Bank Stock Loan
The Bank Stock Loan provides financing options for the acquisition or refinancing of bank stock for North Dakota financial institutions.
The borrower may be individuals or bank holding companies.
Acquisition or refinancing the purchase of bank stock or bank holding company shares of a financial institution located in North Dakota.
BND generally will lend no more than 75% of the discounted book value of the stock or securities being pledged as collateral for a bank stock loan to an individual for the purchase of bank holding company stock. Total maximum debt to a bank holding company is generally subject to regulatory requirements. Each loan is reviewed on a case-by-case.
The interest rate is based on BND’s assessment of the risk, asset quality, collateral and repayment capacity of the borrower. Both variable and fixed rate options may be considered. Origination fees may be charged.
BND is typically a direct lender to financial institutions, but may be a participant in a loan originated by another financial institution. Application is made directly to BND. BND acts on a loan request when the following information is received:
- Resumes or narratives of the bank’s management experience and education
- Copy of the proposed buy/sell agreement and the terms of the purchase if applicable
- List of the bank’s stockholders and, if applicable, all of the bank’s holding company’s stockholders, including the names, addresses and the percentage of ownership for each stockholder
- Personal financial statements of individuals acting as guarantors for the loan
- 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)
- Copy of the most recent independent audit or report to the Board of Directors
- Projected financial statements of the subsidiary bank(s) and holding company as applicable
- Other documents and information as BND may deem necessary.
Proper and adequate collateral is required. As a general rule, a borrower must secure the debt by pledging the stock of the bank being acquired or refinanced. In the case of a bank holding company, pledging of the holding company stock and stock of the bank itself is required. A minimum of 51 percent of outstanding bank stock is necessary in most cases but may vary based upon circumstances.
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.
Repayment period may be up to 15 years. Principal and interest payments are generally required no less than annually.