ARC SUCCESS STORY
Christine, a senior lender, consistently receives long-term fixed rate requests from commercial borrowers. Her bank does not want the complexity of swaps or derivatives, nor the expense of other hedging options. She is justifiably unwilling to take the interest rate risk, so she is forced to structure a shorter term than the market demands. Christine recognizes many other banks are able to offer long-term fixed-rate loans giving borrowers cash flow certainty and she is struggling to protect existing relationships plus compete for new business.
Better than a swap, Christine begins using the ARC program to offer long-term fixed-rate loans without her bank carrying a derivative. ARC enables Christine to compete for high-quality transactions without term limitations so she may drive loan growth, enhance retention rates and tap a new source of fee income. She is also able to offer compelling features to borrowers such as loan assumability and rate portability from one loan or property to another.
Christine booked $80 million in new loan business and $1 million in fee income through her first twelve months utilizing the ARC program. Her bank’s ROA increased by 36 basis points and she was able to offer no closing cost loans to a newly-defined target market within the owner-occupied medical community. Christine also witnessed an 80% decrease in her overall portfolio runoff, all through a lender-friendly hedging platform.
CenterState’s Assumable Rate Conversion (“ARC”) Program allows your bank to utilize our data, expertise and balance sheet to allow you to offer long-term fixed rate loans to your customer while your bank enjoys a floating rate – all without hedge accounting, a derivative on your balance sheet or hedge management. How is that for an idea?
ARC Hedging Program Benefits
Here is how your bank will benefit: