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Stocks to Watch – PMC Commercial Trust (PCC)

Posted on March 20th, 2012 by admin

Stocks to Watch – PMC Commercial Trust (NYSEAMEX: PCC)

PMC Commercial Trust (PMC Commercial) is a real estate investment trust (REIT) company. It conducts its activities along with its wholly owned subsidiaries. The Company mainly makes loans to small businesses collateralized by first liens on the real estate of the related business. Its loans are principally to borrowers in the limited service hospitality industry.

The Company generates revenue mainly from the yield and other fees earned on its investments. It operates in Dallas, Texas and includes originating, servicing and selling commercial loans. It creates loans through PMC Commercial and its wholly owned lending subsidiaries:

  • First Western SBLC, Inc. (First Western)
  • PMC Investment Corporation (PMCIC)
  • Western Financial Capital Corporation (Western Financial)

PMC is a national lender that principally makes loans to small businesses. Furthermore, it also originates first liens on the real estate of the related business; its loans are typically personally guaranteed by the principals of the entities obligated on the loans. The Company recognizes loan origination opportunities through personal contacts, Internet referrals, attendance at trade shows and meetings, direct mailings, advertisements in trade publications and other marketing methods.

These loans are generated through referrals from real estate and loan brokers, franchise representatives, existing borrowers, lawyers and accountants. Payments are made to non-affiliated individuals who assist in generating loan applications.

The Company has a unique combination of loan products that can’t be found elsewhere. Its main concern is the client’s welfare; to make their business successful and that loan closes quickly! The Company is committed to a program of customer service and personal attention.

Today, bank loans for long-term assets are “mini-perms” which means that the term may be five years with a longer amortization. At the end of the five year term, the bank may renew the loan (or maybe not renew it at all, based upon its own set of problems or other agendas).

Consequently, at a minimum, the interest rate at that time may need to be renegotiated if it is renewed. Moreover, there may be renewal fees and costs for new environmental reports, appraisals, etc. The Company’s loans on the other hand are long-term loans without a call feature and do not have typical bank performance covenants. Interest rates do not have to be renegotiated.

PMC Commercial Trust (NYSEAMEX: PCC)   52 week:  6.84 – 9.03   Mkt cap: 76.88M   Shares: 10.57M

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