View Sale Announcement Detail
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The recent rate cut by the Federal Reserve served as a starting gun of sorts for banks to embark on loan sale transactions to complete pent up balance sheet projects. The second half of 2024 has already seen sizable commercial loan sales either announced or closed, indicating the market is seeing the Fed action as an “all clear” signal, as loan sale activity is typically highest when market participants view the worst as being behind us.
Washington Federal, Atlantic Union Bank, First Foundation Bank, Valley Bank and Home Street all announced plans to sell performing CRE loan portfolios at prices (or estimated prices) ranging from 92% to Par, with the discounts driven by coupon/duration rather than credit quality.
Earnings calls transcripts in the latest quarter indicate objectives of the loan sales include
Additional motivators could have been merger accounting (applicable to certain of these transactions) and stock analyst, ratings agency and regulator attention, as these parties are more prominently voicing concern with concentrations and other balance sheet positions.
The end results of the loan sale transactions are stronger bank balance sheets which are better positioned for the next growth cycle, unburdened by concentration caps or below market rate loans with long durations. Expect to see more of this type of loan sale activity in coming quarters, as banks are seeking a competitive advantage through strengthened balance sheets.
Performing loan portfolios as well as impaired loans of all types continue to be in high demand in today’s secondary market. Garnet Capital Advisors can be a resource to help you discover the optimal portfolio to offer to accomplish your financial objectives for the upcoming year. Contact Garnet today to discuss how we can help meet your objectives.
Garnet Capital Advisors 500
Mamaroneck Avenue, Harrison, NY 10528
(914) 909-1000
info@garnetcapital.comGarnet Capital Advisors 500
Mamaroneck Avenue, Harrison,
NY 10528
(914) 909-1000
