Banks should consult their professionals and fully explore any opportunity and risk referenced herein.”. How to use accordion in a sentence. Debt Accordions: A loan provision which allows the borrower to add additional investors to the loan subsequent to the initial loan date. on (ə-kôr′dē-ən) n. A portable wind instrument with a small keyboard and free metal reeds that sound when air is forced past them by pleated bellows operated by the player. This blog is only intended to provide general education about the banking industry, leadership, risk management, and other related topics and is not intended to provide any specific recommendations. revolving credit facility an arrangement (usually with a bank) that requires the borrower to undertake to make regular periodic payments into a designated account in return for the facility to borrow on that account up to a specified sum, the amount of which is usually expressed as a multiple of each contractual payment into the account. That is unfortunate because the community bank then forgoes the higher earning asset after taking the risk on the construction loan. Revolving Credit Facility is one of the forms of business finance in which flexibility is provided to the companies to borrow and use the funds of the financial institution according to their cash flow needs by paying a commitment fee as agreed in the agreement with the financial institution. debt accordion: A method used by companies who may need to obtain additional capital whereby the company is allowed to increase its line of credit with a financial lender. Instead, you draw down the cash whenever you need it. In this section: Having folds or bends like the bellows of an accordion: accordion pleats; accordion blinds. on (ə-kôr′dē-ən) n. A portable wind instrument with a small keyboard and free metal reeds that sound when air is forced past them by pleated bellows operated by the player. 4. A credit facility is a type of loan made in a business or corporate finance context, such as revolving credit, term loans, and committed facilities. The 2013 Credit Facility matures on April 29, 2016, increases the letter of credit sublimit to $750 million and provides an accordion feature that could potentially increase the size of the facility by an additional amount not to exceed $400 million. Properly positioned, the bank can charge more upfront fees because substantial value is created for the borrower by eliminating interest rate uncertainty. Types of Credit Facilities. A lending syndicate led by Bank of Montreal expanded Pure Sunfarms’ credit facility to its full C$59 million ($43.41 million) capacity with the completion of the facility’s accordion feature. Facility and Letters of Credit will be subject to a borrowing base calculation to be agreed.] Postal Realty Trust Exercises $50 Million of Accordion Feature on Senior Revolving Credit Facility Business Wire CEDARHURST, N.Y. -- February 3, … This unsecured revolving credit facility raises the company's borrowing capacity to USD400m from the USD200m as well as provides an accordion feature allowing for an additional USD350m of capacity, subject to customary terms and conditions, resulting in a maximum borrowing capacity of USD750m. As a result, loans under this facility seem to be directed toward borrowers that have accordion provisions in existing credit agreements. In this article, we explain the accordion feature, how to use it and how it can help your bank increase risk-adjusted profitability. credit facilities synonyms, credit facilities pronunciation, credit facilities translation, English dictionary definition of credit facilities. More specifically, for underserved areas, a service facility includes credit union-owned electronic facilities … If an existing credit agreement does not include accordion provisions, consent of the borrowers’ existing lenders will be required in order for a borrower to participate. South State Bank and CenterState Bank, N.A. However, frequently the competition for the better credits is intense and requires innovative thinking and creative products. revolving facilities, term facilities and term and revolving facilities combined. Many credit facilities have an “accordion” function that allows a borrower to gradually increase availability under an existing credit facility. Hercules Capital Renews $125.0 Million Accordion Credit Facility With Initial Commitment of $75.0 Million From Wells Fargo. Sunflower Bank Supplies $25MM Credit Facility with Accordion to Strategic Data Center. Instead of earning interest income on only one year for a risky credit, the community bank can extend the lifetime value of the loan by a factor of 11X and earn interest on the cash flowing, stable asset. We observe substantial opportunities for banks in both owner-occupied and investor construction through perm financing. Why Its Time For A Hedge Program At Your Bank, A New Skill For Bankers - Selling, Leading, and Learning Remotely. Define credit facilities. We have written about construction through permanent (perm) financing before (HERE) but the accordion feature is another novel structuring strategy to help community banks compete against the national banks to attract and retain some high-quality borrowers. Please visit bankingforward.com to learn more. This backstop facility supports the commercial paper's credit rating and fosters investor confidence since it provides a secondary source of repayment for the commercial paper. The exercise of the accordion feature has increased the total revolving commitment of the lenders under the Credit Facility by $35,000,000, bringing the aggregate limit under the Credit Facility to $535,000,000. The official Securities law definition is found in SEC Rule 144 and Rule 405. The construction is expected to take one year, and the borrower would like to lock a fixed rate post construction for a 10-year period. Navigating Uncertainty: Accordion is committed to helping private equity sponsors and portfolio company CFOs assess and address financial risk. There is no need to draw down the entire amount available under the credit facility; it is simply available for use as needed. Strategic Data Center Fund Manager secured a revolving line of credit that converts into a permanent loan from Sunflower Bank. In this section: * Chesswood exercises accordion feature under credit facility. adj. The community bank can command better pricing by offering a complete financing package. – making it a popular option for borrowers considering a possible takeover. ... the investment bank that “arranges” a Credit Facility by negotiating original terms with the Borrower and Syndicating the facility to a larger group of Lenders. Typically, national banks prefer to extend long-term facilities on high-quality, stabilized cash flow at lower margins. This is a substantial benefit for the borrower and can command premium pricing. “This commentary on this blog reflects the personal opinions, viewpoints, and analysis of the author and not CenterState Bank. General terms of the Credit Facility remain unchanged. Find out what thousands of banks, regulators and industry experts are doing to drive performance. The credit facility will initially provide the ability to borrow up to $25 million. A revolving credit facility is an important part of financial modeling What is Financial Modeling Financial modeling is performed in Excel to forecast a company's financial performance. USA incremental loans, Also known as an accordion feature. These are available in single currency and multi-currency versions and in versions with letter of credit or swingline options. An incremental facility is an extension of new commitments and/or loans implemented under the aegis of a Borrower’s existing credit facility documentation, which extensions of credit are made subject to the specific incremental incurrence requirements set out in such existing credit facility documentation. Pursuant to the exercise by the Borrowers of the Accordion Option referenced in Section 2.5 and 2.5.1 of the Loan Agreement, and subject to the phasing set forth in Section 2.1 of this Accordion Exercise, the Revolving Credit Limit set forth in Section 1.1 of the Loan Agreement is hereby increased from $250,000,000 to $375,000,000. Additionally, the Company added JPMorgan Chase Bank, N.A., because it underscores changes in a company’s debt based on operating assumptions. of maturity of the existing revolving facility. All contents of the lawinsider.com excluding publicly sourced documents are Copyright © 2013-, Incremental Revolving Facility Commitment. Home | Equal Housing Lender | Member FDIC | Privacy & Legal | Accessibility | Site Map. ©2020 CenterState Bank Correspondent Division. This unsecured revolving credit facility raises the company's borrowing capacity to USD400m from the USD200m as well as provides an accordion feature allowing for an additional USD350m of capacity, subject to customary terms and conditions, resulting in a maximum borrowing capacity of USD750m. A feature of some loan agreements that allows the borrower to add a new term loan tranche or increase the revolving credit loan commitments under an existing loan facility up to a… When substantial changes were made to the CRA regulations in 1995, the federal financial supervisory agencies 2/ (the agencies) agreed to review the CRA regulations in 2002. Check out our latest framework and explore our purpose-built collaboration platform. We refer to the Facility Agreement and in particular Clause 2.5 ( Accordion Facility) thereof. facility meaning: 1. a place, especially including buildings, where a particular activity happens: 2. the buildings…. Signup today for free to get the latest banking performance strategies, tactics and insight delivered right to your inbox. Community banks are more likely to lend on the construction note. Companies typically purchase an accordion feature in anticipation of the need for more capital for possible expansion opportunities. At CenterState Bank, we use accordion construction through perm loans to decrease credit risk, increase profitability and keep competitors at bay. See more. Oct 31 (Reuters) - Dennys Corp * Dennys - new $400 million credit facility includes an accordion feature that would allow borrower to increase size of facility to $450 million - SEC filing Let us consider a sample $1mm construction through perm loan, where the borrower requires an immediate $500k draw for land acquisition and soft costs (although the initial draw can be any dollar amount). With the right prepayment provision, the borrower is much less likely to repay the loan post construction for underpriced term loan from a national bank or insurance company. adj. This makes the loan rate more competitive for the community bank. As the first step in this review, the agencies have published an advance notice of proposed rulemaking (ANPR) that seeks public comment on a wide range of questions. The blue line represents the accordion tranche - a multiple advance facility to accommodate construction advances.
2020 accordion credit facility definition