How to buy a successful Community Bank
Have you ever wondered what it takes to buy a Bank of small community? Thousands of investors across America have found community banks to be a valid investment vehicle and have gained interest in community banks. Most investors buy bank owned by subscribing to private placements that are distributed to accredited investors selling Bank.
Private placement investments in banks are generally not listed on any Exchange and are generally considered to be illiquid. Investors are rewarded only if banks perform as expected, allowing the appreciation of Bank shares or through illegal dividend payments. These factors limit the global appetite for bank investments to those few accredited investors who are comfortable with the risks involved and have a horizon of a long-term investment.
The financial crisis of 2008/2009 negatively impacted many community banks, resulting in a shortfall of hundreds of these institutions. In the face of mounting bank failures, the FDIC has decided to limit its exposure and effectively stopped issuing new insurance Charter bank, also known as De Novo depository banks.
It is estimated that between 2008 and 2009 over100 investor groups in various stages of De Novo application is asked to withdraw the new Bank applications or were rejected outright. Leaving many hundreds of thousands in stranded costs which was supported during the process of De Novo. Although there was no clear policy statement on bank regulation, in some cases groups of investors were given soft tips to look for existing banks for acquisitions.
For many De Novo Group, the acquisition of the Bank has been a major change in direction and some abandoned their efforts altogether. The reason is simple, for decades, a novo de was application preferred path looking for new bank cards and knew the process or you may find convenient resources with experience in the process. M & A bank typically had been the domain of large banks that could afford to keep seasoned investment bankers to close the deal.
As of this writing in October 2010, it is fair to say that de novo is dead. There may be some lucky investors who can convince the regulatory authorities to allow their new Bank charters, but that is the exception to the rule.
The number of banks in the United States is falling in the 1980s when there were over 14000 banks in existence. Today the number is about 8000 banks and finance companies. It is conceivable that the total number may decrease to 6000 banks over the coming years; Much of the reduction will come from M & a activity in space.
Demand and economy have not yet kicked in, but it will be simple. As A result of the financial collapse, most small commercial banks today under book value. This is an artificial dip in ratings. Reduced power should begin to impact the Bank’s assessments over the next few years, and those lucky enough to survive the recession will be more valuable than ever before.
Buying a bank is not as simple as buying other companies. The banking regulations are very strict and complete the acquisition process companies must maintain legal advisory services experts, accounting and strategic. The following steps describe the process of acquiring
1. Identify an institution
2. Negotiate a price
3. Conduct due-diligence
4. Negotiate a definitive agreement
5. the acquisition of Fund
6. Seek approval from regulatory agencies.
For individuals ready to begin the capture process that is important to understand the importance and value of the help of experts, the process can take 3-6 months from start to finish.