FDIC Provides Additional Transparency Regarding Marketing and Sale of Failing Financial Institutions

Summary:

The Federal Deposit Insurance Corporation (FDIC) has enhanced its public website to increase transparency into the marketing and sale process of failing financial institutions and has posted templates of contractual agreements for transactions to facilitate review in advance of any acquisition opportunities. The information can be found in the Resolutions section of the website at Failing Bank Resolutions | FDIC.gov. 

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-insured financial institutions and certain non-bank entities. 

Highlights:

The FDIC has been working across a number of different areas to improve the bidding process for failed institutions and incorporate lessons learned from the 2023 bank failures. The FDIC has updated several pages of its public website to reflect this work, including providing additional information related to nonbank asset bidders and “alliance bids” when multiple bidders combine resources to bid on a failed institution. Specifically, updates were made to the following pages:

• Franchise Sales
• Acquisition Overview
• Alliance Bidding
• Transaction Types
• Loan Pools Offered to Asset Buyers Prior to Bank Failure (New page)
• Loan Sales 

As part of this work, the FDIC recently engaged in an extensive outreach program to improve aspects of its bidding process. One consistent theme was the need to make the FDIC’s transaction documents more readily available and to consider ways to improve and modernize such forms. As described below, the FDIC has posted a number of examples of transaction documents to its public website. The FDIC welcomes feedback on these documents; comments or questions can be directed to InstitutionSales@FDIC.gov.

• Sample document templates for franchise sale transactions have been added to the “Franchise Sales > Transaction Types” page, and include:
  • Whole Bank Purchase and Assumption Agreement (PDF)
  • Whole Bank with Optional Shared Loss Purchase and Assumption Agreement (PDF)
  • Basic Purchase and Assumption Agreement (PDF)
  • Confidentiality Agreement (PDF)
  • Financing documents to be added soon
• Sample document templates, including financing documents, for loan pools offered in connection with the franchise sale have been added to the “Loan Pools Offered to Asset Buyers Prior to Failure” page, and include:
  • Loan Sale Agreement (PDF)
  • Financing Term Sheet (PDF)
  • Purchase Money Note (PDF)
  • Account Control Agreement (PDF)
  • Custodial and Paying Agency Agreement (PDF)
  • Security Agreement (PDF)
  • DTC Eligible Global Note (PDF)

Sample document templates will likely change over time, in which case newer versions may be posted. The version of a template used for any particular transaction could be different from the posted version as a result of updates that have not yet been posted and/or unique transaction offerings.