“And Now for the Real Story” Purchasing Failed Banks from the FDIC Community Bankers Association of Illinois 35 th Annual Convention September 26, 2009 Presented by: Dennis R. Wendte, Barack Ferrazzano/Financial Institutions Group Jim Ashworth, Carlinville National Bank William Wilhelm, Crowe Horwath, LLP

FDIC Resolution Process: Primary Goals Provide customers timely access to their insured funds Resolve failed institutions in the least costly manner Manage receiverships to maximize net return

Bidding for Failed Banks “You can’t win if you don’t play” – getting on the bid list FDIC process –Bidding –Information and due diligence –Structure and timing –Regulatory approvals

Bidders List Regulatory Criteria Tier 1 leverage capital: at least 4% CAMELS composite: 1 or 2 Management rating: 1 or 2 Community Reinvestment Act rating Satisfactory or Outstanding Satisfactory anti-money laundering records

FDIC Contact Contact FDIC through FDICconnect Two contacts addresses and phone numbers Geographic preference of future acquisitions Interest in purchasing deposit franchise Interest in purchasing asset portfolios

FDIC Marketing Information package includes financial and operating information Asset valuation review Estimate of value for all balance sheet assets Based on discounted cash flow analysis A key component in the “least cost test”

IntraLinks Market the institution via a secure website All financial, legal and regulatory information is uploaded and available 24/7 Loan pools and deposit trial balances are also available but redacted

Due Diligence FDIC representative on-site Controlled process Bidders have equal access to information

Transaction Structure Whole bank with no loss coverage Whole bank with FDIC shared loss coverage Insured deposits only Subsequent loan pool purchases

Bid Acceptance and Closing Receive bids by eFax and hard copy Confirm bids are conforming Run the “Least Cost Test” model Clear bids with regulators Notify bidders and sign documents Bank closes and acquiror takes control

Advantages of Failed Bank Deals Less risk than traditional acquisitions Large, immediate liquidity bump Quick and easy approval process Possibility of “cherry picking” assets Dispose of burdensome contracts

Questions? Dennis R. Wendte Jim Ashworth William Wilhelm