OSP Value Fund IV LP Q4 2022

OSP SITUATION THESIS OPPORTUNITY EXPERTISE BARRIERS ADVANTAGE Regulatory Sales Despite extended expansion phase of US economy, $19 billion in C&I credits charged off since 2020. FDIC lists 40 institutions as problem banks with $170 billion in assets. Over 750 banks have less than $100 million in assets (too small to thrive) totaling $48 billion. When FDIC fails a bank, typically only 25% of its loans are non-performing; 70-75% are performing, but still sold at a discount. Due to regulatory burdens, many small banks and problem institutions will not survive next phase of credit cycle. At least $60 billion in bank assets will transact at attractive prices. Small deals ($5 to $25 million portfolios) of unloved C&I private credits will be the recurring norm. In this scale, we project that the opportunity will last for the next 5 to 10 years. OSP principals have over 25 years of experience sourcing and underwriting small balance private C&I credits from US bank balance sheets and have deployed billions of institutional capital in similar transactions. Unloved C&I loans must be underwritten and resolved asset-by-asset which is labor-intensive. Pace of small transactions is unappealing to large investment funds - doesn't move needle fast enough. OSP has the talent and enjoys longstanding counterparty (sellers and advisors) and special servicing relationships to see, underwrite and resolve over $250 million annually of these transactions. Prepared for the State of Connecticut 6

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