By helping Third Coast Bank securitize a US$200 million revolving CRE loan, we supported its first ever CRT transaction – lowering construction concentration risk, improving capital efficiency, and creating a model for regional banks managing development heavy portfolios.
In April 2025, Third Coast Bank originated a US$200 million revolving commercial real estate mortgage loan to one of America’s largest private investment firms focused on real estate development. The loan is secured by interests in a portfolio of eleven residential master planned communities across the Houston, Dallas, and Austin metropolitan areas – a concentrated exposure in fast growing Texas markets.
Traditionally, the bank had relied on participations and syndications to manage concentration across its books. For this loan, Third Coast created participation interests and sold one participation to an EJF sponsored depositor, which in turn on sold it to an issuing vehicle, EJF CRT 2025 1 LLC. The issuer pledged its participation interests and issued asset backed notes, with senior notes purchased by the bank and mezzanine notes purchased by EJF affiliates – transferring a defined slice of credit risk to capital markets investors while the bank retained the client relationship and ongoing exposure.
This structure enabled Third Coast to target several supervisory metrics at once. The risk transfer is expected to reduce the bank’s risk weighted assets under current risk based capital rules and lower the ratio of construction, land development and other land loans to total capital – a key measure used by regulators when assessing CRE concentration risk. At the same time, the bank diversified its on balance sheet loan portfolio by cutting the size of a single development focused exposure without exiting the credit.
A first of its kind blueprint for regional banks
EJF CRT 2025 1 is widely viewed as the first public example of a securitization executed on a single newly originated U.S. CRE loan of this size, and the first of its kind to achieve a measurable reduction in CRE concentration as well as capital requirements. For a Texas based regional bank with approximately US$5 billion in assets, that matters: previously, similar CRT style solutions had largely been the domain of much larger institutions.
The deal’s uniqueness also made it complex. Market participants have pointed to the challenge of finding an investor willing to spend the time and resources to diligence a single loan portfolio of eleven development stage communities, and to navigate the regulatory and structural nuances of combining a revolving CRE loan with a CRT securitization. Yet the parties involved see the approach as scalable: although this transaction focused on a newly originated loan, they expect the same model could be replicated for existing loans, giving regional and community banks “another tool in the toolbox” for managing evolving regulatory metrics and risk positions.
For Third Coast, this first securitization strengthened capital ratios, reduced construction concentrations, and mitigated credit risk – while preserving the ability to serve an important client and continue lending into its core Texas markets. For the broader regional bank sector, it demonstrates how carefully structured CRT can turn a single, concentrated CRE exposure into a catalyst for both safety and growth.
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