Take advantage of your bank in pursuit of export happiness

1. Take advantage of your bank in pursuit of export happiness 2013 Winter Legislative Conference February 11, 2013

2. Need money, what for? • To fulfill export purchase order(s) - Project based • To find a bridge financing between the trade cycle of A/R, inventory and A/P – asset based • To buy capital (fixed) assets – long-term investment • To finance market development and other reasonable general working capital • Start-up costs (including R&D)

3. Interview your banker • Comprehension of international trade • Bank’s international infrastructure • Does your bank look beyond the figures • Unspoken rules

4. Organized in 1976 as First Women’s Bank of Los Angeles • Full service commercial bank that is known for customizing solution for clients • Specialize in EXPORT FINANCING and COMMERCIAL REAL ESTATE • Export: EXIM WCGP, Insured A/R Fin.; SBA EWCP, Export Express, ITL • Domestic: SBA CAPLine, 7A, Business Equity • CRE: SBA 504, Conventional lending as low as 3.98% for OCP • Nine branches/LPO throughout the West Coast • GBC International Bank was Named as Western Region Lender of the Year by EXIM Bank

5. EXIM Bank and SBA • EXIM Bank Working Capital Guarantee Program • EXIM Bank Medium/Long-Term Financing Program • Insured A/R Line of Credit (with Enhanced Assignment) • SBA Export Working Capital Program • SBA ExportExpress Program • SBA International Trade Loan

6. Benefit of government guaranteed loan programs -Fulfill export sales orders -Turn export-related inventory and accounts receivable into cash -Cost reduction -Finance Bid and/or Performance Bonds -Increase advance rate -Level the playing field -Due diligence from the bank may be the seal of approval your investor(s) needs to see

7. Export Working Capital Program • Transaction Specific • To finance one-time identifiable transaction • Transaction Specific Revolving • To finance multiple identifiable transactions • Non-Transaction Specific Revolving • To finance general export-related A/R and export-related inventory

8. Case Study (Transaction Specific) • A Mexican utility company placed order to install inlet air cooling system on gas turbine for $4 million • Cost to the US exporter is $2 million for the transaction, which includes $1.5 million raw material, $400K manufacturing costs $80K engineering & $20K installation. Production time is 8 month. • Due to competition, 10% down payment. You get a 60-day Term L/C for remaining 90% of payment. • Transaction requires 10% Standby L/C as performance bond

9. GBC comes to the rescue Solution: L/C service • Advising and negotiation of $3.6 million commercial L/C • Issuance of $300K standby L/C Export Financing • $3,240,000 12-month EXIM LOC for both pre-shipment financing on the 75% of cost and post-shipment financing on 90% of L/C-proceed • $300,000 12-month EXIM LOC to finance the issuance of performance bond. Bank will require at least 25% of face value of the standby L/C in collateral (10% with EXIM approval)

10. Case Study (Transaction Specific Revolving) • A scrap metal export trader has a buyer in China that consistently orders once a month for $500K supported by sight L/C issued by Bank of China • COGS is $440K/order. Shipment is once a month. Exporter buys the scrap metal from scrap yard with $40K due at the time of placing order, the remaining $400K is paid prior to loading • This exporter is also looking to buy a metal processing machine valued at $1 million, but only has $200K

11. What if you don’t have $440K Solution: L/C service • Advising and negotiation of $500,000 commercial L/C on monthly basis Export Financing • $330,000 12-month SBA EWCP for pre-shipment financing on the 75% of cost • Bank will disburse $30K to pay the scrap yard at the time of placing order. Then advance another $300K prior to loading the container. Exporter just need to come up with $110K prior to shipment • Bank structures an SBA International Trade Loan for $800K

12. Case Study (Non-Transaction Specific Revolving) • VOS Inc is a manufacturer of cosmetic products and exports 100% of its products to 20 foreign distributors, orders are placed each month, $10K per order (Total $200K) • The company consistently maintains $450K in inventory and $200K in A/R with 30-day term. Distributors demand 60-day term or will switch to another supplier, but will buy more with 60-day A/R term. • VOS estimates A/R will increase to $500K with 60-day term, and inventory level will also raise to $550K. But VOS is cash restrained from meeting the demand of distributors.

13. Don’t panic, get financed Solution: Export Financing • As a 100% exporter, borrower gets the maximized borrowing capacity on it’s assets (eligible A/R and eligible inventory) • At maximum advance rate of 90% on eligible A/R (90% of $500K = $450K) and 75% on eligible inventory (75% of $550K = $412.5K), Bank can lend up to the combined borrowing base of $862.5K. • Monthly borrowing base will fluctuate. GBC may suggest a $1 million EXIM LOC, providing some cushion should additional loan advance is necessary.

14. Contact Information (WWW.GBCIB.COM) • Kelly Chiou, AVP & Commercial Banking Officer(206) 219-0236 kchiou@gbcib.com • DouangNonthaveth, AVP & Commercial Banking Officer(206) 219-0263 dnonthaveth@gbcib.com) • Annie Pan, EVP & Chief Marketing Officer Edward Tang, VP & Trade Finance Officer (626) 243-1180 apan@gbcib.com(626) 243-1183 etang@gbcib.com