF CApital, LLC.



Ownership and Original Strategy

NBF Capital, LLC dba National Business Finance (NBF) was formed in March 2002 in Salt Lake City, Utah. The company was established to take advantage of the opportunities in equipment financing that came into existence as a result of several lending organizations leaving the leasing industry. Since 1999, the number of equipment leasing companies has sharply declined due to heavy losses associated with poor portfolio performance and a lackluster economy in specific industries such as transportation and construction. These industries experienced high delinquency, erosion of collateral values, and lessee operating losses. Companies such as The Associates (now Citicapital), GreenTree Financial, Newcourt Financial, Soris Financial and others, experienced tremendous losses in their transportation portfolios largely due to unsound credit practices employed during the late 1990s in efforts to boost market share. For example, The Associates, the perennial market leader in the transportation industry, financed first-time owner/operator truck drivers with as little as 5% down on new equipment with significant curb-side depreciation and F.E.T. To remain competitive, other lessors followed suit. When the economy softened, independent truck drivers lost their haul sources and could not make their equipment payments. The result was a huge repossession rate, which further eroded the value of used equipment.

NBF employs solid lending strategies designed to create and maintain a performing portfolio even during the weakest economic periods. Specifically, NBF's policy is to fund only those borrowers that have the ability to repay based on their industry experience and the strength and viability of their current employment arrangement. Furthermore, NBF structures and prices transactions appropriately to manage the overall risk.

Presently, there are far more sub-prime transactions available than there are dollars to fund them. As a result, NBF is able to “pick and choose” the transactions to include in the portfolio. To date about one transaction in ten applications is funded. Additionally, the pure supply-and-demand aspects of this type of financing enable NBF to command a premium when including a particular transaction in the portfolio. If a customer cannot accept the approved terms, there are plenty of others that will. Despite the high rates on the portfolio (typically 25% plus), NBF structures transactions that result in payments that can be made by the borrowers in the normal course of their business. It would not make good business sense to price and structure transactions that were overly burdensome for borrowers.

The flow of business into the NBF portfolio is originated through established vendors, construction and trucking companies, and repeat customers.

When NBF receives a financing request, they perform exhaustive research and analytical measures. No customer is approved for financing that has not been contacted personally, and in detail by one of the NBF principals. Quite often these borrowers have “stories” to tell regarding personal credit and other factors that are evaluated by the NBF officers.

Once the borrower has been fully scrutinized, the collateral is evaluated to validate condition and value. Due to the high curb-side depreciation associated with new equipment and the Federal Excise Tax assessed on new class-8 tractors & trailers, NBF prefers to finance used equipment. The equipment will not be specialized, but will have a ready market should repossession become necessary. In addition to the equipment to be financed, NBF always asks for additional collateral when conditions warrant. Collateral risk is also offset by vendor recourse whenever possible. This greatly assists the remarketing of the collateral, if necessary, but also helps to minimize losses in default situations.

The key to the NBF portfolio is its exit strategy and the ability to manage risk. NBF has a letter agreement with Kenworth Sales Co. of Salt Lake City and Utility Trailer Co.'s Salt Lake City branch to help refurbish and remarket or repurchase equipment that has been repossessed.

NBF now employs 15 professionals as shown on the attached organization chart. Each member of the organization has many years of leasing and equipment financing experience.

Other NBF Business Strategies

The principals of NBF recognize the danger of having all of their “eggs in one basket”. Therefore, the sub-prime trucking and transportation portfolio is only one of several strategies in the business model. In addition to servicing their own commercial portfolio, NBF brokers transactions for an up-front fee to other large funding sources such as GE Capital, Zions Bank, and others with whom they have established working relationships. A third part of the business model relates to taking on the role of lessee advisor with large-ticket, complicated transactions. The fourth strategy included in the business model is to provide small ticket leasing services to community banks. The fifth strategy is to provide sub-prime and other niche mortgage products that are usually provided by brokers to these same community bank customers.

Small Ticket Leasing Strategy

After the failed merger of First Security Bank and Zions Bank in 2000 and the subsequent acquisition of First Security Bank by Wells Fargo Bank, First Security's small ticket leasing portfolio was sold. First Security successfully operated the small-ticket business within First Security's community bank system for years under the "Handi Lease" moniker. Although the Handi Lease program has been discontinued, there remained a large under-served market.

NBF has established a small-ticket leasing program for community banks in Utah. NBF services the transactions on behalf of the community banks. The community banks may chose to either sell the transactions to NBF for a fee or to participate in the transactions.
In today's demanding market, more than seventy-five percent of U.S. company's choose leasing as their method of acquiring equipment. Over one-third of all equipment purchased in the past years have been acquired through leasing.

Some of the reasons the popularity of leasing is accelerating at such a fast pace is due to the fact that leasing:
• Conserves cash reserves - Leasing permits 100% financing with no down payment, so you get the equipment you need without a major cash outlay. You can also cover the costs associated with delivery, installation, maintenance, training and other “soft costs”. Customized lease programs are often developed to include everything required in getting the equipment operational, productive and generating revenue.
• Low Cost option – Through the combination of tax benefits, and other lease structures, leasing can be the lowest cost financing option.
• Preserves lines of credit - Many leases can be accomplished without impact to other credit availability, thereby preserving much needed credit availability and liquidity.
• Provides tax benefits - Equipment purchases made with cash or credit lines are made with after tax dollars. Some Leasing structures allow businesses to classify lease payments pre-tax business and operating expenses, which are 100% tax deductible.
• Provides obsolescence protection – Leasing can provide a cost effective method for upgrading and retooling equipment that has outlived its initial advantages or is unable to feed growing production or service demands. Programs can be easily structured to eliminate the hassle of selling used equipment at severely depreciated values in the continual effort to modernize and upgrade.
• Provides flexible payment plans - Leasing, you can arrange long, flexible terms with low monthly payments. Leases can accommodate seasonal payment structures and
• Provides the latest technology - using leasing you can build in programs for technology upgrades and replacement of outdated equipment.
• Allows the equipment to pay for itself – With leasing you don’t begin paying for the equipment until it is delivered and begins working.
• Protects against rising interest with fixed rates – Most lease payments are fixed, not adjustable - you don't have to worry about floating interest rates.
• Offers fast and convenient funding – Most of the time leases can be approved and funded in days.

Sub-Prime Residential Mortgage Loan Strategy

Another NBF strategy is to provide niche products to community banks. After the small-ticket leasing product was successfully rolled out in early 2004, interactions with community banks identified another niche product where assistance is necessary to avoid loss of customers to larger banks. One of the products most desired is a sub-prime residential mortgage product. Most large banks have sub-prime programs within their product mix or have correspondent relationships with national sub-prime sources. Many community banks lack sufficient sub-prime volume to warrant the commitment of resources to a correspondent relationship or to focus on these transactions. Such mortgages have previously been referred to various brokers directly by loan officers with varying degrees of success and confidence. Such policies concerning sub-prime mortgages may lead to predatory lending issues due to the involvement of some unscrupulous sub-prime brokers. NBF has established itself as a Flow Lender (a step above the broker level) for Argent Mortgage, one of the largest and most efficient sub-prime sources in the United States. As a Flow Lender, NBF can partner with loan officers to reduce processing time and be more responsive to borrower needs than could a broker. The result would allow the our partners to better serve customers and to improve the efficiency and profitability when dealing with sub-prime mortgage loans.

In our discussions with community banks, sub-prime mortgages arise from applications that look like 'A' loans at first but issues are discovered during processing that drop them into sub-prime status or applications that have been approved as 'A' credits subject to construction of the house that later deteriorate during the construction period. These situations create problems with the construction loan take-out commitment, and unless a sub-prime commitment can be obtained, the construction loan must be classified, and the mortgage loan would have to be held in portfolio.

Most of the community banks have sub-prime volume that runs to about 10% of their total mortgage volume. Since few have correspondent relationships with sub-prime lenders (the volume for each lender being insufficient to warrant it), they lose many potential customers with sub-prime credit status before the application simply because the loan officer realizes the loan would need to be brokered and may refer the borrower directly to a sub-prime broker to avoid the hassle factor. NBF believes that an efficient sub-prime source could add to total loan volume because loan officers would not be as inclined to refer inquiries that are suspected to be sub-prime. In addition, many sub-prime borrowers can repair the issues that caused their sub-prime status within 24 to 36 months, making them ideal refinance candidates down the road. More importantly, satisfying the sub-prime borrowers' needs builds customer loyalty.

NBF hired Brad Vernon, a loan originator with over 10 years of experience in mortgage banking and over 30 years of total professional experience in the financial and accounting fields (Brad is also a CPA) to head up the sub-prime mortgage lending effort.

NBF Sub-Prime Mortgage Products

NBF offers three basic product types:

1. Fixed Rate; 30, 20 and 15 year fully-amortizing payments
2. 2-Year Fixed/Adjustable; LIBOR indexed, 2% initial maximum cap, 1%
subsequent maximum cap every 6 months, 6% lifetime cap
3. 3-Year Fixed/Adjustable; Caps and indexes identical to 2-year above.

Terms for the three product types are flexible based on credit and LTV. They fit into the following five programs:

1. "A" Credit Program, Middle Credit Score over 680

2. Non-Prime program, middle credit score 500 to 680

3. Highest Credit Score Program, based on highest of tri-merged credit score,
500 to 680.

4. 100% Program, Middle Credit Scores 600 + for full doc, 680 + for stated

5. 80/20 Program, Middle Credit Scores 600 + for full doc, 620 + for stated

Other factors affecting eligibility and pricing for each program include:

1. Mortgage History or Rating/Foreclosure History
2. Debt Ratio and Gross Disposable Income
3. Credit History/Bankruptcy
4. Property Type
5. Occupancy Type
6. Documentation Standards
7. Credit Evaluation
8. Property Marketability
9. State Limitations

NBF Capital, LLC will process, submit to underwriting and close the loans after "handoff" from the loan officers. NBF will not attempt to directly solicit additional mortgage business from the borrowers after the loan has closed, thus leaving control of the customer in the hands of the originating loan officer.

NBF can provide a wide range of options with rates and terms with the following information:

1. Fax of 1003

2. Fax of Credit Report or Credit Report Summary

3. Fax of Appraisal (if completed)

4. Fax of Title Commitment (if completed)

If the rates and terms are acceptable, then underwriting can be done in 24 to 36 hours after assignment of the complete file.


1. NBF has identified a currently underserved small ticket equipment leasing and a sub-prime residential mortgage market.

2. NBF is already a profitable player in equipment leasing markets and can provide the expertise for these niche services to our partners to better serve these markets and thus better maintain customer relationships.

3. NBF is not a threat to capture the customer relationship.

4. NBF can provide better access to sub-prime mortgage products for the community banks.




Copyright 2003. All Rights Reserved.