Provident Bank is gearing up for a busy six months, as the Cincinnati-based lender looks to issue $2.4 billion in six deals that will tap both its home equity loan and leveraged lease-backed auto programs via securitization, and its credit-card and small-ticket equipment lease collateral through its conduits.
Lehman Brothers, the bank's HEL underwriter since Provident began securitizing home-equity deals in 1996, will lead a $500 million offering that is expected in September.
Prudential Securities Inc. will also be involved, as it has participated in each Provident securitization for the past year. The deal will receive a wrap from MBIA Inc., the company's long-time insurer.
Provident's subprime home equity program is quarterly, and the bank's largest, said Tayfun Tuzun, a senior vice president at the company. "We securitize everything we originate in that program," he said.
Tuzun said Provident typically securitizes in the last month of each quarter for both its HEL and auto programs, but said that because of Y2K issues, the bank will likely launch its fourth quarter deals earlier than usual.
"I think going earlier in the fourth quarter is a real possibility," Tuzun said, "or maybe mixing it a little bit with prefunding in the third quarter and delivering the loans in the fourth."
The bank's auto lease program is similar to its HEL operation in that Provident securitizes everything it originates, Tuzun said. But the program differs from most auto programs as it is performed by completing a tax-related transaction called a leveraged lease-backed securitization.
The bank hunts for an equity investor that will put down 20% to "buy" the cars, leaving 80% as debt for the bank to securitize.
"We generate a lot of leases in the company where we can't utilize all the tax benefits," Tuzun said. "So you find somebody who can."
The market should expect a September deal from auto program totaling approximately $800 million, as the bank plans to price a bigger deal in the third quarter, followed by a smaller deal for the fourth quarter.
Provident will also securitize $100 million to $125 million of small ticket equipment leases in the third quarter and will launch close to $200 million in credit card receivables early in the fourth. Both of these deals will be commercial paper transactions, Tuzun said.