FIC Shared Loss Capabilities 2009

8/6/2019 FIC Shared Loss Capabilities 2009

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Financial Institutions Consulting

FICs Shared-Loss Capabilities Overview

www.ficinc.com

January 2010


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FICs Shared-Loss experience centers on supporting all elements of the

FICs Shared-Loss Expertise

,

FIC services provided include:

Acquisition/Due Diligence Support-Conduct portfolio due diligence, profile portfoliocharacteristics, and identify concentration risk

-

to support purchase accounting (FAS 141-R and SOP 03-3). Create and document

accounting controls, processes, and procedures to support the audit requirements of the

FDIC Shared-Loss agreements

Portfolio Support-Review/assess each loan in commercial portfolios, perform credit file

audits, obtain updated financials, recommend risk rating changes, address accrual/non-

accrual status, and create audit proof submissions

u m ss ons- anage mont y quarter y su m ss ons, ata own oa s, ansupporting documentation management and reporting

Software Tracking System-Provide a turn-key software application that allows for loan

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Copyright 2009 by Financial Institutions Consulting, Inc.


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Ac uisition/Due Dili ence Su ort Commercial & Residential

FIC Capabilities

Our activities include:

ns e rev ew o oans n por o o

Assessment of management, credit quality, and portfolio performance

Determine concentration risk, key loss areas, and portfolio characteristics

Valuation and Accounting Services

Support for acquisition accounting issues related to SOP 03-3 and FAS 141-R

Activities include:

Support for fair value determination including portfolio stratification andvaluation (FAS 157)

Create and document accounting controls, processes and procedures to

www.ficinc.com3Copyright 2009 by Financial Institutions Consulting, Inc.

support the audit requirements of the FDIC shared-loss agreements


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Once the Shared-Loss Agreement is in effect, depending on client needs, we

, ,

Portfolio Support FDIC Submissions Software Tracking System

1. Analyze portfolio and assess

risk based on collateral quality

and borrowers financial

capacity

4. Automate Monthly/Quarterly

Certificate preparation

5. Provide secure electronic

6. Track payments and

recoveries

7. Generate automated quarterly

2. Re-classify loans after updated

risk assessment

3. Maximize shared-loss claims,

data format

disposition

8. Offer real-time audit

capabilities through

employing efficient, cost

effective processes and

technology

Intelligence portal

9. Ensure secure multi-level user

access managed by the bank

10. Forecast quarterly shared-loss claims, based on portfolio

quality assessment and

ongoing loan reviews



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The Shared-Loss process requires data collection from multiple internalsystems and detailed reporting both for the bank and the FDIC

FIC Shared-Loss Management (SLM)Inputs:

SLM Logic: Transform and reconcile loan level

transactions to FDIC required format Produce FDIC shared-loss certificates FDIC Shared-Loss

Reporting:

FDIC RequiredShared-Loss

Monthly Loan Level

Transactions

Bank LoanSystem

Accounts

Reporting Accounting Audit / Control

aya e

Underwriting

Shared-LossRequest &Approval

Management

Loan LevelAnalysis

Recoverable /Reimbursable

Expenses

Stakeholder View



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Portfolio Support- Residential

Generating loan modification tracking reports/providing monthly download

FICs Residential focus includes:

Active SFR

Active REO Inventory

Calculating FDIC Loss Certificates

Foreclosure/REO

Additional Recovery/Expenses

Charge Offs

In addition, FIC partners with a major residential mortgage sub-servicer thatcan rovide that service to ac uirers



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Portfolio Support-Commercial

Providing a swat team of credit professionals to conduct loan by loan analysis

Our Commercial focus includes:

Performing individual credit file audits, detailing file update requirements

Leading the collateral/appraisal valuation process for real estate secured loans

Determining those credits requiring field exams, review borrowing base certificates,and determine collateral position/coverage

Evaluating loans for accrual/non-accrual status

Recommending risk rating changes

Reviewing and prioritizing of loans for FDIC submission

,support/handling



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Elements of our commercial credit analysis include:

Note Name Branch 4/30/2009

New

AppraiserSelected

Quote RequestSent Y/N

Engaged Fee Due DateDate

RecvdEstimateof Value

ValueDate

LTVReviewOrdered

ReviewAppraiser

Review FeeReview

DueDate

RecvdNotes

Appraisal Tracking

3523 XYZ Builders CRE $ 4,420,464 Sam Smith YES 08/12/09 $5,000 09/30/09

LoanUpdate

Borrower(Corp/Partnerships) Guarantor(PersonalorBusiness)

TaxReturns

FYE

TaxReturns

CurrentPFS(Asof

Credit File Audit Report

4441MaryJones XYZRefrigeration X X X 12/31/08 AuditedRMcontactedclienton8/25,willhaveinfoby9/30/09

OscarJohnson X X XRalphDavidson X X

BorrowerName NotePurpose T ype C ollateralTypeBalance

outstanding

Undisbursed

Commitment

availability

Note

risk

rating

TimesPast

Due3059

TimesPast

Due6089

TimesPast

Due90+

Non

accrual

Dateof

Non

Accrual

Maturity

Date

Interest

RateCity State

Zip

Code

XYZRefrigeration Commercial&Industrial Loans 71 SecuredbyOther 100,000.00 25,000.00 5 000 000 000 N 20091231 5.75 Houston TX 43123



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Each commercial loan, both CRE and C&I, requires individual analysis

Shared-Loss Analysis

Date Prepared: Prepared By: FIC

Borrower InformationBorrower Name:

Guarantor(s):Related Facilities:

Maximum Credit:Loan Information

Originating Officer: WAR Officer:

Non-Accrual Date: ReversedInterest:

n eres a e: ex ue a e:

Note Date: Principal Balance:

Maturity Date: Available Credit:

Risk RatingCurrent Rating:

Principal Charge Off: Rating:

Remaining Principal: New/Split Rating:

Collateral InformationAppraisal Date: Appraised Value:

Description:Comments

Recommendation

--

Claim ID: Certificate Date:Principal Balance:Less Appraised Value:Principal Charge Off:Escrow Charge Off:Reimbursable Expenses:Reimbursable Interest (90 days):


Total Charge Off:Shared Loss Request (@80%):


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The commercial portfolio requires close tracking to capture additional claimopportunities

Borrower Loan #

Shared-Loss

Claim IDAppraisal

(Y/N)

AppraisalReview

(Y/N)

CallMemo(Y/N)

CompleteFinancials

(Y/N)

SubmissionForm(Y/N)

Shared-Loss Claim

Charge-OffPrincipal

Charge-OffInterest Expenses

Escrow ChargeOff Total Charge Off

Total Share-LossClaim (@80% or

95%)

Non-Performing Loans

Kings Company (NA) 9999 17 y n/a y n y 327,920.21 14,322.66 7,500.00 349,742.87 279,794.30

Beverly Hills Ventures, LLC (NA) 8888 N/A n/ n

, - - - - - -

More Of The Same Properties, LLC (NA) 7777 43 y n/a y n y - 27,035.71 900.00 - 27,935.71 22,348.57

Total Non-Performing 327,920.21 41,358.37 8,400.00 - 377,678.58 302,142.86

Transfer to Non-Accrual for Sept 30 Claim

, n/a n/a y y y 14,181.79 14,181.79 11,345.43

Big Time Investments 4321 19 y n/a y n y 87,181.00 - 4,000.00 91,181.00 72,944.80

Total Transfer to Non-Accrual 101,362.79 - 4,000.00 - 105,362.79 84,290.23

Total September 30 Claim429,283.00 41,358.37 12,400.00 - 483,041.37 386,433.10

Prior Quarter Submissions/Net Changes

Jones Company (None this Qtr) 4422 43 5,400.00 5,400.00 4,320.00

Total Adjustments/Net Changes

No Claim but Transfer to Non-Accrual for Dec 31,2009 Certificate

ABC Suppy 4344 y n/a y n y 637,802.20

Jackson Apartments 3233 y n/a y n y 752,695.80

Tryit Developer 1414 y n/a y n y 378 999 51, .

Total Transfer for December 31, 2009 1,769,497.51 - - - - -

No Claim, Ongoing Monitoring Principal Balance Expenses

Johnson Builders 1234 N/A y n/a y n y 1,387,500.00 450.00

Jones Construction 5678 N/A y n/a n n y 148,211.53 4,500.00

XYZ Company 9101 N/A y y y y y 2,981,301.00 6,200.00


m eve oper s y y n n y 1,643,254.36 - 6,850.00 - -

Total "No Claim" 6,160,266.89


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FDIC Submissions (Commercial & Residential)

FIC understands the intricacies of the Certificate process and can assist in keyaspects of completing certificates:

Preparing and submitting Monthly/Quarterly Certificates

documentation)

Overseeing initial data download management and tracking



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Software Tracking System (Commercial & Residential)

FIC has developed the FIC Shared-Loss Portal to provide detailed loan tracking,certificate preparation, and ongoing Shared-Loss reporting

The softwares features/capabilities include:

Knowledge-based software developed as a result of hands-on experience,manual learning environment

Loan level tracking (Opening Balances, Transactions, Closing Balances,Adjustment Tracking, Recoveries, Reimbursable/Recoverable Expenses)

Detailed management reporting for life of Agreement

Multiple Certificate, multi-acquisition capability

Support for audit requirements



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The software application provides detailed loan level tracking through the lifeof the Agreement



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The software automates the monthly/quarterly FDIC Certificate generation



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Additionally, FICs Shared-Loss Portal features extensive managementreporting capabilities

Formatted reports include:

Loan Detail Re ort This re ort rovides detailed current information for each loan covered underthe Agreement, including loan information, analysis/claim summary, and expense summary.

Loan Analysis/Claim Report Includes loan level analysis detail (See slide 9)

Loan Level Reconciliation Report For each loan, this report provides a reconciliation of theare - oss oan a ance roug e mos recen er ca e

In addition to formatted reports, users have the ability to download any data from thePortal in Excel format. Standard downloads include:

Analysis Data Provides a listing of loan analyses

Claim Data Provides a listing of all claims

rov es e a s on a expense ems, o open an c a me

Adjustment Data For audit purposes, this download provides details on all manual adjustments

Transaction Data Includes all transaction details



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Several key principles for managing a Shared-Loss Agreement emerge from

Lessons Learned

Separate and Centralize Shared-Loss Assets. FDIC reporting requirements

require loans to be flagged as share-loss assets, and access to loans should not

be bank wide.

Create a Dedicated Team. The specific requirements related to managing Shared-Loss loans in compliance with the Agreement underscore the need for a specialized

- .

preclude loans from future submission

Engage Key Internal Constituencies. The Shared-Loss process requires the, , , , , .

knowledgeable and engaged Shared-Loss working team is critical

View Shared-Loss as a Line of Business, Not a One-Off Transaction. The

-

bank maximizes cash flow and, ideally, builds a portfolio of transactions

Operate With a Sense of Urgency. Optimizing cash flow from the transaction and

www.ficinc.com16

the need to prioritize activities related to Shared-Loss



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Our Senior Professionals

Charles B. WendelPresident of Financial Institutions Consulting, Inc.

20+ years exper ence as consu tant an an er

Expertise in retail banking, business, commercial banking, and wealthmanagement

Functional experience in strategy, acquisition integration, segmentation,,

Contact: [email protected]

Telephone: 917-744-6600

Thomas McMillen, CPA

CPA with 20+ years experience, includingas CIO

Ex ertise in financial and o erational

Robert White

20+ years experience as consultant andbanker; previously with GE Capital andCitizens Bank

processes, information technology, andsystems evaluation and integration

Expertise in commercial real estate, C&Ilending, business banking, and commercialfinance



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Selected Clients

We adapt to the needs of our clients, no matter their size

United States IBM Credit International

,international financial institutions as well as regional and community players

Bank One/First USA Intuit ABN-AMRO (Asia)

BankUnited JP Morgan Chase ASB Bank

Capital One (Card) M&T Bank Bank of New Zealand

Capital One Bank MasterCard Advisors CIB (Egypt)

Citibank and CitiCapital MasterCard International Credit Union Central of Canada

Citizens/RBS Metavante ICICI Bank (India)

Commerce Bancshares North Fork Bank Kiwi Bank (New Zealand)

Eastern Bank Principal Financial Group Laurentian Bank

Equipment Leasing Association Sovereign Bank Raiffeisen Bank (Austria)

First Horizon Bank USAA Scotiabank Inverlat

FleetBoston Visa USA Standard Chartered Bank

GE Capital Wachovia Visa International

www.ficinc.com18

Guaranty Bank Wells Fargo World Bank


FIC Shared Loss Capabilities 2009

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