The Changing Rules for FDIC-Assisted Acquisitions:
Strategies for Minimizing Execution Risk in Failed Bank Transactions
The inducement for healthy banks to acquire failing banks in FDIC-assisted acquisitions is the value of the target bank's core deposits and franchise coupled with the opportunity for virtually zero credit loss exposure because of the FDIC loss-share arrangement.
As valuable as these acquisitions can be for acquiring banks, the execution risk involved should not be underestimated. Moreover, the terms and conditions imposed by the FDIC in these acquisitions continue to evolve. Staying current on the financial effects of these developments makes for informed decision-making and better estimates of the value of the institution acquired.
The FDIC's form agreement for loss-share transactions recently changed. The change eliminating the 95%/5% loss-share guarantee above the stated threshold makes FDIC-assisted acquisitions more difficult to bid, increases the credit loss exposure for the buyer and makes managing the operational risk associated with the integration and stabilization of the acquired franchise all the more important as buyers defend the transaction value.
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Upcoming Webinar
FDIC-Assisted Acquisitions: The Rules Have Changed
Wednesday, April 28, 2010
The FDIC rules for assisted acquisitions have recently changed and this program will explain the consequences of the rule changes for buyers of failed banks. Seizing and defending value in FDIC-assisted acquisitions will be the primary focus of the speakers:
- Brant Ahrens, Chief Operating Officer, The PrivateBank
- Al Laufenberg, Managing Director, Stifel Nicolaus
- Matt Galo, Partner, Schiff Hardin LLP
- Christopher Zinski of Schiff Hardin will moderate the program
If you are interested in signing up for the webinar, please register by April 27 via www.schiffhardin.com/events/fdic_042810/.
For questions, call Therese Squillo at 312.258.4653.
ABOUT SCHIFF HARDIN LLP
Schiff Hardin LLP provides services to banks, savings associations and other types of financial institutions nationwide and internationally. In addition to our traditional strengths in mergers and acquisitions, securities and financings, bank regulatory compliance, and trust department counseling, we have a particular and increasing focus on corporate governance and fiduciary litigation. Our Finance Group also supports our financial institutions clients in all aspects of their credit and lending businesses, and our Securities and Futures Regulation Group assists them in their securities, investment management and commodities-related businesses. We represent some of the largest banking organizations in the U.S. and overseas, and many community banks and thrifts.
For more information, contact us.
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