Community Based, Nationally Recognized (sm)

Monthly Archives: September 2009

August TARP Capital Infusions – TARP Map and List of Recipients Updated

By Dustin Hall - Friday, September 4, 2009

During the month of August, the Treasury completed rounds thirty-eight, thirty-nine, forty, and forty-one of TARP Capital infusions.  In these four rounds, which closed on August 7, August 14, August 21, and August 28, respectively, the Treasury purchased a total of approximately $130 million in securities from 9 financial institutions.  Through August 2009, the Treasury had invested in 673 institutions, totaling approximately $204.5 billion.

In these four rounds, U.S. Century Bank, Miami, Florida, received the largest infusion, $50 million, and Bank Financial Services, Inc., received the smallest infusion, $1 million. 

During August, three financial institutions re-paid their TARP capital investments: CVB Financial Corporation ($97.5 million (75% of the initial investment)), Bancorp Rhode Island, Inc. ($30 million), and State Bankshares, Inc. ($12.5 million (25% of the initial investment)).  As of the end of August, 2009, 37 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.3 billion.  At the end of August 2009,  Treasury’s outstanding investment equaled approximately $134.2 billion.

(more…)

Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , .

Bank Eligibility to Bid for Loss Sharing Arrangements

By Rob Klingler - Friday, September 4, 2009

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

(more…)

Email This Content Email This Content Posted in Bank Regulations, Mergers & Acquisitions, Troubled Institutions. Tagged with , .

Georgia DBF Explanation of Lending Limit Changes

By Rob Klingler - Thursday, September 3, 2009

As we’ve previously discussed, the Georgia Department of Banking and Finance had proposed to modify the way in which loans to related entities are treated, among other changes.  No material changes to the proposed rules have been made, and the new final rules are effective on September 7, 2009.  The new final rules are available from the DBF’s website or directly here.

The new rules, effectively consolidating many related party loans, may cause the consolidated relationships to become in technical violation of Georgia’s loans to one borrower rule upon renewal.  However, the DBF, in recognition of the current economic environment, has allowed for a transitional phase for loans that were previously made and separately remain in compliance with the DBF’s prior rule on an unconsolidated basis.  Those loans should be reworked to comply with the new regulations if feasible, but will otherwise be treated as grandfathered under the prior rules.  So long as such loans are modified or renewed by the bank without any additional extension of credit, the loans will not be cited for a violation of the Georgia legal lending limit.

The DBF has NOT provided any relief from loan to one borrower issuers in the context of declining legal lending limits due to reduced capital.  Under the Georgia regulations, where the bank’s statutory capital base is reduced for any reason, existing debt which was in conforming with the legal limitations at the time it originated are not construed to be non-conforming with new legal limitations resulting from the reduced statutory capital base.  However, extensions, renewals and rollovers are generally considered to be a new loan, and must conform to the new, lower lending limitations.

In the current economic environment this places banks in an untenable situation because borrowers are unable to pay off the loans due to a lack of liquidity and no other financial institutions are willing to take over the credits.  There are few options left for a bank in such a situation; e.g., enter into some sort of forbearance agreement with the borrower.  The result of that, however, is that after 90 days the loan will need to be downgraded to substandard, regardless of whether the borrower is able to keep interest payments current.  We have had extensive discussions with the Georgia DBF on this issue, focused on the OCC rules, which permit extensions or renewals in this situation.  However, the Georgia DBF has stated that it will not modify its position at this time.

(more…)

Email This Content Email This Content Posted in Bank Regulations. Tagged with , .

Initial Luxury Expenditures Policies Due Soon

By Rob Klingler - Tuesday, September 1, 2009

The deadline for TARP CPP recipients who received capital infusions prior to June 15, 2009 are required to have adopted an Excessive or Luxury Expenditures Policy by Monday, September 14, 2009.  In addition to adopting such a policy, TARP CPP recipients are required to submit the policy to Treasury and their primary federal banking regulator, and post the policy on their website.  (Subsequent TARP CPP recipients are required to adopt and post a policy within 90 days after the completion of their capital infusion.)

We have collected a list of posted Excessive or Luxury Expenditure Policies.  This list is complied for informational purposes only to offer examples, and is not intended to be complete list of posted policies.  In addition, we may not identify when a bank has filed a revised policy.  Inclusion (or exclusion) from the list does not represent a recommendation of any policy.  Clients of Bryan Cave should contact us to further discuss an appropriate Excessive or  Luxury Expenditures Policy.

(more…)

Email This Content Email This Content Posted in TARP Capital. Tagged with , , .

August 2009 Client Alerts

By Stan Santos - Tuesday, September 1, 2009

The Buying and Selling of Distressed Notes

The volume of purchase and sale of performing and non-performing real estate loans has picked up dramatically over the past year as banks seek to shrink their balance sheets as their capital base falls and other banks and investors seek to take advantage of the sale of assets from failing banks. What are the typical features of such agreements and what are the interests of buyers and sellers in such transactions?

For more information, please read the client alert published by Bryan Cave LLP’s Real Estate Banking, Business and Public Finance Financial Institutions Client Service Group on August 5, 2009.

Group Health Plans: Compliance Items

Several important changes in governing law and regulations during the past year require changes to group health plans in the upcoming enrollment period. Below is a brief description of these major changes which require implementation in 2009 or 2010.

For more information, please read the client alert published by Bryan Cave LLP’s Employee Benefits & Executive Compensation Client Service Group on August 20, 2009.

New York Restaurant Employer Briefing — Wage Payment Requirements

New York restauranteurs operate in one of the most regulated employment environments in the country. In addition to the federal, state and local laws applicable to all employers, such as those prohibiting employment discrimination, governing the payment of wages, workplace safety and leaves of absence, New York-based restaurants also must comply with regulations applicable only to the restaurant industry. This extensive maze of regulation can be exploited by plaintiffs’ lawyers who search for unwitting violations. This has led recently to many lawsuits that are costly to defend, and which seek not only damages for employees, but also fees and costs for the attorneys who bring these suits. The threat of litigation is compounded by the fact that many lawsuits are brought as collective actions on behalf of several employees, which can greatly add to potential damages and to the complexity of the defense.

For more information, please read the client alert published by Bryan Cave LLP’s Labor and Employment Client Service Group on July 31, 2009.

(more…)

Email This Content Email This Content Posted in Client Alerts. Tagged with , , , , , , .