BEST PRACTICES IN BANK INTEGRATIONS –

ALL THINGS APPRAISAL: TIPS & TRICKS

AUGUST 6, 2014

What you are about to experience are the views of these three individuals…

• Deloris L. Kraft-Longoria, MAI Chief Appraiser, Frost Bank (San Antonio, TX)

• Eric K. Schwartz, MAI, SRA SVP, Chief Appraiser, Amegy Bank (Houston, TX)

• Justin D. Slack, MAI, SRA, AI-GRS, AI-RRSVP, Commercial Appraisal Mgr, HomeStreet Bank (Seattle, WA)

• Where do you Start?

• Does size matter?

• Policy(s) & Procedures

• Personnel & Cultures

• Vendor Lists

• Systems

WHERE DO YOU START?

READY…..SET…..WAIT FOR IT….GO!

• Appraisal Departments

• Credit Administration

• Business Units

• Approved Appraiser List(s) Mgmt

• Other 3rd-Party Vendor Mgmt

– AMCs

– Environmental Consultants

– Building Inspectors/ Engineers

– PP/ Equipment Appraisers

DOES SIZE MATTER?

PIT FALLS

PIT FALLS…• Not being included in Due Diligence team• Not being a part of merger team and/or included in meetings prior to

merger• Lack of list of appraisal assignments in the works

– Who is the Client after LD-1?– Who is the Intended User after LD-1?

• Appraisal Coordinator or Personnel left after merger• Acquired Bank had no Appraisal Division or Collateral Management

System (CMS) • Lack of written policies to train acquired bank personnel

– To use CMS system– When & how to order an Appraisal

…& MORE PIT FALLS• Incorporating Ordered Appraisal Assignments into CMS

– Setting up files, gathering all data• Payment of AMC/Appraiser of Appraisal Assignments in the works

– Dual payment • Lack of market knowledge in new footprint• Lack of sufficient personnel to handle the “new normal” (workload)• Specialized Property Types

– Mining operation– Agricultural properties– C-Stores– Country Clubs

POLICIES & PROCEDURES• Who gets to stay?– Combined?– Are you really the devil?

• Who is your regulator now?– Different wrinkles– Different cycles– Different expectations

PERSONNEL & CULTURES…

…PERSONNEL & CULTURES

Bank A• Chief Appraiser

(Certified Appraiser)• Review Appraisers (2)• Department Admin.

Bank B• Appraisal Dept.

Administrator(non-certified Manager)

• Review Appraisers (3)• Environmental Consultant• Evaluator

VENDOR MANAGEMENT

• Approved Appraiser Lists– Update and Add New Appraisers to Lists due to new terror

ties or markets

• 3rd-Party Reviewers– Continue to use or eliminate

• Environmental Consultants– Incorporate additional environmental contractors to list

VENDOR MANAGEMENT

• Building Inspectors/ Engineers• Order Management Systems• Appraisal Management Company(s)– Coordinate with AMC’s in regards to open assignments • Complete reviews, payment of the appraiser

• Cloud Storage

APPRAISAL MANAGEMENT SYSTEMS

APPRAISAL MANAGEMENT SYSTEMS

• RIMS• YouConnect (Real Wired)• Oasis (Global DMS)• Lender Portal (EDR)• FNC’s system– Commercial, Residential and Environmental CMS

system • Others

APPRAISAL MANAGEMENT SYSTEMS

• Platform Integrations– Pre/Post – Identify challenges

• Key points to consider:– Administrative and support personnel needs assessment– Budgetary constraints– Integrating systems with differing cost allocations– Line reporting conflicts– Cultural conflicts!!!!!

– Understand the weaknesses and strengths of each AMS– SWOT Analysis: Do you need to perform one?– Single or multi-platform process management

• Different systems for commercial and residential?

OTHER ISSUES– USPAP Issues– Who is the client and intended user if the acquired entity no longer

exists?– Are there additional expense burdens associated with:

• AMC Audits• Manpower allocations• Duplication of review and support staffing

– Retain performing vendors– Annually evaluate vendors (establish protocols if absent)– In-service training – may be necessary at both institutions– Establishing performance expectations– Valuing designations (cultural issue)