Member Loan Connection Making Profitable Connections For FHLBNY Members
With the economic recovery underway, many institutions are starting to experience increased growth in loan portfolios. A recent report from the Fed’s Beige Book and members' 1Q12 earnings releases show the following upbeat trends regarding loans:
- The economy in our service district has picked up, with increases in loan demand, no change in credit standards, and the largest decline in delinquency rates in a number of years
- Loan growth shows a steady to strong improvement for members of the FHLBNY
Given the dearth of loan growth over the last few years, most institutions have the capacity to readily absorb this growth. However, loans-to-one-borrower limits and the desire to avoid concentration risk may make selling whole loans or participations an important part of ongoing credit risk management.
Interagency regulatory guidance regarding management of a CRE portfolio states that:
Management should develop appropriate strategies for managing CRE concentration levels, including a contingency plan to reduce or mitigate concentrations in the event of adverse CRE market conditions. Loan participations, whole loan sales, and securitizations are a few examples of strategies for actively managing concentration levels without curtailing new originations. If the contingency plan includes selling or securitizing CRE loans, management should assess periodically the marketability of the portfolio. This should include an evaluation of the institution’s ability to access the secondary market and a comparison of its underwriting standards with those that exist in the secondary market.
If your institution is standing by witnessing the growth in loan portfolios, the FHLBNY’s Member Loan Connection (MLC) can provide you with a solution. The FHLBNY provides a communication exchange that allows members in the MLC network to connect with potential buyers or sellers through this free service. Interested members lenders will contact you directly, whereupon you are enabled to negotiate a contract and mutually engage in originating loans.
All loans are eligible for submission. Click the image on the right to view a sample submission form – you have the option to include as much or as little information in the submission as you’d like.
Note: The FHLBNY serves only as the information exchange facilitator for the MLC network.