StoneCastle Financial, an ABA endorsed solution provider, last week announced a $45.5 million investment in preferred shares issued by Community Funding CLO, Ltd., a bank credit collateralized loan securitization. The net proceeds of the CLO were used primarily to fund direct capital investments into 35 community and regional banks from 24 states.
ABA, through its Corporation for American Banking subsidiary, endorsed StoneCastle Financial in 2013 to help community banks, especially privately held ones, seeking an additional source of permanent capital. The banks that participated in last week’s CLO can use the capital to support nearly $2.5 billion in local lending or to fund acquisitions or refinance more expensive capital.
Community Funding is the first pooled bank credit securitization to close since 2008. The original form of pooled bank credit securitizations, TruPS CDOs, were created by what is now Citigroup in 1999 by the founders of StoneCastle Partners. TruPS CDOs accounted for more than $40 billion of community bank capital issuance between 2000-and 2008. For more information, contact ABA’s Helen Sullivan.