Smaller Banks Need Additional Capital Too

On Monday, the Financial Times reported that America's small and medium-sized banks are short $24 billion to meet the most recent capital standards established as a result of the [U.S.] government's latest stress tests. After discounting the largest 19 federally insured institutions, if the government's stress tests were applied to the next 200 largest banks, the tests would unearth capital shortfalls for 38% of those institutions.

If the remaining 7,700 smaller banks in the U.S. underwent similar financial testing, it would result in a further capital deficit of $7.8 billion. These findings come after the government's high-profile stress tests of the largest banks; and such findings put pressure on their respective smaller rivals.

The original stress tests found that 10 of the 19 largest U.S. institutions do not have adequate cash to survive what was defined as their ‘worst-case-scenario.’ Those 10 banks have yet to repay $27 billion in aid from the Troubled Asset Relief Program, or (TARP). The majority of the repayment funds could consist of internal resources rather than the banks’ raising additional capital on their own. Regulators are unlikely to allow any of the 19 largest banks to fail; however, the smaller banks with capital shortfalls would most likely be absorbed. We will keep you posted…

$2,500,000 Owner/User Loan Quote

Penstar recently obtained an application for the cash-out refinance of an owner-occupied post-production facility in Southern California. The additional loan proceeds will be utilized to consolidate installment debt and provide equipment financing for onsite audio and video studios. The real estate terms are 65% loan to value, fixed for 5 years at 6.25% then recast for a second 5-year term on a 25-year amortization schedule. For additional information, please contact David Stepanchak at (818) 883-9611 or DStep@PenstarAdvisors.com

Penstar is identifying transactions that will qualify for bridge loans on stabilized office and industrial properties located in major metropolitan cities throughout the United States. The loan will provide an option to either float over LIBOR at 5.0%, or swap to a current 6.0% fixed rate of interest for a 5-year term. The 1st Trust Deeds carry a top 20% personal recourse guarantee and are amortized over 25 years. For more information, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com

30 Day Libor	10-Year Treasury	Prime
0.31%	3.37%	3.25%

Penstar Realty Advisors can be reached at (818) 883-8600 or at our offices located at:
21700 Oxnard Street, Suite 1870, Woodland Hills, CA 91367