Trust Preferred Securities (TPS) Financing Loan Program
Trust Preferred Securities (TPS) Financing Loan Program provides financing to an investment company created to complete a trust preferred securities transaction for the benefit of a financial institution located within the state.
Borrower may be an individual or investment company formed for the purpose of accommodating a trust preferred transaction.
Financing to enable a North Dakota bank holding company to issue trust preferred securities for purposes as deemed appropriate by the borrower and BND.
Total maximum debt to a bank holding company is generally subject to regulatory requirements and to BND review at the time of the loan application. 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, 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 to protect the interest of BND. The loan will be secured by the trust preferred securities issued by the bank holding company and purchased by the borrower. 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.