Friday, August 28, 2009

Tracking the Nation's Bank Failures

The FDIC announced that its "problem bank" list has grown to 416 banks, an increase of 111 banks since last quarter according to The Wall Street Journal (subscription required). If my math is correct (and my logic sound), the problem bank list has actually grown by close to 160 banks when one considers that bank failures in the last quarter totaled almost 50 banks.

While concerns grow that the FDIC's insurance fund is about to be consumed, the questions intensify over whether or not the FDIC may soon be forced to borrow from its $100 billion line of credit at the Treasury Department.

Within the online version of The Wall Street Journal (subscription required), they created this great little interactive tool to show readers which banks have failed this year, the size of the institution, the name of the rescuing bank and the cost to the FDIC

Honors for costing the FDIC insurance fund the most - IndyMac Bank at $8.9 billion.

Honors for being the biggest failure by asset size - Washington Mutual with $307 billion of assets.

The problem bank list still represents only 5 percent of all banks. There is still money available for all types of business borrowers with a variety of risk profiles. Even bank money.
Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : Problem Bank List , Failed Banks , FDIC , Washington Mutual , IndyMac Bank

Wednesday, August 19, 2009

Wells Fargo Claims Top Ranking from CIT

Wells Fargo is the new king of SBA loans.

According to a study by Foresight Analytics, Wells Fargo funded 7.7% of all SBA loans in the first nine months of the fiscal year while struggling CIT Group's 1.1% market share dropped it to 16th place in the rankings.

When taking into account the Wells Fargo acquisition of Wachovia Bank, their combined market share of SBA loans rises to 9.3% of the market.

CIT Group had held the top spot in SBA loan production for nine years until its recent challenges put an end to its marketplace dominance.

For those borrowers who qualify, now is a good time to consider an SBA loan. Between the fee waivers and the recovery of the secondary markets for SBA loans, activity levels are picking up. There are a lot of smaller, regional banks looking to add to their SBA loan portfolio.

Need help finding the right SBA lender? Read "Matchmaking for Business Loans" and give me a call!

Tags : SBA loans , 7a loan , Wells Fargo , CIT Group , top SBA lender

Tuesday, August 18, 2009

Latest in Lending Developments

Here are a couple of things I have read in the last few days about the business loan and commercial real estate loan environment.
  • According to the July 2009 Senior Loan Officer Opinion Survey, demand for business loans and commercial real estate loans continues to be weak. Credit is still tight, though the number of banks increasing credit underwriting guidelines is lower than it was in the peak of year end 2008. Don't count on lending returning to "normal" before late 2010 or 2011 for either bank loans or commercial real estate loans.

  • Bank closings continue at a record pace with eight bank closings in the first half of August bringing the year to date bank total to 77. Over 300 banks were on the FDIC's troubled bank list as of the end of May according to The Wall Street Journal (subscription required). Don't expect the pace of bank closings to slow anytime soon.

  • It is increasingly difficult to tell if CIT's fortunes are improving if you were to read this August 13th Written Agreement with the FDIC. Regardless of who your lender is, it's not a bad idea to know your options at a time like this. I imagine there are plenty of lenders who finance accounts receivable that are licking their chops as CIT tries to overcome its challenges.

  • The spring stimulus bill has been good news for the SBA. SBA loan volumes have significantly increased and there is some concern that its allocation of stimulus money to waive guarantee fees may run out by the end of the calendar year. I'm in the process of closing a $1.3 million SBA 7a loan which was approved in less than ten days!

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : Bank loans , commercial real estate loans , CIT Group , troubled bank list , SBA loans , accounts receivable financing

Wednesday, August 12, 2009

Vulture Lenders Are Back!

Vulture lending is back according to The Wall Street Journal (subscription required). New data from Dealogic pointing to 140 distressed debt deals valued at over $84 billion in which creditors used their debt positions to seize control of troubled companies.

The deals cited included corporate takeovers resulting from bankruptcies, restructurings, recapitalizations or liquidations.

The front page article suggests that many of today's vulture lenders are hedge funds who are increasingly thinking about a "loan to own" strategy. However, it is hard to know if the hedge fund lenders in these corporate takeovers were merely executing upon one of their exit strategies to recover their loan balances or if their original intent was to own the company.

In late 2006, I provided a few tips on how to identify if your lender is a vulture. If your considering new lenders, it's a good time to revisit those tips. If you've already got lenders who are beginning to act suspiciously, it's probably too late to do anything about it.

Here are three questions you might ask to determine if your lender is a vulture...

1. What actions has this lender taken with its other borrowers in the event of a default?

2. Are the proposed covenants tighter than a company can realistically expect to achieve if anything goes wrong with the plan?

3. Is the financing transaction structured in a way that creates a situation in which the new lenders or investors have better claims on a company's assets and income than do existing common shareholders and lenders?

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : vulture lender , distressed debt , loan to own , business loans , cash flow problems