The Problem
This community bank was looking for a new tool to boost both loan production, fee income, and their overall ability to compete in their markets. As a result, they consistently found themselves on the losing end of CRE deals with rates that extended beyond 5 years.
The Solution
Adopt the ARC Program: ARC allows a community bank to offer up to 10-to-20-year fixed rate commercial loans, while the bank earns a floating rate on their balance sheet. All without any hedge accounting or reporting headaches that come with a traditional interest rate swap.
The Results
- $93 Million New CRE Loan Production
- $1.3 Million Fee Income Generated
- Bank uses RAROC loan prices model to calculate a sufficient ROE for the bank, typically 15% to 16%
- Bank is thrilled with the upward move in floating rates, while borrower retains a fixed rate
Why ARC?
Easier for lenders to sell than back-to-back swaps
Bank gets a floating rate on their balance
No hedge accounting or reporting headaches
Allows the bank to offer long-term fixed rates to their borrowers
How does the ARC Program work?
Provide long-term fixed rates to your borrowers while booking a floating rate loan. No complicated paperwork, accounting, or swap to manage.
Book ARC Demo