Bank failures typically do not occur in large numbers like in the late 1980’s and during the Great Recession. However, these failures are a normal occurrence but only come around on rare occasions.

Is your bank prepared? Are you ready to move on relatively short notice?

Over the past few weeks, the FDIC has closed three banks and sold the deposits and most of the loans to other banks. There will be more opportunities - perhaps in December or early 2020 as the FDIC performs year-end clean up on its very limited troubled bank list.

Are you ready?

Here are several readiness steps that you should consider taking:

1. If not already completed, go to the Failing Bank Acquisitions webpage of the FDIC and complete the Potential Franchise Bidder Contact Form.

2. Review the detailed information on the FDIC Marketing Process webpage to understand how the process for acquiring a failed bank works.

3. Do some additional homework on banks that have very low Tangible Equity Ratios (equity capital net of intangible assets divided by total assets). You can pull down bulk FDIC Call Report files and determine which banks have ratios below 5%. There were 11 banks at 6/30/2019 and three of these banks were closed recently.

4. Establish a small team to carry out several key activities: pre-bid due diligence, bid pricing and proposal, date of closing integration planning and final merger integration planning. See Merger Readiness Planning on BankingStrategist.com.

Acquisitions of a failed bank can present a unique opportunity for your bank to gain market share or to enter a new market. These opportunities do not come around often. Prepare your bank and your team so that you can seize upon such an opportunity.

Good luck and much success!