Fred Ford

Santa Maria, CA (USA)
Role(s):
Founder/Owner/Principal

Cash Collateral Deposit Group

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Location: Santa Maria
Industry: Finance
Year Founded: 2011
Number Employees: 1-10 people
Business Stage: Creation/Idea
Entity Type: Limited Liability Company
Description: Cash Collateral Deposit (CCD) Group, LLC., a cash collateral provider, 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. CCD Group 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 item. The cash deposit is then used as compliant collateral and CCD Group 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. As stated above, the bank will be required to pay a monthly fee, plus a small annual renewal fee in the second and subsequent years. We arrange to provide banks with cash deposits from $5mm on up—depending on the size and health of the bank. Generally, we consider working with banks that have at least $50 million in assets. Typically, the deal is structured to renew annually (up to 7 years). The funds will remain on deposit in the bank as long as the Direct Pay Letter of Credit remains outstanding. The bank may decide to reduce or increase the DPLC—and corresponding funds on deposit—in future years. Going into the program, the bank may also decide to initiate and phase out the program over time. For example, a bank may decide to receive a cash deposit of $500mm and phase out the program beginning in the 3rd year lowering it to $300mm, then $200mm in the 4th year and zero by the end of the 7th year. Any closing fees that were deducted from the loans proceeds are never paid back by the bank to CCD Group. Closing of a transaction generally requires no longer than 30 days of receipt of the Letter of Intent to issue the Direct Pay Letter of Credit to CCD Group. CCD Group’s Cash Deposit Process · After preliminary discussions with CCD Group, the bank determines the amount of the deposit desired. CCD Group will approve the amount based upon the size and health of the bank, and issues a letter to the bank stating that CCD Group will be arranging a deposit in the amount of $X into the bank. · The bank then issues a Letter of Intent to CCD Group to provide a Direct Pay Letter of Credit as collateral for the funds. · CCD Group then begins the two – 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 CCD Group in the event of a default. However, the trustee bank will not draw on the DPLC unless: A. The interest only (30-day Libor) payment is in default. B. The annual renewal fee is not paid. C. The DPLC is no longer renewed by the bank at which time the funds will be returned. Once the syndication is complete, CCD Group will arrange for the deposit of the full amount of the DPLC, less any one-time fees into a CCD Group’s DDA at the bank. The bank will then freeze the funds until the deal terminates. Cash Collateral Deposit Group’s Bank Partnership Program The current tumult in market conditions really culminated well before 2007, when the CMBS market began to implode and banks began to loose the ability to reload for future loan commitments. 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 better able to provide them with the funding that they needed. This is where Cash Collateral Deposit Group, through our Capital Division, can be a "go to" source to keep your customers and their deposits at your bank. Cash Collateral Deposit Group, a cash collateral provider, will in partnership, fund your new loans, balloon loans or refinance your existing portfolio at low interest rates to keep your customers happy and help you conserve cash on hand. You benefit by charging a fee to your customer for a Direct Pay Letter Of Credit (DPLC), while we arrange to fund your new loans. The customer receives a great rate that can be interest-only or amortized – you decide. In the meantime, the customer keeps their deposits at your bank as well as other services. Moreover, the funds remain in your bank and the bank benefits while you are not required to pay interest on the funds. Loans need to be at least $5mm however; we can go up to your banks maximum ability to issue a DPLC. Finally, as a professional courtesy, we do not charge your customers any upfront fees and any one-time processing fees are deducted at closing. Please allow 2 – 4 weeks for closing. Cash Collateral Deposit Group’s Commercial Financing Program Cash Collateral Deposit Group’s Commercial Financing principals have provided below market rate financing for builders and developer for over 30 years. Our key index for financing is floating, 30-day Libor. Historically, 30-day Libor does not fluctuate significantly and is usually the lowest market index rate. We are a premiere source of funding for both commercial real estate financing and refinancing. However, we can provide financing for any purpose when the loan is backed by a Direct Pay Letter of Credit (DPLC). Our lending begins with deals that are at least $5 million dollars, and only limited to an institutions ability to issue a maximum size letter of credit. We typically close our loans within 2 to 4 weeks. Why use a Direct Pay Letter of Credit? The purpose of a Direct Pay Letter of Credit is to reduce the aggregate cost of financing. An interest-only loan at 30-day Libor is ideal for most any borrower. Depending on your bank, a DPLC can generally be obtained for a nominal fee. We can also pay this fee for you at the time of closing from the proceeds. In today’s market, banks have significantly less cash, yet we still have billions of dollars to lend at low rates. Many lenders today are asking borrowers to move their deposits in order to obtain their loan; yet your bank does not want to see you pull your deposits. We help by keeping your banking relationship intact, while the bank receives fee income from the DPLC. Hence, a win-win-win. How to apply for financing: 1. After consulting with one of our lenders, a business desiring to borrow from us first obtains a DPLC from a U.S. bank - or the U.S. office of an international bank. As an exception, a foreign bank can be used as long as a U.S. bank (or U.S office of an international bank) serves as the confirming bank. We will work with the bank to arrange funding the proceeds directly to your account. 2. We begin the 2 – 4 week syndication process once we receive a Letter of Intent from your bank to issue the Direct Pay Letter of Credit, the beneficiary will be a trustee bank. Since the DPLC is the collateral, no other documentation such as financials or personal principal information is required. The DPLC will not be drawn upon unless there is a default. Your bank reserves the right to increase, decrease or amortize the DPLC each year. 3. We finance 100% of the value of the DPLC, less some one-time fees deducted from the loan at closing. What are all of the fees? 1. First, the interest only, 30-day Libor fee with a floor of 1.00%. This is paid monthly. In the 1st quarter of 2011, the rate was below 0.30%—much less than prime. No points are added but there are some one-time fees that follow in steps two and three. 2. A one-time Syndication and Trustee fee (deducted from the loan proceeds). 　 3. A one-time origination fee, depending on the size of the loan, but also deducted from the proceeds of the loan. 4. Annual renewal fee, quoted depending on the size and term of the loan. 5. There are no upfront fees, nor any prepayment fees. Please email us for more information. (URL removed)