We have advised a number of banks on the feasibility of bidding to acquire the assets of failed institutions.  The loss sharing arrangements currently being offered by the FDIC can be an attractive means to increase market presence or to expand into new markets.

The specific criteria used by the FDIC will vary from project to project based on the characteristics of the troubled institution, the time available for marketing, and other factors.  However, the FDIC has indicated the following base criteria:

Supervisory Criteria:

  • Total Risk Based Capital ratio of 10% or higher
  • Tier 1 Risk Based Capital ratio of 6% or higher
  • Tier 1 Leverage Capital ratio of 4% or higher
  • CAMELS composite rating of 1 or 2
  • CAMELS Management component rating of 1 or 2
  • Compliance rating of 1 or 2
  • RFI/C rating of 1 or 2
  • CRA rating of at least Satisfactory
  • Satisfactory AML Record

Total Asset Size Criteria:

  • Total asset size threshold is roughly double the core deposits of failing bank when the bidder is located in the same state
  • Total asset size threshold is roughly four times the core deposits of the failing bank when the bidder is located in a contiguous state
  • Total asset size threshold is roughly five times the core deposits of the failing bank when the bidder is located in other states

If you would like to further discuss the possibility of bidding on a troubled institution, please contact any of the attorneys in the Bryan Cave Financial Institution Group.