offs were down to about $22 billion.
Regional and local banks will continue to
improve their balance sheets with
increased reserves and subsequent sales
of NPLs that they previously could not
afford to sell.
It’s true that total
provision for loan losses have been
dropping for several quarters, but the
large institutions are reducing their
provisions by a larger amount than
smaller and middle market institutions
are adding to theirs. About 33 percent of
financial institutions reduced reserves,
compared to 59 percent that added
reserves. Thus, the global loan loss
number masks real problems in the
smaller and middle market institutions.
Chuck Singleton (left) is president; Stewart Loewenstein (center) is
director, special assets; and Fred Adams (right) is director, underwriting,
of Republic Financial Corporation’s Special Assets Group. Singleton
has more than 25 years’ experience in the acquisition and resolution of
distressed assets, and holds a bachelor’s degree in business administration
from Wichita State University. Loewenstein possesses more than 20
years of structured finance experience across multiple business lines,
including 15 years in asset management transaction origination,
corporate development, private equity, and real estate management.
Adams has more than 20 years of financial services experience, including
loan acquisitions and workouts, asset management, underwriting, and
business development. He holds a bachelor’s degree in finance from the
University of Texas at Austin and an MBA from the University of Arizona.
With the problem-bank list
shrinking and fund income growing, it is
feasible that the FDIC is being
conservative in its projections for
funding. There will be more troubled
asset inventory on the market in the next
two years coming from both commercial
mortgage backed securities (CMBS)
maturities and from all bank subsets. So,
the U.S. is geared up for the next two
years of strong market activity.
A bifurcated market
with larger institutional banks and CMBS
in the market will continue. Some expect
that regional and community banks will
recover over time and only then start to
offload their NPLs. Most likely, this is
the tail of the market. Along with rolling
maturities from the larger institutions,
some foresee continued distressed
opportunities for the next three to
four years. J
From all of us at Deloitte Financial Advisory Services LLP we would like to honor Sheila Smith, principal and the national service line co-leader for its Corporate Restructuring Group, and thank her for years of dedication and contributions to Deloitte and TMA.
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