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Robin Trehan, bank consultant explained the steps for purchasing a small bank in USA. Trehan said, “A deal can have a hidden value and how one breaks the value and brings in the value is up to the buyer to realize. Here are series of steps I will suggest once one has identified a bank and it fits the initial criteria”

  1. Putting an offer sheet (Letter of Intent) with basic terms and conditions for the due diligence. 
  2. If the offer is accepted hiring a good regulatory banking law firm and accounting firm for the preparation of 
  • Definitive Sales Purchase Agreement.
  • Doing due diligence. 
  1. During the due diligence process, following questions should be put in picture.
    • A copy of audited financial statements for the past three to five years. 
    • Does the bank own or lease the space that it occupies? If it leases the space, what is the remaining term? 
    • Regarding the loan on the book, provide a breakdown by type, rates, and maturity. 
    • The investment the bank owns. The breakdown by type, rates, and maturity. 
    • The deposit on the book. The breakdown by type, rates, and maturity. 
    • A brief description of the customers. 
    • Who is the present management and how the bank board is organized.
    • A list of shareholders. 
    • Analysis of CAMELS- Capital, Asset quality, Management, Earning, Liquidity, and sensitivity to market risk. 
  1. If the due diligence is satisfactory, continue with the transaction or re-negotiate the purchase price or terminate the agreement.
  2. After the acceptance of the Definitive Agreement, seeks regulatory approval based on their business plan. Business plan will determine how much additional capital will be required to support the operations of the business plan.  
  3. Seller seeks its shareholder’s approval to the transaction as soon as the Definitive Agreement is executed.
  4. Buyer has to in the meantime get the regulatory approval. 
  5. Closing takes place and if possible making sure that present management stays there for two to three years. Best deals are sometimes derived and made. Stick to the fundamentals, good things sometimes take time and lots of hard work.



About Robin Trehan:

Robin Trehan is Partner at Credit Capital Funding in Chicago, Illinois. A graduate of Grenoble Ecole de Management, Trehan is an expert on a diverse set of banking topics including blockchain, e-payments, crypto banking, and commercial banking. Trehan has bachelors in economics, masters in international business and finance, and a MBA in electronic business.


Contact: Robin Trehan

Company: Credit Capital Funding









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