Bank Stock/Trust Preferred Securities Financing Loan Program

BND’s Bank Stock Loan Program provides financing options to accommodate the acquisition or refinancing of bank stock of a North Dakota financial institution. The Trust Preferred Securities Financing Program (or TPS) may provide financing to an investment company created to complete a trust preferred securities transaction for the benefit of a financial institution located within the state.

Under either loan program, BND is typically a direct lender, but may be a participant in a loan originated by another financial institution.

Qualifying Requirements

Borrower - Loans may be made to individuals, bank holding companies, or in the case of the TPS Program, investment companies formed for the purpose of accommodating a trust preferred transaction.

Use of Proceeds - The purpose of a bank stock loan may be to acquire or refinance the purchase of bank stock or bank holding company shares of an institution located in the State. A TPS loan may provide financing to enable a North Dakota bank holding company to issue trust preferred securities for purposes as deemed appropriate by the borrower and BND.

Information - BND acts on a loan request when the following information is received:

• Resumes or narratives of the bank's management experience and education
• A copy of the proposed buy/sell agreement and the terms of the purchase, if applicable
• A 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 those individuals who will act as guarantors for the loan
• A 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)
• A 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

Equity - BND generally will lend no more than 85% of the discounted book value of the stock or securities being pledged as collateral for the bank stock or TPS loan. Each loan is reviewed on a case-by-case basis and the owner's equity is taken into consideration along with all other elements of the business.

Collateral - Proper and adequate collateral is required to protect the interest of BND. As a general rule, a borrower must secure the debt by pledging the stock of the bank acquired or refinanced. Generally in the case of a bank holding company, pledging of the holding company stock as well as the stock of the bank itself is required. A minimum of 51% of the outstanding bank stock is necessary in most cases.

A TPS loan will be secured by the trust preferred securities issued by the bank holding company and purchased by the borrower.

In the case of either a bank stock or TPS loan, 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 also may be required.

Application Process

Applications are made directly to BND. An application shall include sufficient information to allow BND to properly evaluate the loan.

The approval process depends upon the size of the loan. BND's general review procedures are followed.

Interest Rate

The rate of interest is based upon BND’s assessment of the risk, asset quality, collateral, and repayment capacity of the borrower. Both variable and fixed rate options may be considered.

Repayment Terms

BND will consider a planned repayment period of up to a maximum of 15 years. Principal and interest payments are generally required no less than annually.

Fees

Origination fees may be charged.

For more information please contact us at:

Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
(701) 328-5671
1-800-472-2166 ext. 5671
TDD (Telephone Device for the Deaf) 1-800-643-3916