NDA

Trading

Own your Balance Sheet like never before.

Established with some of the top minds across the finance industry, Memphis Capital’s Whole Loan Trading Desk makes it possible for clients to solve their balance sheet issues with ease.

Memphis Capital’s Whole Loan Trading Group was launched in 2017 when it became apparent that our credit union customers needed better, analytics-driven advice when purchasing or selling loan participations. As a relationship-oriented group, we set out to serve our customers as the best in the loan participation market.

Small company, big ideas.

Memphis Capital is a boutique firm that advises institutional investors and builds custom balance sheet solutions. We help Banks, Credit Unions and other financial institutions with optimization and long-term strategic needs.

We know how to navigate the market.

Your due diligence and settlement specialists can depend on our help in facilitating sales. We’ll notify you about sticking points, share information on expected documentation, answer questions, and even draft funding documents on your behalf. Our extensive regulatory knowledge can also help you prepare to answer tough questions from your examiners and board members.

Whole Loans

BANKS

Banks and Credit Unions Industry veterans oversee the process of finding you exactly what you’re looking for. We work niche sectors like Solar, Subprime, Student, and more, and as a non exhaustive list, we offer:

  • Residential and Commercial
  • Credit Union Participations
  • 504s
  • USDAs
  • Student
  • Solar
  • CRA-Eligible products, including Mortgages
  • Municipals
  • Corporates
cREDIT uNIONS

We have a unique focus in providing an ALM-centric viewpoint that is typically found only on fixed-income trading desks. We understand both credit and interest rate risk and how best to position each on a balance sheet within a regulatory framework. Because of that, our desk transacts many performing loans annually, and more than 80% of those are Prime Credit Union Loan Participations.

Consumer Products
• Auto
• RV
• Home Improvement
• Unsecured Consumer
• Residential Solar

Performing Residential
• 1st and 2nd lien HELOCs
• Hybrid ARMS
• Closed-end 2nd mortgages Commercial Real Estate
• Conventional Small Balance Commercial
• Non-Owner Occupied Conduit CRE
• Multifamily and Multifamily Construction

Indirect Lending
Allows for custom origination suited to your lending guidelines.

Loan Pool Securities & Individual guaranteed SBA 7(a) Loans

Memphis Capital has been in the securities business for over 15 years as a Broker-Dealer. As a niche component of the financial market, our tools and traders help empower our clients to evaluate bonds and analyze alternative financial strategies through broad range of securitized loans and build pools.

SBA 7(a) Pools SBIC Pools SBAP Pools SBA Guaranteed Interest Certificates USDA Loans 504 1st Lien IOs??
Risk Weighting 0% Risk Weighted 0% Risk Weighted 0% Risk Weighted 0-20% Depending on regulator 0-20% Depending on regulator 100% Risk Weight
Rate Sensitivity M/Qtr Adjust, High or No Caps Moderate Rate Sensitivity, similar to Agencies and Treasuries Moderate Rate Sensitivity, similar to Agencies and Treasuries Most Certificates are tied to PRIME, M/Qtr Adjust, No Caps Many feature frequent, adjustable rates, No Caps Fixed Rates, may be high
Liquidity & Marketability Active Secondary Market Active Secondary Market Active Secondary Market Active Secondary Market Reflect prevailing rate environment Limited liquidity
Pledgeability Generally pledgeable as collateral1 Generally pledgeable as collateral1 Generally pledgeable as collateral1 Generally pledgeable as collateral1 Generally pledgeable as collateral1 Non-pledgeable
Prepayment Penalties or protections Anything with an original maturity of 15 years and longer is subject to prepay penalties No prepay protections Penalty starts at 100% of par value + Int. Rate, declines depending on maturity Anything with an original maturity of 15 years and longer is subject to prepay penalties Varying prepay penalties Penalty rate decreases at 10, 20 years Anything with an original maturity of 15 years and longer is subject to prepay penalties
Spreads Pools offer Floating Spreads over cost of Funds, spreads also similar to short-term rates Pools offered on a spread, comparable to avg lifetime of Treasuries Pools offered on a spread, comparable to avg lifetime of Treasuries Variable Rate SBA GIC spreads similar to short-term rates, Fixed Rate SBA GICs typically similar to US Treasury Curve Variable Rate USDA spreads similar to short-term rates, Fixed Rate GICs typically similar to US Treasury Curve Pools offered on a spread, comparable to avg lifetime of Treasuries
CRA Eligibility and Benefits Pools we create contain loans that may be CRA Eligible May be CRA Eligible, requires investor eval. & regulatory input May be CRA Eligible, requires investor eval. & regulatory input SBA GICs on Secondary Market may be eligible for CRA Credit1 USDAs on Secondary Market may be eligible for CRA Credit1 Unlikely to be CRA-Eligble

Small Business Association (SBA) Pools are modified pass-through securities assembled from the guaranteed portions of SBA 7(a) loans. Unlike individual loan portions purchased for the loan portfolio, SBA Pools are booked in the investment portfolio instead.

Principal and accrued interest are fully guaranteed, but premiums are not. As such, premiums are the primary risk exposure to investors, and Diversification is the most effective safeguard against premium risk exposures. The greater the number of underlying loans, the lesser the effect of one prepayment.

SBA Pools are 0% risk-weighted and unconditionally guaranteed as to timely principal and interest payments by the full faith and credit of the US Government. Payments are automatically deposited in your depository trust company (DTC) account on the 25th of every month.

Variable-rate SBA Pool coupons adjust on a monthly or quarterly basis, typically with no interest rate caps.

SBA Guaranteed Interest Certificates trade in an active secondary market. Since SBA loans have variable interest rates that reset frequently and are not subject to interest rate caps, their rates are reasonably reflective of the prevailing interest rate environment.

SBA Pools are modeled on Bloomberg with regularly updated descriptions, performance data, yield calculators, and ticket writing capabilities. Each pool has a unique six-digit pool number and a CUSIP number.

Bloomberg tracks the prepayment performance of all SBA Pools issued over the past 10 years. The monthly report provides a valuable tool for analyzing investments.

SBA Pools are generally considered pledgeable as collateral for public funds, Federal Reserve and Federal Home Loan Bank advances, and treasury, tax and loan accounts. Check with your regulators for specifics, as treatment may vary.

Prime Rate has historically correlated with short-term rates such as SOFR, T-Bills, and the overnight federal funds rate. SBA Pool investments offer attractive floating spreads over the cost of funds.

SBA Guaranteed Interest Certificates represent beneficial ownership of the entire guaranteed portion of a specified SBA Guaranteed loan. Denominations typically range from $100M to $3.7MM. These are carried as loans for call reporting purposes. As with SBA pools, premium dollars are not covered by the government guarantee. and are at risk of loss in the event of prepayment. For government guaranteed loans, premiums are the primary risk exposure.

The SBA mandates that all SBA loans with original maturities of 15 years or longer have 5-3-1% prepayment penalties (25% annual exclusion) for the first three years.

SBA Guaranteed Interest Certificates are unconditionally guaranteed as to principal and accrued interest by the full faith and credit of the United States Government.

SBA Guaranteed Interest Certificates qualify as either 0% or 20% risk weighted assets, depending on your federal regulator.

Most SBA Guaranteed loans feature adjustable interest rates tied to the national Prime Rate that adjust on a monthly or quarterly basis with no interest rate caps.

SBA Guaranteed Interest Certificates trade in an active secondary market. Since variable SBA loan interest rates reset frequently and are not subject to interest rate caps, their rates are always fairly reflective of the prevailing interest rate environment.

SBA Guaranteed Interest Certificates are generally pledgeable as collateral for public funds, Federal Reserve and Federal Home Loan Bank advances, and treasury, tax & loan accounts. Check with your regulators for specifics, as treatment may vary.

The SBA’s Fiscal Transfer Agent (FTA), Guidehouse, handles all settlements, transfers, and cash flows. Investors receive a monthly statement with accounting details for each loan.

Variable rate SBA Guaranteed Interest Certificates are offered at spreads comparable to short-term rates, such as fed-funds or SOFR. Fixed-rate loan spreads are typically comparable to the U.S. Treasury curve.

SBA Guaranteed Interest Certificates purchased in the secondary market may be eligible for CRA credit. Check with your regulators for specifics, as regulatory treatment may vary.

USDA B&I (Business & Industry), CF (Community Facility), and FSA (Farm Service Agency) guaranteed loan portions are traded in an active secondary market. These are booked in the loan portfolio, and the government guarantee protects investors against loss of principal and accrued interest.

Premium dollars are not covered by the government guarantee. As with all government guaranteed assets, premium loss is the primary risk exposure. These loans may be broken down into denominations as small as $500,000, making them an attractive choice for investors looking to diversify.

USDA guaranteed loans qualify as either 0% or 20% risk-weighted assets, depending on your federal regulator.

Many USDA loans feature adjustable interest rates that adjust frequently and are not subject to periodic or lifetime interest rate caps.

Variable USDA loan interest rates reset frequently and are not subject to caps, so they reflect the prevailing interest rate environment.

Many USDA loans are subject to prepayment penalties (often 5-4-3-2-1%) that are passed through to investors on a pro-rata basis.

USDA guaranteed loans are generally pledgeable as collateral for public funds, Federal Reserve and Federal Home Loan Bank advances, and treasury, tax & loan accounts. Check with your regulators for specifics, as regulatory treatment may vary.

Variable-rate USDA guaranteed loans are offered at spreads comparable to short-term rates, such as fed-funds or SOFR. Fixed-rate loans are typically offered at spreads comparable to the U.S. Treasury curve.

Originating lenders remit principal and interest payments directly by wire transfer. Some investors prefer to take delivery of their loans on a Colson Depositary Receipt Series “C” (DR-C).
Colson guarantees timely monthly payments, and investors receive all payments from a single source. Colson charges a one-time certification fee and an ongoing fee of 0.125% of the coupon rate.

Guaranteed loan portions purchased in the secondary market may be eligible for CRA credit. Check with your regulators for specifics, as regulatory treatment may vary.

Government Guaranteed Portions

Lenders can sell the guaranteed portions of their SBA 7(a), USDA, and FSA originations into an active secondary market. Since they retain the un-guaranteed portions on their books and continue to service the loans, this does not jeopardize borrower relationships. With premium dollar prices and attractive servicing fees, secondary market transactions can make guaranteed lending a viable profit center for your institution. Our Lender Relations department can help determine what you can do with your portfolio.

Your Bridge to Capital

Ready to sell into the secondary market?

We’ll help you get competitive bids on your guaranteed government loan portions.
Contact our Lender Relations Director to get started.

Jennifer Bond, Lender Relations
  • 901-261-5961
Email Jennifer
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