Bank Partnership Program

The 2008 tumult in market conditions affected CMBS/MBS markets which imploded, and banks began to lose the ability to sell their loan portfolios to institutional investors - as a conduit to reload for future lending opportunities. Furthermore, high default rates on both consumer and commercial loans further absorbed resources at financial institutions. To that end, banks lost customers who pulled their deposits when the customer needed to go to another bank that was more liquid; better able to provide them with the funding that they needed. This is where American Med & Commercial Capital, through our Capital Division, can be a “go-to” source to keep your customers and their deposits at your bank.

Bank Cash Deposit Program

American Med & Commercial Capital is offering a unique mechanism for significantly and quickly increasing bank deposits. This is a confidential program and can be transparent in financial disclosure. Other than reporting increased deposits, the transaction is not made public. This program is also available as a Certificate of Deposit (Commercial CD) and is similarly structured.

American Med & Commercial Capital allows banks to originate the cash deposit by simply issuing a Direct-Pay Letter of Credit on behalf of the bank to a trustee bank, which can be an off-balance sheet, in the footnotes item. The cash deposit is then used as compliant collateral and American Med & Commercial Capital is prohibited any access to the funds by the bank. The bank can return the funds or a portion of the funds at any time. The bank takes the lead role in how they desire to internally structure the deal. The funds are provided at a cost of floating, interest-only, 30-day LIBOR. The deal is structured so that the bank does not pay any upfront fees.  

AMC Cash Deposit Process

  • After preliminary discussions with American Med & Commercial Capital, the bank determines the amount of the deposit desired. American Med & Commercial Capital will approve the amount based upon the size and health of the bank and issues a letter to the bank stating that American Med & Commercial Capital will be arranging a deposit in the amount of $X into the bank.
  • The bank then issues a Letter of Intent to American Med & Commercial Capital to provide a Direct-Pay Letter of Credit as collateral for the funds.
  • American Med & Commercial Capital then begins the two- to four-week process of arranging the syndication of the deposit and the bank begins the process of issuing the DPLC. The DPLC is structured such that a trustee bank serves as the beneficiary bank. The trustee bank will not be the lender but we pay them an underwriting fee. Also, the DPLC is essential to ensure that 100% of the value of the DPLC will be paid to American Med & Commercial Capital in the event of a default. However, the trustee bank will not draw on the DPLC unless:
    1. The interest-only (30-day LIBOR) payment is 60 days in default.
    2. The annual renewal fee is not paid.
    3. The DPLC is no longer renewed by the bank at which time the funds will be returned.

Once the syndication is complete, American Med & Commercial Capital will arrange for the deposit of the full amount of the DPLC, less any onetime fees into an American Med & Commercial Capital, DDA at the bank. The bank will then freeze the funds until the deal terminates.