Voya Investment Management and OBL BankServices, Inc., enter into preferred-vendor agreement

Rhea-AI Summary

Voya Investment Management and OBL BankServices, Inc. (OBLBS) have entered into a preferred-vendor agreement to provide Ohio community banks with a commercial and industrial (C&I) loan-acquisition and risk-management program. The Voya Senior Loan Bank Advisory Program aims to help community and small regional banks access the $1.4 trillion senior loan market.

The program offers banks a turnkey solution combining education, preparation, and implementation. It leverages Voya's market leadership, experience, and credit risk management capabilities while allowing banks to maintain independent research and decision-making. Participating banks can build portfolios individually or cooperatively, benefiting from loan diversification, asset growth, interest and fee income, and floating rate assets.

OBLBS will receive compensation from Voya for its services, including up to 5.0 basis points based on Target Portfolio Commitments to the Programs.

Positive

• Partnership provides access to the $1.4 trillion senior loan market for community banks
• Offers loan diversification, asset growth, interest and fee income, and floating rate assets
• Combines Voya's expertise with banks' independent decision-making
• Compliant with regulatory guidelines and prudent standards

Negative

• Compensation arrangement may affect Voya's willingness to negotiate below standard advisory fees

Insights

Financial Analyst

As a seasoned financial analyst, I find this partnership between Voya Investment Management and OBL BankServices intriguing, albeit with immediate impact. The agreement aims to provide Ohio community banks access to the $1.4 trillion senior loan market, which could potentially diversify their loan portfolios and boost income.

However, the real impact of this partnership will depend on several factors:

• The number of Ohio community banks that participate in the program
• The volume of loans they acquire through this channel
• The performance of these loans over time

While the partnership offers potential benefits such as loan diversification, asset growth and access to floating-rate assets, it's important to note that entering the syndicated loan market also comes with its own set of risks. Community banks will need to carefully manage these new exposures.

For Voya Financial (NYSE: VOYA), this partnership could lead to increased fee income, but it's unlikely to significantly move the needle for a company of Voya's size in the short term. The 5 basis points fee structure suggests this is more about strategic positioning and market expansion than immediate revenue generation.

Investors should monitor the adoption rate of this program among Ohio banks and any plans to expand to other states. If successful, this could become a meaningful growth driver for Voya's asset management business in the long run, but for now, it's a wait-and-see situation.

Banking Industry Expert

This partnership between Voya Investment Management and OBL BankServices is a strategic move that addresses a key challenge faced by community banks. In today's complex financial landscape, smaller institutions often struggle to compete in the commercial and industrial (C&I) loan market due to resources and expertise.

The Voya Senior Loan Bank Advisory Program offers several advantages to participating banks:

• Access to Voya's market leadership and industry knowledge
• Enhanced credit risk management capabilities
• Training and sourcing opportunities
• Ability to maintain independent research and decision-making

This last point is crucial, as it allows banks to satisfy regulatory requirements while still benefiting from Voya's expertise. It's a delicate balance that could prove attractive to many community banks.

However, it's important to consider potential drawbacks. Community banks entering the syndicated loan market may face increased competition and pressure on margins. There's also the risk of diluting their traditional strengths in small business underwriting and relationship management.

The success of this program will largely depend on how well it's executed and whether it truly enables community banks to compete effectively in the C&I loan market without compromising their core strengths. If successful, it could serve as a model for similar partnerships in other states, potentially reshaping the competitive landscape for community banking.

Agreement provides Ohio community banks a commercial and industrial loan-acquisition and risk-management program

NEW YORK--(BUSINESS WIRE)-- Voya Investment Management, the asset management business of Voya Financial, Inc. (NYSE: VOYA), and OBL BankServices, Inc. (OBLBS), a subsidiary of the Ohio Bankers League, announced today they have entered into a commercial and industrial (C&I) loan growth partnership program known as the Voya Senior Loan Bank Advisory Program.

While community and small regional banks have historically excelled at small business underwriting and relationship management, Voya’s C&I program recognizes the syndicated loan market demands a broader industry knowledge and timely action. Participating commercial banks benefit from Voya’s unique market leadership, experience, relationships, credit risk management, training and sourcing capabilities while effectively keeping independent research and decision-making within their walls, thus satisfying regulatory requirements.

“Our goal is to provide banks with a turnkey solution--combining education, preparation and implementation to enable them to enter the $1.4 trillion senior loan market,” said Randy Cameron, co-head of the Voya Bank Advisory Group. “This asset class benefits banks looking for a combination of loan diversification, asset growth, interest and fee income, and floating rate assets.”

Under the Voya program, community and regional bank commercial credit professionals build portfolios of senior secured commercial and industrial loans. Banks may work individually to build portfolios, one loan at a time, or cooperatively to share in a portfolio of select loans These portfolios benefit from Voya’s access to the new loan and secondary markets as well as strong and ongoing loan underwriting and monitoring processes, which are compliant with regulatory guidelines and prudent standards. Through education and mentoring, banks learn about the implementation and monitoring of compliant portfolios that offer diversification, value recognition and loss avoidance as their core objectives.

“We’re excited about this newly founded endorsed business partnership with Voya Investment Management as it is going to provide our member banks access to unparalleled resources, empowering them to navigate today’s complex financial landscape with confidence and drive sustainable growth,” said Michelle Crume, executive director of OBL BankServices. “Together we will be bringing two new solutions to our Bank Members that will expand their commercial and industrial loan offerings at a time when this may be a much-needed resource.”

“The goal of OBL BankServices is to provide member banks with a turnkey solution that combines education, preparation and implementation to enable them to enter the $1.4 trillion senior loan market,” said Crume. “This asset class benefits banks looking for a combination of loan diversification, asset growth, interest and fee income, and floating rate assets.”

OBL Bank Services, Inc. (“OBLBS”) has entered into a Solicitation Agreement (the “Agreement”) with Voya Investment Management Co. LLC (“Voya”) under which OBLBS solicits clients for the Voya Senior Loan Advisory Program and/or the Voya Senior Loan Shared Portfolio Program (each, a Program, and together, the “Programs”).

As part of OBLBS’ services under the Agreement, OBLBS and its personnel may make favorable statements regarding Voya and its products and services, including a Program. Such statements constitute “endorsements” for purposes of Rule 206(4)-1 under the Investment Advisers Act of 1940.

Under the Agreement, in exchange for its services (including making such endorsements), OBLBS will receive cash compensation from Voya, consisting of up to 5.0 basis points (.05%) computed based on the Target Portfolio Commitments to the Programs that are agreed upon by clients solicited by OBLBS. In addition, Voya has agreed to pay and maintain Affiliate Members status with OBLBS and support OBLBS through various event sponsorships. Other than the incentive such compensation gives OBLBS to endorse Voya, there are no material conflicts of interest resulting from OBLBS’ relationship with Voya.

No costs or charges will be incurred by any client by reason of having been referred to Voya by OBLBS However, the presence of these arrangements may affect Voya’s willingness to negotiate below its standard advisory fee, and therefore may affect the overall fees paid by referred clients.

OBLBS is not a Voya client and OBLBS and Voya are not affiliated. Also, OBLBS is not authorized to provide investment or other advice on behalf of Voya or to act for or bind Voya. No asset advisory agreement with Voya will become effective until accepted by Voya.

About OBL Bank Services, Inc.

OBL BankServices, Inc. (OBLBS) is the for-profit division of Ohio Bankers League (OBL) Each preferred vendor is carefully researched and approved by the OBLBS Board of Directors — selected by bankers for bankers — to ensure quality, consistent product and service delivery. OBLBS offers a full line of products and services to meet your bank’s needs. Visit ohiobankersleague.com to learn more.

About Ohio Bankers League

Ohio Bankers League is the trade association for the Ohio banking industry — and is Ohio’s only organization focused on meeting the needs of all banks and thrifts in the Buckeye State. For more than 125 years, the OBL has been the voice of the Ohio banking industry fostering a cooperation that has made it one of the strongest and most reputable financial trade associations in the country. By linking banks, bankers, and industry experts — and by pooling their intellectual and capital resources — the OBL serves as a powerful creator of knowledge and collective resources. The non-profit association is comprised of 174 FDIC-insured financial institutions including commercial banks, savings banks, and savings and loan associations ranging in size from just over $13 million in assets to more than $1.5 trillion.

About Voya Investment Management

Voya Investment Management (IM) manages approximately $331 billion as of March 31, 2024, in assets across public and private fixed income, equities, multi-asset solutions and alternative strategies for institutions, financial intermediaries and individual investors, drawing on a 50-year legacy of active investing and the expertise of 300+ investment professionals. Voya IM has cultivated a culture grounded in a commitment to understanding and anticipating clients’ needs, producing strong investment performance, and embedding diversity, equity and inclusion in its business.

VOYA-IM

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725225708/en/

Media:

Voya Financial

Kristopher Kagel

(212) 309-6568

Kristopher.Kagel@voya.com

Ohio Bankers League

Audra Johnson

Director of Communications

(614) 340-7621

ajohnson@ohiobankersleague.com

Source: Voya Financial, Inc.

FAQ

What is the Voya Senior Loan Bank Advisory Program?

The Voya Senior Loan Bank Advisory Program is a commercial and industrial (C&I) loan growth partnership program offered by Voya Investment Management and OBL BankServices, Inc. It provides Ohio community banks with access to the $1.4 trillion senior loan market, offering loan diversification, asset growth, and risk management capabilities.

How does the Voya program benefit community banks?

The program benefits community banks by providing access to the syndicated loan market, offering loan diversification, asset growth, interest and fee income, and floating rate assets. It combines Voya's market expertise with banks' independent decision-making, while ensuring compliance with regulatory guidelines.

What compensation does OBL BankServices (OBLBS) receive from Voya (VOYA) for this partnership?

OBLBS receives cash compensation from Voya (VOYA) of up to 5.0 basis points (0.05%) based on the Target Portfolio Commitments to the Programs agreed upon by clients solicited by OBLBS. Voya also pays for Affiliate Members status and supports OBLBS through event sponsorships.

How can banks participate in the Voya Senior Loan Bank Advisory Program?

Banks can participate in the program by working individually to build portfolios one loan at a time or cooperatively to share in a portfolio of select loans. The program provides education, mentoring, and access to Voya's new loan and secondary markets, as well as loan underwriting and monitoring processes.