Florida Banking February/March 2025

Additionally, a growing emphasis on sustainability is influencing SLB deals, as companies seek to reduce their environmental impact and align with global sustainability goals. Brookline is at the forefront of these technological advancements, currently in discussions with an AI company that will enhance its strategic capabilities. This collaboration aims to utilize artificial intelligence to identify financial institutions in need of a capital influx and to pinpoint new markets where Brookline can successfully establish flourishing branches. This strategic partnership underscores Brookline's commitment to leveraging cutting-edge technology to refine its market approach and expand its operational scope. The Brookline Advantage At Brookline Branch Services, we specialize in structuring bespoke SLB solutions tailored to the needs of financial institutions. Our approach focuses on: • The 6 Cs Philosophy: At Brookline, we believe in the six key drivers of success in SLB transactions: 1. Capital Gains: Maximizing day-one proceeds through precise market evaluations. 2. Cost-Savings: Helping institutions reduce operational expenses through optimized lease structures. 3.Customized Solutions: Tailoring lease structures to align with client goals. 4. Co-Tenancy: Redesigning oversized branches to include co-tenants, which improves foot traffic and enhances community engagement. 5.Client-Centric Approach: Building lasting partnerships by prioritizing client needs. 6.Core Business: Owning real estate is a distraction for banks; it is not the highest and best use of their employees and resources. Our research reveals that leading retailers like CVS and Walgreens own only about 3-4% of their real estate, highlighting a strategic focus on operational agility. In stark contrast, banks typically own a much larger share, around 50-60%, of their real estate assets! This highlights an opportunity for banks to minimize their real estate involvement, which can be a distraction, and instead focus resources on enhancing customer services. •Branch Downsizing Expertise: Many bank branches today are oversized compared to the average requirements of modern banking operations. Brookline brings expertise in downsizing these branches and introducing co-tenancy strategies, which not only improve space utilization but also foster increased customer engagement and deposit growth. • Testimonial: Jon Burk, President of BMO Harris Bank, remarked, “Our first sale-leaseback portfolio transaction immediately reduced our operating expenses and enabled the redesign of

the oversized branches’ space to fit our needs.” Brookline’s SLB solutions continue to deliver such impactful results. Why Now? The combination of economic uncertainty and the evolving needs of businesses makes 2025 a pivotal year for SLB transactions. For financial institutions, SLBs are no longer just a financing tool but a strategic decision to remain competitive in a challenging market. Sale-Leaseback transactions have not only been prevalent but also significantly advantageous for financial institutions in 2024, as demonstrated by recent high-profile deals: • Fulton Financial Corp.: Engaged in an SLB deal valued at $55.4 million, realizing a gain on sale of $20.4 million. This transaction allowed the bank to offset securities losses while retaining control over its branches, showcasing SLB as a strategic tool for managing balance sheet risks and improving liquidity. •Pinnacle Financial: Executed a comprehensive SLB transaction totaling $92.8 million. The remarkable gain on sale combined with repositioning their bond portfolio and offsetting $9.2 million in losses highlights SLB's role in financial restructuring and portfolio optimization. •Atlantic Union Bancshares: Through an SLB deal worth $45.8 million, the bank achieved a gain of $27.9 million. This significantly bolstered their Tangible Common Equity (TCE) ratio, improving it from 6.45% to 7.15%, underlining the efficacy of SLBs in enhancing financial stability and shareholder value. Conclusion As the real estate market continues to evolve, the Sale-Leaseback model stands out as a resilient and versatile strategy. By addressing the dual needs of liquidity and operational continuity, SLBs are shaping the future of commercial real estate investments. For banks, this is an opportunity to reimagine their real estate strategies and unlock untapped potential — a journey that Brookline is proud to lead. As an endorsed partner of the Florida Bankers Association, Brookline is uniquely positioned to assist all member banks. We offer our expertise in strategically downsizing oversized real estate and capitalizing non-earning real estate assets. With our help, banks can transform their branches into immediate capital gains, enhancing their balance sheets from the day of closing. Brookline is ready to guide member banks through these transformative opportunities, ensuring they maximize their real estate investments while focusing on core business growth. For information about Brookeline's services, please email William Yeomans at byeomans@ brooklinebranch.com.

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