COURTESY DEPOSITS EXPLAINED
The AmeriStar courtesy deposit product is straightforward and designed to benefit Borrowers. We specialize in arranging deposits at reputable financial institutions worldwide. These deposits are carefully structured to ensure they cannot be encumbered, pledged, used as loan collateral, or be subject to any risk that may affect a Borrowers financing. Importantly, the Borrowers lender has no right of offset against the deposits we arrange.
Examples of Borrowers Using a Courtesy Deposit
Real Estate Developer
Jack is the owner of a Consulting business that specializes in assisting individuals with personal in-home health-related matters. To improve his business operations, Jack decides to raise capital, intending to pre-pay his vendors for better product discounts, benefiting his customers. His funding requirement is $500,000.00, and he has prepared a professional loan proposal, which includes our product.
Initially, Jack approaches his banker, requesting a $1 ,000,000.00 from AmeriStar, with a cost of $30,000.00.
Kate owns a successful mortgage brokering company, generating around 15 new loans monthly for her customers. Recognizing what motivates bankers and lenders, she consistently advises her mortgage-seeking clients to include our product in their bank lending application proposals. As a result, her business has seen substantial growth, and the approval process has become more efficient, with many lenders now aware of our product being attached to her mortgage applications.
Michael R. is a real estate developer specializing in small tracks of townhomes and apartments. He is currently in need of $7,000,000.00 in financing for his latest project. As Michael already has connections with several lenders, he approaches AmeriStar to arrange a $14,000,000.00 deposit into his lender's bank.
A Banks View to a Courtesy Deposit.
AmeriStar will make a "courtesy deposit", in the form of Jumbo CD purchases at an institution. AmeriStar intent is to enhance the relationship with the borrower and make the proposal more appealing to the bank by including a deposit of funds via the purchase of CDs at the chosen institution. It's important to note that the funds used to purchase the CDs are not the borrower's funds, and the CDs are not owned by the borrower or part of their proposed transaction with the bank. The borrower is responsible for arranging these CD purchases (known as “courtesy deposits”) at the bank. AmeriStar has no involvement with the lender's loan approval process or the borrower's business. AmeriStar only makes the purchase of Certificates of Deposits at the lending institution. It is important to note that these funds are brought to the bank at zero cost to the bank and through no extra effort of the bank (marketing cost).
All AmeriStar arranged Courtesy Deposits are typically institutional funds and come from USA domiciled individuals, corporate funds, municipalities, financial institutions, Regulation D 506(c) or (b) Offerings or other domestic investors. All information necessary to comply fully with all applicable regulations, including the Patriot Act, the Bank Secrecy Act, and the Money Laundering Control Act will be provided along with any other information required by the lending institution. Information provided can include ID's, fingerprint cards, authorizations, tax ID numbers, or other identifying information, the source of the funds, the originating account, the purpose of the funds, and whatever else is required from the receiving bank.
"Courtesy Deposit" Defined
A "courtesy deposit" is a deposit of funds with a financial institution to enhance a client's financing proposal. The funds are only deposited via the purchase of Certificates of Deposit in the name of AmeriStar- not the client/borrower. The deposits are made in increments of $100,000.00 to $250,000.00 depending on the requirements of the accepting financial institution. The term of the Certificate of Deposit can range from one to five years. All deposits can be renewed for additional terms.
The "courtesy deposit" can never be subject to risk. Accordingly, the financial institution must carry appropriate FDIC insurance to cover all deposits arranged by AmeriStar. At no time can the funds be encumbered, pledged, put in jeopardy, used to collateralize a customer's loan, or used to guarantee any customer's situation. The bank does not have the right to offset against these deposits.
Benefits to the Bank
By approving a loan package that includes a "courtesy deposit," the bank may benefit in multiple ways. First, the Courtesy Deposit may provide additional liquidity. The bank gains a new "center of influence" client. The bank can apply this capital in whatever manner the bank sees fit, including, for example, making additional loans, using the funds for arbitrage, or investing the funds for gain. Only The Bank can identify the proper use for the courtesy deposits, such as: earning more revenue.
The bank is able to redeploy the funds and increase its profitability by using the courtesy deposit to fund additional loans.
By approving a loan package that includes a "courtesy deposit," the bank and banker are gaining two significant relationships. The bank gains a relationship that utilizes multiple products, beginning with a courtesy deposit which will remain with the bank for a predetermined period and potential extended period of time. Furthermore, the bank has a new customer and is able to add products to the relationship such as treasury management services, investment management, personal accounts, etc., which all significantly enhance the relationship and further the bank's ability to become the provider of banking services.