OVERVIEW

Both lending divisions grew at a healthy rate through the years.  Conventional lending flourished in large part due to an outstanding staff of lending agents who brokered first and second trust deed residential mortgages through  nearly one hundred mortgage lenders nationwide.  By 1998, loan volume exceeded one half billion dollars.  Private lending flourished primarily because of First Blackhawk’s stringent lending criteria and high emphasis on safety.  An overriding concern for the protection of investor capital has resulted in a very low ratio of loans funded to loans reviewed.  Less than 5% of all private loans brought to First Blackhawk meet the company’s stiff lending criteria.

Safety in private lending is dependant on a number of factors but the most important is protective equity.  The ratio of amount loaned to property value (loan-to-value or LTV) is critical. Obviously, the lower the ratio the greater the safety factor that exists.  This ratio is only a good indicator of safety if significant care is taken to insure that an accurate value of the property is obtained.  First Blackhawk uses only the most experienced appraisers and real estate agents to establish and confirm that value.  Because of this high degree of care and analysis the company has experienced no loss of

principal to First Blackhawk investors since its founding (over 140 private loans with a $90.000,000 combined principal).  During that period, over $14,000,000 in interest has been paid to investors.

First Blackhawk currently has well over 100 active investors.  They employ available cash assets as well as IRA,  Keogh, profit sharing and other pension-arranged funds. "Offshore investors" have been participating in First Blackhawk loans since 1998.  In recent years, First Blackhawk has adjusted its private lending emphasis from smaller residential loans to larger developmental loans.  Loan safety is actually enhanced by moving to these larger loans. First, it enables the company to lend to more sophisticated borrowers with stronger financial credentials.  Second, at the same loan-to-value a larger loan has more absolute protective equity behind it which further assures that we have the borrower’s full and complete attention. Company policy also dictates in these development loans that no more than 50%  of the property value will be loaned to a borrower.

In most cases, a majority of the interest in First Blackhawk loans is prepaid at the time of funding.  The company acts as servicing agent for its investors administrating the receipt and distribution of all interest and principal funds.  There is no charge to investors for this service.  The borrower does pay a 1% servicing fee.  All private loans at First Blackhawk go through an escrow with a major title company and full title insurance is obtained.

First Blackhawk is very proud of its safety record over the past eight years.  Many of our investors are friends, neighbors and even family who have a significant amount of trust in our ability to protect their assets.  We will continue our highly conservative approach to private lending to insure that the trust bestowed upon us is well earned.

Real Estate Broker - CA Dept. of Real Estate - License #01144055

04/04/06