Bidding on a Failing Bank
What does the Department Require?
- Generally, the Department will authorize your institution to be on the bid list to make an acquisition from the FDIC if:
- The target acquisition is reasonable in size and complexity to your institution
- Your bank’s management rating and composite ratings are a 1 or 2
- Your bank is not operating under an enforcement action
- Your bank is well-capitalized
- Your AML/BSA programs are adequate
- Additional approval is needed if any of the following apply:
- Your bank is less than three years old
- Your institution has made another FDIC assisted acquisition in the last 12 months
- Your institution has experienced a change in control since the last examination
- Your institution is operating outside the parameters of its approved business plan, or the proposed acquisition would cause it to operate outside the approved business plan
- If you do not currently have a state bank charter you need to contact the Department as soon as possible to determine if you can qualify for a “shelf charter.”
Who do I contact at the FDIC?
- To be included on the FDIC bid list and receive electronic notification of opportunities, go to FDICconnect and verify the names of your bank’s primary and secondary contacts including title, email addresses and phone numbers. If the contact information is outdated, update it.
- You can indicate state and size preferences. Contact the Division of Resolutions (FDIC-DRR) to confirm that you are a qualified bidder specifically for certain state and size preferences.
- If you meet the Department’s criteria generally the FDIC will contact your institution if:
- Your CRA record is adequate
- Your compliance rating is 1 or 2
- Your Fed BHC FRI/C rating is 1 or 2
- The FDIC has certain size restrictions that are applied to determine bidder eligibility. These size restrictions are not static, but may change given any particular set of circumstances.
- Your total assets are at least double the size of failing bank, if located in the same state
- Your total assets are at least four times the size of the failing bank, if located in a contiguous state
- Your total assets are at least five times the size of the failing bank, if located in noncontiguous states
Note: Additional criteria may be imposed by the FDIC
- If your institution does not meet these criteria or if you have an interest in institutions located in a particular city or state, or if your institution has a specialized business plan, the FDIC maintains an “Alternate Bid List.” To be placed on the Alternate Bid List, contact the Division of Resolutions (FDIC-DRR) or dial 1-800-568-9161 and ask for the Franchise Marketing Department.
What is RR Donnelley Venue Client Services (“Venue”)?
- Venue is the FDIC’s secure website used to market failing institutions. All information on failing bank opportunities must be accessed via Venue.
- The following information is available on Venue:
- Key dates and deadlines
- Key personnel
- Types of transactions being offered
- Key financial data
- Legal documents
- Detailed information on loans and deposits
- Once you have been invited to view information on a failing bank you will be provided with a link to Venue by email.
What if the FDIC contacts my Bank?
- Review the information
- Decide if you are interested in the failing bank
- Contact the Corporate Activities Division at the Department to report your interest
- Contact your FDIC Case Manager if your bank is a non-member or Federal Reserve Director of Applications if your bank is a member
- Schedule due diligence via instructions found on Venue.
- Conduct your due diligence
What if we want to bid?
- After you have reviewed the documents, conducted due diligence, and your Board has approved submission of a bid:
- Contact the Corporate Activities Division at the Department and your Regional Director if you plan to submit a bid
- Contact your FDIC Case Manager or the Federal Reserve Director of Applications, as applicable
- Download the following information:
- From the Department's website, Failed Financial Institutions Form. If your bid involves significant fair value accounting adjustments, detailed information will be required.
- From Venue, the DSC or Federal Reserve Application Form. This form is generally found under Regulatory Application Information.
- From Venue, the Bid Form. This form is generally found under Bid Mailbox.
- You may be required to provide a Capital Commitment Letter in support of your bid essentially in this form
- Complete these forms and submit them as directed. The Department asks that bidders submit the required information two days prior to bid submission.
What deadlines apply?
- You must get approval of the Department and the FDIC Case Manager or Federal Reserve Director of Applications in order to submit a bid. Again, we ask that the information be submitted two days prior to the bid deadline.
- You must submit your bid to FDIC-DRR timely and in the manner required by the FDIC-DRR.
- The Department notifies FDIC-DRR if the bid is cleared.
- The FDIC Marketing Specialist will notify you as soon as possible if you are the winning bidder, usually within 2-5 days of bid submission.
What if my bank is the successful bidder?
- FDIC-DRR will notify you if your institution is the winning bidder. Specific instructions will be provided regarding documents to be executed, personnel, and bonding requirements.
- Refer to the Department’s Failed Financial Institution Form. You will need to provide:
- The signed form
- Evidence of bonding
- Details on locations acquired, e.g. type of facility, physical address(es)
- The $5,000 fee
- The name of the person with whom we should interface along with phone, fax and email address
- The Department will coordinate with you on such things as:
- Timing of announcements
- Press Release
- Delivery of Certificates
- Notices to be provided to other regulators
- Acting as central point of contact if the bid results in an interstate acquisition
What if I still have questions?
- Contact the Corporate Activities Division at the Department.