The BAN Report: The $8MM LA Industrial Portfolio / FDIC Quarterly Banking Profile / New Appraisal Requirements / Facebook COO Sandberg on Hot Seat-11/28/18
The $8MM LA Industrial Portfolio
|Clark Street Capital’s Bank Asset Network (“BAN”) proudly presents: “The $8MM LA Industrial Portfolio.” This exclusively-offered portfolio is offered for sale by one institution (“Seller”). Highlights include:|
- A total unpaid principal balance of $8,441,231, comprised of 2 loans
- Both loans are low-leveraged 1st mortgages, a conventional CRE first mortgage, and an SBA 504 1st
- Portfolio has a weighted average coupon of 6.34%
- Both loans are secured owner-occupied industrial properties in the Los Angeles MSA
- All loans have personal guarantees
- All loans have prepayment penalties
- Opportunity to acquire depository relationships
- All loans will trade for a premium to par and any bids below par will not be entertained
|Files are scanned and available in a secure deal room and organized by credit, collateral, legal, and correspondence with an Asset Summary Report, financial statements, and collateral information. Based on the information presented, a buyer should be able to complete the vast majority of their due diligence remotely.|
|Sale Announcement||Wednesday, November 28, 2018|
|Due Diligence Materials||Thursday, November 29, 2018|
|Indicative Bid Dates||Thursday, December 13, 2018|
|Closing Dates||Thursday, December 27, 2018|
Please click here for more information on the portfolio. You will be able to execute the confidentiality agreement electronically.
FDIC Quarterly Banking Profile
The FDIC last week released its quarterly banking profile, the most comprehensive report on the health of the US banking industry. A few highlights:
- Tax reform has been a boon for the industry, as quarterly net income was up 29.3% from the year earlier. Half of the increase was due to tax reform.
- Higher rates continue to benefit most banks as net interest margin stood at 3.45%, up 15 basis points from a year earlier. It grew by 7 basis points from the prior quarter. Basically, banks are re-pricing loans at higher yields faster than they are paying up for deposits.
- Loan-loss provisioning declined for the second consecutive quarter, after rising for several quarters.
- Non-interest income improved modestly, up 3.8% form the prior year.
- Modest loan growth from the prior quarter of 0.8%, which was led by consumer loans (up 2%)
Nothing but good news for the banks right now. Perhaps, loan growth could be better, and there are certainly some warning signs about the economy, but banks are enjoying a record year right now.
And to make Christmas even better, the FDIC announced that it is ending quarterly deposit surcharges, as the Deposit Insurance Fund (DIF) is above the 1.35% reserve ratio.
“Since the reserve ratio was 1.36 percent on Sept. 30, it has achieved the minimum reserve ratio of 1.35 percent that is required by law,” Ellis said. “As a result, the third quarter of 2018 marks the last period that large banks will be assessed quarterly surcharges by the FDIC.
“When the reserve ratio is at or above 1.38 percent, small banks will receive credits for the portion of their assessments that contributed to growth in the reserve ratio from 1.15 percent to 1.35 percent. We estimate these credits to be approximately $750 million in aggregate,” she added.
This is especially good news for the large banks, which pay out about $5.2 billion annually.
New Appraisal Requirements
Earlier this year, we reported on the appraisal requirement thresholds changing, and the impact that would have on commercial real estate transactions. The FDIC proposed last week to update their requirements on residential real estate as well. Transactions of $400,000 and less no longer will require an appraisal. The last time this policy changed was in 1994.
Rather than requiring an appraisal, the proposal would require that residential real estate transactions exempted by the threshold obtain an evaluation consistent with safe and sound banking practices. Evaluations provide an estimate of the market value of real estate but could be less burdensome than appraisals because the FDIC’s appraisal regulations do not require evaluations to be prepared by state licensed or certified appraisers. In addition, evaluations are typically less detailed and costly than appraisals. Evaluations have been required for transactions exempted from the appraisal requirement by the current residential threshold since the 1990s.
This proposal responds, in part, to comments that the current exemption level for residential transactions had not kept pace with price appreciation in the residential real estate market. These comments were received during the recent Economic Growth and Regulatory Paperwork Reduction Act review process and during the rulemaking process that led to a final rule, issued in April 2018, which raised the appraisal threshold for commercial real estate transactions from $250,000 to $500,000.
The FDIC adapting this change would directly impact the time and costs associated with residential real estate transactions, and would ease the burden that many face when completing these deals.
Facebook COO Sandberg on Hot Seat
Facebook COO Sheryl Sandberg has had a rough couple of weeks, receiving intense criticism in how she has handled Russian election meddling. Two reports, one in the Wall Street Journal and another in the New York Times painted a negative picture in her management. The New York Times story was titled “Delay, Deny, and Deflect: How Facebook’s Leaders Fought Through Crisis.”
But as evidence accumulated that Facebook’s power could also be exploited to disrupt elections, broadcast viral propaganda and inspire deadly campaigns of hate around the globe, Mr. Zuckerberg and Ms. Sandberg stumbled. Bent on growth, the pair ignored warning signs and then sought to conceal them from public view. At critical moments over the last three years, they were distracted by personal projects, and passed off security and policy decisions to subordinates, according to current and former executives.
Many on Wall Street piled on with numerous calls for her resignation. Jim Cramer said “stock goes up” if she resigns. One Vanity Fair writer blamed the leadership industry as personified by Harvard Business School.
The truth is, Harvard Business School, like much of the M.B.A. universe in which Sandberg was reared, has always cared less about moral leadership than career advancement and financial performance.
Since its practically impossible for Mark Zuckerberg to be fired, Ms. Sandberg is receiving the lion share of the blame for Facebook’s woes. Zuckerberg gave her a vote of confidence last week. It makes it especially uncomfortable because Ms. Sandberg has become a role model to many women. It remains to see if she can survive as growth slows down.
The BAN Report: Amazon Backlash / Buffett Bets on Banks / Mixed Opinions on Corporate Debt / Walmart Projects Strong Holiday / The Dairy Portfolio-11/15/18