Financial law

• Granite Point Mortgage Trust Inc. (NYSE: GPMT) today announced an adjustment to the conversion rate for the companys 5.625% convertible senior notes due 2022 (the Notes).
• Currently, the conversion rate for the Notes is 50.5977 shares of common stock per $1,000 principal amount of the Notes.
• Notice of the conversion rate adjustment was delivered to holders of the Notes and Wells Fargo Bank, N.A., as trustee, in accordance with the terms of the supplemental indenture governing the Notes.
• Granite Point Mortgage Trust Inc. is a Maryland corporation focused on directly originating, investing in and managing senior floating rate commercial mortgage loans and other debt and debt-like commercial real estate investments.

• VANCOUVER, British Columbia, Dec. 30, 2019 (GLOBE NEWSWIRE) -- Deer Horn Capital Inc. (CSE: DHC) (the Company or Deer Horn), announces that it has amended the terms to raise up to $250,000 by way of a non-brokered private placement of up to 5,000,000 units at a price of $0.05/unit.
• Deer Horn also announces that it has amended the terms to effect a debt conversion to settle an aggregate of $109,125 owing to consultants, lenders and other creditors, including some insiders.
• 3.4% of Deer Horns then issued shares, assuming completion of the private placement and the debt conversions) to a private company owned by Tyrone Docherty, the CEO, President and a director of the Company to settle $40,000 debt; and 50,000 shares (approx.
• 0.2% of Deer Horns then-issued shares, assuming completion of the private placement and all debt conversions) to Pamela Saulnier, CFO of the Company, to settle $5,000 debt.

• This article examines bank lending conditions for euro area non-financial corporations (NFCs), making use of the wealth of soft information available in the euro area bank lending survey (BLS) since its inception in 2003.
• One relevant question in this context is whether the tightening of the bank loan supply during the financial and sovereign debt crises has been offset by the easing of bank lending conditions for loans to NFCs since 2014.
• The article also draws on the responses of individual banks to examine the differences in bank lending conditions for NFC loans over time and across bank business models.
• In short, it looks at additional aspects that enhance the regular assessment of bank lending conditions faced by firms based on the euro area BLS.

1 Introduction

• In addition, BLS data have been shown to have strong leading indicator properties vis--vis aggregate movements in loan volumes.
• Against this background, BLS survey information is regularly monitored and assessed to gain insights into bank lending conditions directly from reporting euro area banks.
• [2] This article focuses on bank lending conditions for euro area firms, drawing on the wealth of information available in the BLS, from both an aggregate and individual bank-level perspective.
• What can the euro area BLS tell us about the credit conditions faced by euro area firms over the past 10-15 years?
• Importantly, business models with relatively stable funding sources show more moderate variations in credit conditions compared with other bank types.
• In short, this article looks at additional aspects that enhance the regular assessment of bank lending conditions based on the euro area BLS.

2 Bank loan supply conditions for euro area firms

2.1 Banks’ credit standards for loans to euro area firms

• Credit standards, which reflect banks internal guidelines or loan approval criteria, are a key indicator of bank lending conditions.
• [4] In addition, changes in credit standards for NFC loans lead actual NFC loan growth by around one year.
• Chart 1 NFC loan supply, demand and NFC loan growth (net percentages and quarterly growth rates)
• The net easing of credit standards from 2014 up until early 2019 has been the longest net easing period since the inception of the BLS at the beginning of 2003.
• Following a drastic tightening of credit standards for euro area NFC loans between the third quarter of 2007 and the second half of 2011 during the euro area financial and sovereign debt crises (with a net peak of 68% at the time of the Lehman Brothers collapse in the third quarter of 2008), euro area banks started to ease credit standards in net terms in the first quarter of 2014.
• In the second and third quarters of 2019, there was some variation in the changes made by banks to their credit standards amid concerns about the euro area economic outlook, while actual lending rates remained at historically low levels.

2.2 Which factors have driven changes in credit standards for NFC loans?

• The factors driving changes in credit standards provide a better understanding of the reasons behind changes in banks loan approval criteria.
• Euro area banks also report the underlying factors which contribute to changes in credit standards.
• First, and in keeping with the changes in credit standards for NFC loans, the tightening impact of these factors has been greater than the easing impact.
• The high correlation with credit standards applies in particular to tightening periods, but risk perceptions also play an important role when banks ease their credit standards.
• [7] Chart 2 Factors contributing to NFC credit standards (percentages of banks)


Chart 3 Banks’ risk perceptions and industrial confidence (net percentages of banks and percentage balances)

• Banks cost of funds and balance sheet constraints play an important role, mainly in the tightening of credit standards, whereas the correlation between this factor and an easing of credit standards is rather small.
• By contrast, competitive pressure, mainly from other banks, is the most important factor for explaining an easing of credit standards.
• Specifically, the net easing of credit standards on NFC loans since 2014 has, to a large extent, been related to competitive pressures.
• Lastly, banks risk tolerance has overall had a broadly neutral and, in some periods, small tightening impact on credit standards for NFC loans since 2015.

2.3 Why has the net easing of credit standards since 2014 been rather moderate?

• Banks overall easing of credit standards on corporate loans since 2014 appears moderate compared with the previous tightening (see Chart 4).
• When summing up the net percentage changes, the cumulated net easing of credit standards over the past five years, compared with the cumulated net tightening of credit standards for loans to euro area NFCs during the financial crisis, appears moderate despite the extended net easing period.
• Chart 4 Credit standards on NFC loans (net percentages and percentages of banks)
• Corroborating evidence is also provided by the BLS ad hoc question on the level of credit standards, which complements the quarterly question on changes in credit standards on an annual basis.
• According to the banks responses, the level of banks credit standards for euro area NFC loans in the first quarter of 2019 was still tighter than the historical range of credit standards since 2003.
• Among the driving factors behind credit standards mentioned above, banks risk perceptions and willingness to take on credit risk matter considerably.
• Chart 5 NFC credit standards and impact of supervisory and regulatory requirements on credit standards (net percentages of banks)
• During the net easing period of NFC credit standards since 2014, the regulatory and supervisory impact on credit standards was neutral on average, suggesting that the previous tightening impact was not reversed.
• This is consistent with the broadly neutral impact of banks capital positions on banks credit standards for NFC loans during the net easing of credit standards since 2014.
• Third, in relation to banks need to clean up their balance sheets, non-performing loan (NPL) ratios have also had a tightening impact on banks credit standards.
• While this should contribute to favourable lending conditions in the medium term,[11] banks efforts to increase their resilience help to explain why the net easing of banks credit standards was not greater.

2.4 Credit terms and conditions for loans to euro area firms

• Banks credit terms and conditions for new loans point to a considerable easing of the actual agreed lending conditions for NFC loans, which is more marked than for credit standards.
• While credit standards are defined as banks internal guidelines or loan approval criteria, banks terms and conditions are defined as the actual terms and conditions applied to a new loan, as agreed in the loan contract.
• The analysis of banks terms and conditions therefore complements the analysis of credit standards to provide an overall view on bank lending conditions.
• Specifically, their margins on riskier NFC loans widened, while margins on average NFC loans in total broadly stabilised.
• Hence, while euro area banks have eased their credit standards for NFC loans only moderately since 2014, they have eased their actual terms and conditions for new NFC loans of average riskiness substantially.
• Borrowers who have met the banks loan approval criteria have benefited from considerably more favourable actual lending conditions for average NFC loans.
• [13] Chart 8 Impact of the ECBs non-standard measures on bank lending conditions (net percentages and percentages of banks; impact over the previous six months)
• In contrast to margins on average NFC loans, margins on riskier loans have narrowed only a little in net terms since 2014 (see Chart 7).
• The more cautious attitude towards riskier loans may indicate that banks have not been willing to take on major risks when lending to firms in order to boost returns in a low interest rate environment.
• Taking a longer-term perspective, banks margins on new loans to firms with an average risk profile have returned to levels not far off those prevailing around the beginning of the financial crisis, whereas previously they were lower.
• the spread of bank lending rates over a relevant market reference rate), as reported by BLS banks, can help when assessing the current state of bank lending conditions for firms.
• Chart 9 Cumulated changes in margins on average NFC loans and cost of borrowing spread for NFC loans (cumulated net percentages and spread in basis points)

3 Bank lending conditions across bank business models

• A new dataset on bank business models makes it possible to detect differences in bank loan supply conditions across different types of bank business models for the BLS banks.
• Individual bank data have been aggregated following the BLS methodology to report aggregate changes in bank lending conditions at the euro area level across bank business models.
• Overall, while the direction of the movements in credit standards over time has been consistent across bank business models, there have been notable variations (see Chart 10).
• Universal banks and retail lenders on average tightened their bank lending conditions by more than other lenders during the crisis period.
• Finally, banks risk tolerance had a rather small impact on changes in credit standards across bank business models.
• Chart 10 Credit standards on NFC loans across bank business models (average net percentages of banks)
• Mimicking the net easing of bank lending conditions in the overall sample, margins on average loans have narrowed across all business models since 2014, along with a parallel decrease in bank funding costs, following the ECBs credit easing package (see Chart 11).
• Specialised lenders seem to have benefited particularly from squeezed bond yields, given their stronger dependence on funding through the issuance of debt securities.
• Importantly, ECB borrowing under attractive terms within the ECBs TLTRO-II operations has additionally benefited all bank types.
• In the second and third quarters of 2019, G-SIBs tightened their credit standards on NFC loans and reported an increase in margins on average NFC loans, while developments were more mixed for other bank types.
• Differences in business models reliance on specific customer and market segments can be linked to the heterogeneity in the developments of loan supply as well as in funding conditions and overall profitability.
• Chart 11 NFC loan supply, bank funding cost and bank profitability across bank business models (averages of net percentages of banks, percentages and percentages p.a.)

4 Conclusions

• The loans sold had a weighted average rate of 3.50% and included both fixed and adjustment rate loans previously originated by the Bank.
• The Company plans to sell up to $90 million more of these loans in the quarter ended March 31, 2020.
• This loan sale, coupled with our strong loan origination pipeline, should improve our long-term interest rate margin and profitability.
• HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank.