For the second time in three months, a nonbank lender is selling the unguaranteed portion of its SBA-backed loan portfolio to investors in the secondary market.
First Western SBLC Inc., which specializes in loans guaranteed by the Small Business Administration, is preparing to sell a $25 million chunk of its retained SBA loan portfolio to two insurance companies, according to Asset Sales Report, a sister publication of the American Banker.
Before September, the Money Store had sold $127 million of securitized unguaranteed SBA loans into the secondary market in two deals by the nation's leading SBA lender. Later that same month, the company securitized another $130 million package.
The offering featured a two-tranche structure that combined subordination and reserve account features to ensure a triple-A credit rating from both Moody's Investors Service and Duff & Phelps.
First Western, a subsidiary of Dallas-based PMC Capital, is reportedly selling its securitized package in a single tranche with a floating-rate coupon. The deal is expected sometime this month.
According to Asset Sales Report, the notes will have a 25-year final life and carry a triple-A rating from Moody's. The average life of the notes is dependent upon borrower prepayments.
PMC Capital officials declined to comment, saying they were in the "quiet period" preceding the sale. However, the company disclosed in its third-quarter regulatory filings that it had reached an agreement in principle to sell an undisclosed portion of the $35 million in unguaranteed loans from its SBA portfolio.
The company said it expected to record a gain from the sale as a result of excess servicing to be generated from the sale.