Financial Advisory

Financial services firms of all sizes tap Brean Strategic Advisors’s insights to assess prospective financial transactions.  We are asked to weigh in on prospective whole loan pool purchases, entering into new lines of loan origination, prospective mergers, capital raising, hedging and disposition strategies.  Many of these financial advisory mandates are an outgrowth of work Brean Strategic Advisors already does for our clients, performing investment and loan portfolio analyses and regulatory stress testing.

Hedging Strategies

Brean Strategic Advisors consults with financial institutions on whether their hedges are commensurate with their portfolio’s risk sensitivities and hedge tolerances.  We also identify opportunities to optimize the hedging strategy through use swaps and derivatives.  Services we perform for clients include:

  • Estimate hedge payoff profile, risk/reward in various scenarios and costs.
  • Summarize advantages, risks and implications of proposed hedging program
  • Assess historical hedge effectiveness given experience across rate, market environments
  • Forecast hedge effectiveness given probability weighted scenarios
  • Review hedge tolerances and acceptable instruments in light of institution’s risk appetite
  • Review cashflow implications of hedging and potential for calls

Portfolio Optimization

Brean Strategic Advisors sits at the intersection of Brean Capital, LLC’s broker-dealer and their clients in portfolio manager and treasurer roles and our regulatory analytics client base of chief financial officers and risk officers.  As a result, we are uniquely situated to identify opportunities to optimize portfolios from a risk weighted assets and total return perspective.  Brean Strategic Advisors uses our Analytix platform, which scours broker-dealer inventory from throughout the Street, to identify securities which offer a compelling total return and satisfy each customer’s axe.  We consider each customer’s risk appetite, investment parameters, need for matchers and current risk sensitivities to identify complementary securities.  Brean Strategic Advisors details our proposed trade ideas and how they will impact the portfolio’s total return, duration and other performance metrics in a bond swap analysis.  The report highlights opportunities to sell or rotate securities with poor total return profiles in favor of those which generate favorable returns across scenarios.

Opinion Letters

Brean Strategic Advisors prepares opinion letters to comfort transaction values.  Among the factors we will consider in preparing the fairness opinion are:

  • Financial and qualitative information detailing historical performance, relevant market conditions and expectations of future performance and the outlook.
  • Values using various methodologies appropriate to each sector ranging from discounted cashflow to market and income.
  • Reasonableness and appropriateness of assumptions, including discount rates and market yields, industry multiples to earnings.
  • Risk sensitivities for business and investment and idiosyncratic risks unique to each investment. 

Our fairness opinion will be grounded in due diligence on the transaction we are evaluating and relevant documents and financial materials.  Brean Strategic Advisors’s letter will be drafted in consultation with management, investment bankers and legal counsel.

Transactional Due Diligence

Brean Strategic Advisors is regularly engaged by banks all of sizes to perform transactional due diligence.  Among other services, Brean Strategic Advisors forecasts losses and prepayment speeds on whole loans and securities held by a prospective acquisition target.  We perform due diligence on underwriting guidelines.  If desired, we partner with an affiliate to perform loan re-underwriting for a sample of whole loan files to make sure the documentation complies with legal requirements and is sufficient to .foreclose  We also assess a target’s policies and procedures for asset-liability management.  We review the target’s databases, information technology and the quality of loan-level data.