Follow the Yellow Brick Road: A successful path to an FDIC assisted Bank acquisition Joan...
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Transcript of Follow the Yellow Brick Road: A successful path to an FDIC assisted Bank acquisition Joan...
![Page 1: Follow the Yellow Brick Road: A successful path to an FDIC assisted Bank acquisition Joan Tupin-Crites.](https://reader036.fdocuments.net/reader036/viewer/2022082818/56649f145503460f94c287c7/html5/thumbnails/1.jpg)
Follow the Yellow Brick Road:
A successful path to an FDIC assisted Bank acquisition
Joan Tupin-Crites
![Page 2: Follow the Yellow Brick Road: A successful path to an FDIC assisted Bank acquisition Joan Tupin-Crites.](https://reader036.fdocuments.net/reader036/viewer/2022082818/56649f145503460f94c287c7/html5/thumbnails/2.jpg)
The Yellow Brick Road
• Pre-Acquisition – The Bid
• The Agreement with FDIC
• Post- Acquisition - Compliance – Credit– Data / Information Technology– Reports & notices– Audit
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Start with the right TEAM
• Like Dorothy, in the wizard of OZ, get the right friends on your path;
• Strategic negotiators
• Credit personnel
• Finance
• IT/ Data support
• Accounting
• Of course… Legal Counsel
![Page 4: Follow the Yellow Brick Road: A successful path to an FDIC assisted Bank acquisition Joan Tupin-Crites.](https://reader036.fdocuments.net/reader036/viewer/2022082818/56649f145503460f94c287c7/html5/thumbnails/4.jpg)
Pre-Acquisition and
Bid Overview• Very small window for due diligence vs. a non-
assisted typical acquisition• Team needs to be prepared for quick review
and overview• Use public data to learn about the “target” bank• Bidding may or may not be competitive
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BID Process
• Bid is blind
• Can submit more than one bid
• Involve Board of Directors and strategic partners for the bid process, think broadly and creatively
• Legal and financial experts can assist to craft quality financially – successful bid
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Starting on the Yellow Brick Road
• Closing day/ evening:– Coordinate Human Resources to assist with
the employee questions and issues– Coordinate with Marketing/ sales personnel– Have a plan for all locations – to win the
“hearts and minds” of employees AND the new clients and customers of your institution
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The Agreement with the FDIC
• The Purchase and Assumption Agreement can include Shared- Loss provisions or leave out Shared- Loss provisions
• Do not expect any substantial negotiations
• Review FDIC.gov for the current version FDIC uses
• Loss-share vs. Non Loss-share
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Loss Share
• Loss share is a feature in selected Purchase and Assumption (P&A) Agreements
• You can bid with or without Loss Share
• FDIC and Assuming Institution share the losses on a specified pool of assets
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Purpose of Loss Share
• FDIC has a statutory duty to safeguard the assets of the FDIC fund.
• Loss Share is to minimize cost to the FDIC fund: • keeps assets in the banking sector • restructure problem credits • minimizes the FDIC’s operational risk and
liquidity needs• FDIC minimizes losses through “least-cost
resolution” approach
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Compliance with the “P & A” Agreement – DATA, DATA, DATA
• Understand the requirements and stipulations of the P&A Agreement
• Submit certificates timely to recover the FDIC payments
• Submit data reports, in appropriate formats, to track performance of Covered Assets
• Comply with audit and site visit requirements
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Credit Decisions are Key
• A quality credit team is essential to making the Loss Share profitable for the Institution
• Sufficient credit personnel to manage the loan pool is required by the P & A
• Both Commercial and Retail collection specialists need to be considered
• Quality training & monitoring must occur of the special asset officers
• Consider external assistance to assist to create the processes and forms needed to comply
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Credit Decisions
•Loan amendments/modification must be in accordance with internal underwriting criteria and the P & A agreement•Quality documentation is key for all credit decisions to gain reimbursement from FDIC•Insure management participation in the credit decisions
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Getting to OZ
• With the current economic climate and concern for large number of banks, an FDIC assisted bank acquisition can be a wise strategic move.
• As counsel, be supportive, but understand and counsel management on the risks and rewards of such a transaction.
• Thank You – • Contact me at [email protected]
with questions or discussion points