This transcript is for clients of Independent Bankers' Bank and is not meant for the media. If representatives of the press access this transcript, there should be no attribution or use of this information in any of your reporting. If you have any questions regarding media issues, please contact Greg Hernandez at (202) 898-6984 at ghernandez@fdic.gov.
Independent Bankers' Bank
Client Bank Conference Call
Saturday, December 19, 2009
Marvin Payne
Dallas Regional Ombudsman
Just I'm thinking she’s going to come back and tell me when it starts.
Coordinator
Welcome and thank you for standing by. I'd like to inform all parties that this call is being recorded. If you have any objections please disconnect at this time. I like to now turn the call over to Marvin Payne. Thank you sir. You may begin.
Marvin Payne
Dallas Regional Ombudsman
Thank you. Welcome and we thank you for joining us today on short notice. I'm Marvin Payne, your Dallas Regional Ombudsman of the FDIC. And I will serve as the moderator for today’s call to discuss yesterday’s closure of Independent Bankers Bank Springfield, Illinois.
It is important to us that we share with you as soon as possible what we know about yesterday’s closure.
Some of the questions that you raise today may need to be researched for further review. If that occurs, we will provide the questions and the answers as part of our daily Web site updates.
The purpose of this call is targeted to the client banks that use Independent Banker Bank’s services.
Also please note that this call is for informational purposes only. If there are members of the press who are listening to this presentation, please contact Greg Hernandez for attribution.
Greg’s telephone number is 202-898-6984. Again Greg’s telephone number 202-898-6984. And his email address is ghernandez@fdic.gov.
We have established a Web tool and a telephone call center. That number 1-800-451-1093. Again that number 1-800-451-1093 as ways for you to communicate with us during this call.
We prefer for you to use our Web tool to ask your questions during this call. To ease your efforts to contact us, we ask that you use your correspondent calling offices as your primary business contact.
We have established a link to Microsoft Live meeting for today’s call. Furthermore, a replay of this call will be made available by 7:00 o’clock pm tonight. The call will be available through January 8, 2010.
I will now provide a brief overview of our agenda. Robert Shaw, an Assistant Director with our Division of Resolutions and Receivership will provide an overview of the Bridge Bank.
Joseph Bush Jr. will discuss financial operations. Russell Scott will lead the asset portfolio discussion. Maurice Faratier will discuss the Trust Department, and Nancy McGann will cover Capital Markets.
Regulators who are participants on this call but in a nonspeaking role include M. Anthony Lowe, Chicago Regional Director of the FDIC’s Division of Supervision and Consumer Protection and Jorge Solis, Division Director of the Illinois Department of Professional Regulation Division of Banking.
Now I will turn the call over to Assistant Director Robert Shaw.
Robert Shaw
Assistant Director
Thank you Marvin and good afternoon to everybody. As Marvin said, I am Assistant Director with FDIC in the Division of Resolutions and Receiverships.
However in this role I'm an Executive Vice President of Independent Banker’s Bank Bridge Bank National Association.
My goal and the goal of every FDIC employee working on this project is to continue the delivery of correspondence services on a business as usual basis while we market the institution.
We will be marketing this bank to other banker’s banks and to commercial banks with correspondence services over the next few weeks while at the same time we will operate the bank.
If by chance we are unable to sell the bank, we will give you ample time and notice to allow you to move your business to another bank of your choice.
I want to assure you that we will make this transition to the new correspondent bank as seamless as possible with the least amount of disruption to your bank.
I also want to specifically mention that many of our client banks use our trust department for employee pensions, profit sharings and 401(k) plans.
As successor trustee or investment manager, IBB Bridge Bank will continue to oversee assets for the public or private organization. Let me repeat, current trust services will be administered by the Bridge Bank.
There will be no change in the trust services offered, and the trust department will be marketed along with the Bridge Bank and a new assuming bank will hopefully take over those trust responsibilities.
Your first question might be what is a Bridge Bank? FDIC has only used this tool a handful of times over our 76 years of existence.
First of all IBB Bridge Bank is a nationally chartered financial institution. Sole stockholder is the FDIC. Its board of directors is made up of senior FDIC officials.
Similar to most banks that fail, the FDIC finds an assuming bank. In this instance IBB Bridge Bank is the assuming bank for Independent Bankers Bank.
The IBB Bridge Bank has assumed all of your insured deposits formally held by IBB and will perform the same services that its client banks have come to expect.
By its name itself you can tell we were bridging something. The three main items we are bridging are number one, our client bank into a new assuming bank.
Either we will sell the Bridge Bank or you will find a new correspondent relationship of your own choosing. In either case, correspondence services will continue as usual.
Number two, our goal is for all former IBB employees to move into a new entity over the next few months. In the meantime they will be performing the same services for you that they have in the past.
And finally, our third goal is to move the loans back into the private sector. I do want to mention that the loans remained with receiver and did not pay us to the Bridge Bank. You will hear more about loans shortly from (Russell Scott).
As I have said more than once that we’re going to bridge the client banks into a new correspondent relationship.
Either we will sell the Bridge Bank or we will remain open for sufficient time for you to move your relationship.
We plan to market the Bridge Bank for the next few weeks. If we are unsuccessful in our sales effort, we will continue to operate the Bridge Bank for as long as it takes for our client banks to move into a new correspondent relationship.
After that we will then self liquidate the Bridge Bank's, the Bridge Bank excuse me, as the client banks move into another correspondent bank.
During this time we’ll retain most of the employees from the former bank and they will perform the same services as they did for IBB.
Relationship manager who you the client banks worked with last week are the same employees that we want you to correspond with in the future and conduct your business with.
They are the ones who will assist you in whatever your needs may be. IBB clients can be assured that the daily operation will remain the high quality that you have come to expect.
The Bridge Bank has hired an individual who’s well known to the industry as our President and CEO. I know many of you are familiar with Mr. Gayle Earls who has a 40 year career in banking.
He held leadership roles at TIB, The Independent Bankers bank including CEO, President, and then Vice Chairman from 1986 to 2006.
Additionally he served on the Federal Advisory Council of the Board of Governors of the Federal Reserve System representing the Federal Reserve Bank of Dallas. He also served two three-year terms as Director of the Federal Reserve Bank of Dallas.
Finally, the Former Director of the Independent Community Bank of America where many of you on the phone worked with him.
Unfortunately Mr. Earls had personal commitments today and is unable to attend this conference.
He wanted me to tell you that he’s anxious to speak with you. Feel free to contact him at any time with your concerns or questions. His email address is gayleearls@ibb.cc.
Now let me talk one more time about the bank employees that you have been working with over the years. As I said, we have retained a vast majority of them. And they will perform for you the same services that they have in the past.
Assuming we’re able to find another banker’s bank to purchase our Bridge Bank many of the employees will transition over to them.
If we are unable to find a new assuming bank then we will employ them for as long as required by the Bridge Bank or until they are able to find a new job.
As they leave, we will move the responsibilities to other qualified employees and replace those that leave as needed.
I can assure you that the operational side of IBB Bridge Bank will remain functional and you will not be lacking experienced employees to work with.
I hope you will agree with me that retaining the IBB staff of professional correspondent bankers and adding Mr. Earls as our President and CEO will allow us to give you the banking services that you have come to expect. Finally as it is worth repeating, if we are unable to fight a new assuming bank we will allow you sufficient time to transition your correspondent banking needs to a new bank of your choice.
With that I would now like to turn this over to Joe Bush who is the Chief Financial Officer for the new Bridge Bank. Joe?
Joseph Bush
Chief Financial Officer
Rob thanks. Good afternoon. As Mr. Shaw said, my name is Joe Bush. I’m a Financial Manager for the FDIC’s Division of Resolutions and Receiverships in Dallas, Texas.
I have been with the FDIC in various accounting roles for over 24 years. My current assignment will be serving as the Chief Financial Officer and Executive Vice President of Independent Bankers Bank Bridge Bank National Association.
The primary purpose of the Bridge Bank is to ensure that IBB services continue as usual with no interruption.
The Bridge Bank will provide these services while the FDIC continues to market IBB to another acquirer.
With respect to corresponding banking services, currently IBB bank provides account clearing and (ATH) services for over 220 banks nationwide with average daily wires totaling 450 transactions for well over $400 million.
The Bridge Bank has established a business relationship with Federal Reserve Bank of Chicago to ensure all clearings and settlements occur without any interruption.
In addition, the Bridge Bank has established a line of credit with the FDIC corporate to ensure liquidity of the Bridge Bank is not an issue.
Again, the Bridge Bank will provide uninterrupted correspondence services during the marketing timeframe and use - the correspondent bank should continue to work with your correspondent calling officials.
With respect to Fed funds, IBB Bridge Bank will continue to accept funds as agent and upstream those funds to client bank’s preapproved banks.
In addition to IBB Bank Bridge Bank will continue to loan funds overnight to client banks that have a preapproved secured line subject to the limits of the value of that collateral.
Also IBB Bridge Bank will handle unsecured funds again overnight to client banks with preapproved unsecured lines on an individual basis. And this is subject to a review by the Bridge Bank and this review is ongoing at this time.
With respect to participated loans, even though the loans have been retained by the receiver, the Bridge Bank will continue to service these loans and provide the downstream payments to the participants using the client bank’s existing clearing account.
The Bridge Bank will no longer sell participations on behalf of the client banks nor will the Bridge Bank be a purchaser of loans from client banks. And with that I want to pass the mic over to our post-closing Asset Manager, Russell Scott.
Russell Scott
PCAM
Thank you Joe. Hello everyone. My name is Russell Scott and I will be serving as the post-closing Asset Manager better known as the PCAM overseeing the receivership, asset, and loan function.
The FDIC Asset Team is actively reviewing and evaluating all loan relationships in particular, the receiver’s portfolio of participation loans.
I'd like to reiterate some points that were already made.
The bank staff will be retained to assist in working with borrowers.
As Robert mentioned our activities will reflect business as usual. And I'm also available on an ongoing basis to answer questions and hopefully resolve any concerns you may have.
We recognize many of you have loans and participations here. All participants will be contacted starting Monday morning to discuss specifics on your participation relationship.
With respect to borrowers and participating banks, our message will be consistent. We will continue to honor terms of each loan agreement. All requests will be reviewed on a case by case basis to determine the status and merits of each project.
It is FDIC’s intention to market all of the loan portfolio of IBB with the exception of the banks stock loan portfolio. Information will be provided once the marketing plan is developed.
You may have some questions on the mechanics of this process. Let me try to answer a few. If you have other questions please email or contact your correspondent calling officer.
We will continue to accept all documentation statements and process them in a normal IBB manner.
Requests for the advance of loan funds will be reviewed individually to determine the current status of each loan and the purpose for the advance.
We will determine if inspections have been completed, verify work has been performed as billed and that all necessary documents are current.
With any loan advances we will continue to request a proportionate share from participating investors.
Any IBB legal actions, lending will be stayed until an independent review can be completed by our legal.
The receiver will continue to independently review any loan extension request and any loan approaching maturity and process accordingly.
The receiver will maintain the same IBB process for adjustments of loan interest rates as contracted in - well in the loan notes.
Pending IBB loan participation commitments will require an additional independent review. However, it is likely that if a loan has not been booked on the records of IBB prior to the closing of the bank the receiver will not advance funds for any new loans.
Once again, if a loan has not been booked on the records of IBB prior to the closing of the bank the receiver will not advance funds for any new loans.
The Post Closing Asset Team will remain on-site to discuss any issue or concern further. And the team looks forward to working with you.
With that I would like to introduce you to Maurice Faratier, Trust - of the Trust Department.
Maurice Faratier
Examiner
Okay. Thank you Russell. Good afternoon. My name is Maurice Faratier and I will be working in the trust area.
I’m an Examiner with the FDIC and have more than 20 years of experience in evaluating trust departments for compliance with the Statement of Principles for Trust Department Management.
The department will continue to provide the same level of products and services. And the department will continue to collect and distribute income, maintain accounting records, and provide all reports that are consistent with prior client bank agreements.
In short, the department will continue to be open in a business as usual manner for the duration of the Bridge Bank.
Employees from the department will be contacting you shortly to provide assurances on the status of your accounts.
I will now turn you over to Nancy McGann from Capital Markets.
Nancy McGann
Capital Markets
Thank you Maurice. Good afternoon. I'm Nancy McGann and I’m the Functional Manager for the capital related areas of the Bridge Bank.
Independent Bankers Bank has a tradition of customer focused service. And we will be relying heavily on the team that is in place to work with your institution.
As my colleagues have stated, it will be business as usual with no interruptions. In this area the transition to a Bridge Bank should be transparent to your institution.
You can continue to rely on the same caliber of services provided today by IBB’s security services area.
If your institution has securities trades that have not yet settled, we expect to complete the settlement of those trades. Security trades and delivers going forward will continue to settle as they do today.
Business as usual also extends to the safekeeping services provided by the bank. Your institution can continue to contact and submit requests to Kathy Bryant and her team, the same team that you contact today. Thank you. And now I'd like to turn this discussion back to Marvin Payne.
Marvin Payne
Dallas Regional Ombudsman
Thank you Nancy, excuse me. Now we will commence the question and answer session of the call. I will read the questions and the appropriate panel member will provide the answer.
As a reminder, you can continue to submit your questions to us via the Web tool.
The first question is for Joe Bush and is as follows. We are considering moving our correspondent accounts. Do we need to move the account now?
Joseph Bush
Chief Financial Officer
The answer is no Marvin. The client bank does not need to move their accounts. We will continue to provide world class customer service for the duration of the Bridge Bank.
In the unlikely event there is a not a successful purchaser, we will provide more than adequate time for them to find an alternate service provider of their choice, in other words to create an environment for which they have a soft landing to a new service provider.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. The next question is for Maurice. Maurice as a result of Independent Bankers Bank failure, we are considering moving our trust business elsewhere. Can you provide us with the names of companies that we should consider for our services?
Maurice Faratier
Examiner
Well first we will continue to provide trust services during the operation of the Bridge Bank. However if you decide to move your account, we do not recommend companies for you to conduct business with.
You need to do your own due diligence for that. Those are management decisions that should be made by the bank.
Marvin Payne
Dallas Regional Ombudsman
Thank you Maurice.
Maurice Faratier
Examiner
You're welcome.
Marvin Payne
Dallas Regional Ombudsman
The next question is for Joe Bush. If I discontinue my customer relationship with the Bridge Bank, how can I be assured of the confidentiality of my customer files?
Joseph Bush
Chief Financial Officer
You can be assured Marvin that the bridge will only move customer files at the respondent bank’s discretion and duration. The FDIC takes PIA matters very, very seriously.
Marvin Payne
Dallas Regional Ombudsman
Okay Joe I have a follow-up question for you.
Joseph Bush
Chief Financial Officer
Okay.
Marvin Payne
Dallas Regional Ombudsman
My bank has been utilizing Independent Banker’s Banks to provide substantially all of our funding. Can we continue to rely on broker deposit services?
Joseph Bush
Chief Financial Officer
All broker deposits have been transferred to the receivership. To continue any broker deposit activity the client bank will need to contact their broker directly.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. The next question is for Russell. Russell, my bank has several loans in process with Independent Banker Bank. How soon can we find out whether they will be funded?
Russell Scott
PCAM
The answer Marvin, the Post Closing Asset Management team is in the process of reviewing all IBB’s loans in process before any funding may take place.
Marvin Payne
Dallas Regional Ombudsman
Thank you Russell. Robert I have a question for you sir. The (unintelligible) indicated that key personnel from the former bank will be retained. What does that mean?
Robert Shaw
Assistant Director
Well it simply means that personnel will be retained in order to facilitate the proper continuation of services.
If for whatever reason we cannot retain some key employees then we’re simply going to replace them.
As I said earlier, the client bank’s should have no concern about us being able to continue servicing their needs.
Marvin Payne
Dallas Regional Ombudsman
Thank you Robert. My next question is for Joe. Our bank has arranged for disaster recovery services to be provided through Independent Banker Bank. What is the status of the contingency planning?
Joseph Bush
Chief Financial Officer
Again, the services that are being currently provided by IBB will continue to be provided by IBB Banker’s Bank National Association without interruption.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. My next question is for Russell. The question is as follows.
The question and answer document indicated that bank stock loans will be held until they are resolved. Our loan matures within the next 60 days. How will the FDIC handle matured loans?
Russell Scott
PCAM
Marvin, the receiver will be independently reviewing loans that are maturing.
Marvin Payne
Dallas Regional Ombudsman
Thank you Russell. My next question is for Maurice. The FDIC will be operating Independent Bankers Bank Trust function. While its role as deposit insurer possibly be in conflict with this new fiduciary role?
Maurice Faratier
Examiner
The answer to that is no. The trust function will pass to the Bridge Bank with the other assets. Operations will be conducted as usual.
Marvin Payne
Dallas Regional Ombudsman
Thank you Maurice. Nancy I have a question for you.
Will there be any changes in the procedures for delivering securities?
Nancy McGann
Capital Markets
Marvin the answer to that is no. We expect institutions to continue to follow the procedures that have been established earlier by Independent Banker’s Bank. It will be business as usual in the security services area.
Marvin Payne
Dallas Regional Ombudsman
Okay thank you Nancy. My next question is for Joe. Are transaction accounts that exceed the $250,000 insurance limit insured under the Transaction Guarantee Program through the expiration date?
Joseph Bush
Chief Financial Officer
Yes. The expiration date is currently June 30, 2010. And effective Monday, December 21, TLGP coverage will be in place.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. Joe I have a follow question for you.
Client bank wishes to invest excess Fed funds overnight. Will this continue to be available?
Joseph Bush
Chief Financial Officer
Yes. The IBB Bridge Bank will continue to accept funds as agent and upstream those funds to the client bank’s list of preapproved banks.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. Joe you tend to be a popular guy today I have another question for you.
Client banks have preapproved limits secured and unsecured to borrow funds overnight to a client bank. This is Fed funds person. Will this continue to be available?
Joseph Bush
Chief Financial Officer
With respect to secured lines the, IBB Bridge bank will continue to fund those secured lines again subject to the limits of the value of the collateral.
But with respect to unsecured funds, we’re undergoing a review at this present time of IBB’s review and to see, because they’re going to be on a case by case basis with respect to the unsecured lines.
Marvin Payne
Dallas Regional Ombudsman
Thank you Joe. Robert.
Robert Shaw
Assistant Director
Yes?
Marvin Payne
Dallas Regional Ombudsman
Will the Bridge Bank continue to participate in the Transaction Guarantee Program?
Robert Shaw
Assistant Director
Yes it will as Joe just mentioned. Effective Monday participating through all transaction accounts over $250,000 are fully insured.
Marvin Payne
Dallas Regional Ombudsman
Thank you Robert.
Robert Shaw
Assistant Director
Okay.
Marvin Payne
Dallas Regional Ombudsman
I have a follow question for you sir.
Robert Shaw
Assistant Director
Sure.
Marvin Payne
Dallas Regional Ombudsman
What is the status of any Fed funds sold to Independent Banker’s bank?
Robert Shaw
Assistant Director
I think the client banks will be happy to know there were no Fed funds sold to IBB last night. Had they been sold, those client banks would have become general trade creditors of the failed bank.
Under the instruction of the regulator, Fed funds ceased last night to be sold to the IBB. But as Joe said, that will continue again on Monday.
Marvin Payne
Dallas Regional Ombudsman
Thank you Robert. I have another question for you Robert.
Apparently the intention is to sell the bank. Therefore I assume for the time being the FDIC will like us to remain customers of the new bank.
If this is correct but the sale fails to materialize how long after the FDIC, excuse me, abandon the sales attempt will we have to move our relationships?
Robert Shaw
Assistant Director
Well that’s a very good question. We will start marketing the Bridge Bank next week. That due diligence process I'm guessing will go on for at least a month. And we would hope to know by the end of January whether we have been successful in selling the Bridge Bank.
I can tell you I can relate to another Bridge Bank called Silverton which I think many of our client banks perhaps remember. And Joe and I were there.
We kept that bank open for about four months in order to give the client bank sufficient time to move their accounts.
And it wasn't that they had - they took that long to walk up to a new correspondent bank and sign a signature card. There’s other restraints, mainly the AT&T’s of the world and getting your lines set up to correspond with your new assuming bank. So that’s what took so long.
But we remained open there for about four months. And if that’s what it takes here that’s how long we’ll stay.
Marvin Payne
Dallas Regional Ombudsman
Okay again we are accepting calls. Excuse me, we are accepting questions for this - for today’s call. Thank you.
As I called this presentation, the FDIC would like to remind you that it is business as usual for Independent Bankers Bank Bridge Bank National Association.
All banking services that were available to you at Independent Bankers Bank are available at the Bridge Bank.
The Web site will be updated daily for questions and answers that we could not address during this call or for questions that are submitted after this call.
The Call Center is open tonight and will be open through next week. We are still accepting emails.
Finally we provide our assurances to you that it is business as usual at the Bridge Bank. Thank you and have a good evening.
For more information: www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ibb.html