Bank Stock / Trust Preferred Securities Financing Loan Program
BND’s Bank Stock Loan Program provides financing options to individuals
or holding companies to accommodate the acquisition or refinancing of bank
stock of a North Dakota financial institution. The Trust Preferred Securities
Financing Program (or TOPS) may provide financing to an investment company
created to complete a trust preferred securities transaction for the benefit
of a financial institution located within the state.
Under either loan program, BND is typically a direct lender, but may be
a participant in a loan originated by another financial institution.
Qualifying Requirements
Borrower - Loans may be made to individuals, bank holding companies, or in the
case of the TOPS Program, investment companies formed for the purpose of
accommodating a trust preferred transaction.
Use of Proceeds - The purpose of a bank stock loan may be to acquire or refinance the
purchase of bank stock or bank holding company shares of an institution
located in the State. A TOPS loan may provide financing to enable a North
Dakota bank holding company to issue trust preferred securities for purposes
as may deemed appropriate by the borrower and BND.
Information - BND acts on a loan request when the following information is received:
- Resumés or narratives of the bank's management experience and education.
- A copy of the proposed buy/sell agreement and the terms of the purchase,
if applicable.
- A list of the bank's stockholders and, if applicable, all of the bank's holding company's stockholders. This listing should include the names, addresses, and the percentage of ownership for each stockholder.
- Personal financial statements of those individuals who will act as guarantors for the loan.
- A copy of the regulatory application and regulatory concurrence when available.
- Financial statements of the bank holding company and subsidiary bank(s)
as necessary
- Most recent daily statement of the bank(s).
- A copy of the most resent independent audit or report to the Board of Directors.
- Projected financial statements of the subsidiary bank(s) and holding company
as applicable.
Equity - BND generally will lend no more than 85% of the discounted book value
of the stock or securities being pledged as collateral for the bank stock
or TOPS loan. Each loan is reviewed on a case-by-case basis and the owner's
equity is taken into consideration along with all other elements of the
business.
Collateral - Proper and adequate collateral is required to protect the interest of
BND. As a general rule, a borrower must secure the debt by pledging the
stock of the bank acquired or refinanced. In the case of a bank holding
company, pledging of the holding company stock as well as the stock of
the bank itself is required as a general rule. A minimum of 51% of the
outstanding bank stock is necessary in most cases.
A TOPS loan will be secured by the trust preferred securities issued by
the bank holding company and purchased by the borrower.
In the case of either a bank stock or TOPS loan, BND may require cross-collateralization of the debt with any other related debt to which BND, the borrower, or any related entity may be a party. Additional collateral may be required dependent upon the strength of the borrower. Personal guarantees may also be required.
Application Process
Applications are made directly to BND. An application shall include sufficient information to allow BND to properly evaluate the loan.
The approval process will depend upon the size of the loan. BND's general review procedures are followed.
Interest Rate
The rate of interest will be based upon BND’s assessment of the risk, asset
quality, collateral, and repayment capacity of the borrower. Both variable
and fixed rate options may be considered.
Repayment Terms
BND will consider a planned repayment period of up to a maximum of 15 years. Principal and interest payments are generally required no less than annually.
Fees
Origination fees may be charged.
For more information about this program or other Bank of North Dakota programs,
contact:
Bank of North Dakota
700 East Main Ave
PO Box 5509
Bismarck ND 58502-5509
(701) 328-5671
1-800-472-2166 ext. 5671
TDD (Telephone Device for the Deaf) 1-800-643-3916
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