Adding a structurally differentiated mid-cap bank at OW

Research evidence excerpt

Adding a structurally differentiated mid-cap bank at OW

Barclays | Forbright, Inc.

institutions to access middle market lending opportunities that they may not be able to

originate independently, while leveraging Forbright’s underwriting expertise and origination

capabilities. BancAlliance has two programs, the commercial loan program and the consumer

loan program. Under the commercial program, loans are made to middle market businesses

with $10-$75MM in EBITDA. BancAlliance partners with LendingClub for its consumer loan

program, allowing members to incorporate consumer loans into their portfolios.

Alliance Partners contributes to earnings through multiple fee streams tied to the life cycle of

syndicated loans, including origination and structuring fees generated at loan inception,

syndication fees and gains earned through distribution to partner banks, and ongoing servicing

and administrative fees tied to asset management. We view Alliance Partners as an important

contributor to the broader high-margin, capital-light revenue stream, as it allows Forbright to

monetize its origination platform without fully retaining assets on balance sheet. As a result,

Alliance Partners is a meaningful contributor to the company’s ~20%+ fee income mix,

supporting revenue diversification and reducing reliance on spread income.

Beyond fee income generation, Alliance Partners provides an outlet to distribute loans allowing

the bank to actively manage loan concentrations, reduce capital drains, and support continued

origination levels without needing to put all the loans on the balance sheet. Additionally, the

platform helps Forbright strengthen its middle market lending by partnering with a network of

community banks, effectively expanding its distribution reach.