For a bank that is behind budget, has a real estate concentration, has too much asset duration or just wants exposure to certain industries, there is a program that should be met with open arms, as it is ideal to help strengthen your bank. Today, CenterState introduced its National-to-Local Loan Program to help community banks add C&I loan growth and diversify their balance sheet in a customized manner.
CenterState has underwritten 10 to 15 C&I credits of national companies that are floating-rate and have maturities of three to seven years. We give you a menu of loans, the underwriting package and access to our analyst so you can come up to speed quickly. Let us know when you receive loan approval and you can have a portfolio of quality credits by day’s end. What could be easier?
Now, the downside of the program is that you are not going to get a relationship. The loans that we are offering are administered by some of the largest banks in the country. As such, the borrower only cares to deal with a single point of contact on a regular basis – the agent bank. The plus side is that the acquisition cost for a bank through our program is typically less than $1,000 – the lowest in the industry unless you are using automated underwriting.
While you are not gaining a relationship, these loan purchases allow your bank to have an immediate earning asset to help offset some of your cost, provide shareholder return and scale the loan portfolio up, all of which will allow your team to better focus on going after the quality relationships in your local market.
Equally important is the fact that you can pick and choose your obligors to offset current credit exposures. If you have a concentration in real estate, financial services, housing or hospitality, then purchasing consumer goods and health care happens to be low or negatively correlated to most of your balance sheet. Adding these loans, thus allows you to increase exposure to those other areas and manage enterprise risk more efficiently.
As for pricing and risk, these variable rate loans average around Libor + 3.00% many with floors above 4.00% (above Prime). Given how competitive loans are in the market, this pricing isn’t bad, especially considering the credit strength. Tracking these loans through the downturn, we witnessed probabilities of default well below that of the average community bank. The national scope of operations for these borrowers provides a stable source of revenue, and ultimately free cash flow to weather economic bumps in the road and service debt obligations.
Curious to know what loans are available? Register here , click “National Commercial Loans” and we will send you a schedule of loans currently available for immediate purchase. Every two weeks we will update our offerings and pricing, giving you ongoing market intelligence about your loan alternatives. Once you see a loan that interests you, we will send you a complete underwriting package for your approval.
Given that the end of 2Q is just months away, now is the time to put these loans on the books to set up loan balances and earnings for year-end. Register or contact us now to find out how bankers around the nation have used this tactic successfully and continue to keep their arms wide open for this product.
Submitted by Chris Nichols on April 22, 2014