Barlow Research’s December 2018 First Friday Web Conference, titled “Evolving Challenges and Competition for Small Business Banking,” focused on new challengers entering the financial services market. This article provides a summary of attorney Karen Grandstrand’s comments during the Web Conference.
Bank & Finance
To serve the diverse needs of our financial services clients, our attorneys have skills and experience in regulatory and enforcement matters, mergers and acquisitions, finance, debt finance, corporate and securities, governance, tax, estate planning, real estate, bankruptcy, employment law, compensation and benefits, and litigation.
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What We Do
Fredrikson & Byron’s Bank & Finance Group is well positioned to help our clients evaluate and respond to the challenges and opportunities facing banks and other financial services providers in the current environment. Our attorneys understand how to combine law and business for great solutions.
The principal components of our Bank & Finance practice are:
Mergers and Acquisitions, New Charters and Related Expansions
We have in-depth knowledge of the techniques and issues involved in mergers and acquisitions, including related regulatory and tax considerations. We have worked with clients organizing and chartering new institutions, determining appropriate charter types, forming financial holding companies and bank holding companies, and establishing branches. Additionally, we have helped them start and expand insurance, broker/dealer, trust and other financial services activities.
We provide advice and guidance to financial institutions on the numerous federal, state and local laws and regulations that govern financial institutions and their management. Our group has experience with safety and soundness as well as consumer laws, and federal and state agencies’ enforcement of those laws through the examination process. We counsel clients on compliance issues and help address examination findings.
Enforcement Actions, Financially Troubled Institutions and FDIC Receivership
The federal and state agencies that oversee financial institutions have extensive powers to compel action by and impose sanctions and penalties against institutions, their officers and directors and other “institution affiliated parties.” Fredrikson & Byron’s Bank & Finance Group, which includes an attorney who formerly served as a senior official at a federal regulatory agency, counsels clients on how to avoid and respond to cease and desist orders, written agreements, memoranda of understanding, civil money penalties and removal actions.
FDIC Receivership Matters
We are experienced in advising clients on bidding on failing institutions and purchasing assets from the FDIC. We help qualify clients with the FDIC, prepare bid packages, negotiate agreements, and monitor failed bank and loss sharing agreements.
Legislation and Emerging Issues
Given Fredrikson & Byron’s knowledge of the financial services industry, we are often called upon to provide expertise concerning proposed and pending legislation. As an example, we have worked on Subchapter S legislation and testified concerning privacy legislation. We also work with trade associations and the regulatory agencies to resolve questions raised by proposed and new regulations.
We frequently speak at regional and national banking conferences and write on banking issues. The group’s newsletter is a recognized publication providing regulatory updates and planning advice.
Fredrikson & Byron’s Finance practice includes attorneys who represent both borrowers and lenders in a wide range of transactions, including secured and unsecured commercial loan transactions. Our borrower clients include private equity firms and their portfolio clients, Fortune 500 companies and start-ups.
We represent our private equity clients in financing initial platform acquisitions, as well as subsequent add-on acquisitions and servicing of their loans. For corporate borrowers, we assist with new credit facilities and refinancing of existing credit facilities, making sure our clients benefit from changes in the market while tailoring credit facilities to meet their needs. We are involved from the initial negotiation of the term sheet through closing of single- and multiple-bank facilities, closely-held as well as syndicated loans, first and second lien facilities, LBO and mezzanine financings, and term loan and revolving facilities. We can assist with letters of credit, cross-border issues and opinion letters.
We have support from tax, ERISA, intellectual property, environmental and real estate specialists who review the loan documents to address any potential compliance issues in advance of closing.
Our lender clients include community-based banks, regional and national banks and mezzanine lenders. We represent our lender clients in all stages of a financing transaction which include initial structuring, collateral issues, intercreditor issues, documentation, closing, ongoing aspects of the credit relationship, and eventual payoff (or workout, restructuring or collection action). We also work on transactions involving single lenders, club deals and syndicated credit facilities.
News & Articles
The U.K. governmental authority that publishes LIBOR may phase out LIBOR by the end of 2021. Lenders who use LIBOR will need to determine what effect the phasing out of LIBOR will have for the lender and its borrowers.
December 3, 2018
This past July, the agencies released updated versions of several Interagency documents, one of which was the Interagency Bank Merger Act Application.
Due to recent amendments to the Delaware Limited Liability Company Act, banks and other lenders who make loans to limited liability companies (LLCs) formed in the state of Delaware should carefully review their loan documents and modify restrictive covenants related to mergers, reorganizations, acquisitions, dispositions, and similar transactions to address a newly created form of transaction called a “division.”
Blockchain technology has created quite a stir. Entire industries are scrambling to understand how blockchain works and how it affects their universe.
September 4, 2018
The number of FDIC-insured institutions in the U.S. was at 5,670 as of March 30, 2018, down from 8,534 as of December 31, 2007. Over the past five years, 1,292 institutions have been absorbed by mergers and 63 have failed. Another factor behind the reduced number of institutions, however, is the small number of de novo banks.
By Karla L. Reyerson & Sten-Erik Hoidal
Community banks are no strangers to privacy and data security laws. The latest trends in privacy laws, however, are not limited to certain industries, and they include privacy rights for consumers that could have a significant impact on how companies treat customer information.
By Levi J. Smith & Olivia Cares
The May 11, 2018, implementation deadline for the Financial Crimes Enforcement Network’s Beneficial Ownership Rule has now passed, and there are fundamental changes in the daily customer due diligence obligations of banks and other financial institutions.
June 1, 2018
By Thomas W. Garton & Matthew L. Stortz
A lot of ink has been expended on the topic of whether, under the new tax legislation, a business operating as an S Corporation should, or should not, terminate its S Election and go forward operating as a C Corporation.
Many believe cryptocurrencies could replace fiat currencies and become the primary global currency within the next several years. But what does this mean?
March 1, 2018
Karen Grandstrand has been part of the banking industry since 1982, seeing it from the vantage point of regulator, attorney and director.
By J. Marc Ward
A bank’s data processing agreement is typically one of its most important contracts—yet, it is frequently entered into without legal review, or without even being read.
When an older woman entered her local bank, the teller on duty immediately noticed something was wrong.
The IRS audit rules for all partnerships (including LLCs that are taxed for income tax purposes as partnerships) have changed dramatically.
December 1, 2017
There are many things in life where “close enough” will work, but when it comes to filing a financing statement in a secured loan transaction, getting the name of the debtor “close enough” just won’t do.
Minimum wage hike initiatives continue to garner press attention and momentum nationwide. Lobbying and pressure on the national, state and local levels continues, and a growing number of states and cities have responded.
As of January 1, 2018, all Minnesota limited liability companies (LLCs) will be governed by Minnesota’s new LLC statute, Chapter 322C, including LLCs formed under the predecessor LLC statute, Chapter 322B. Chapter 322C is different in significant ways from Chapter 322B.
November 1, 2017
Fredrikson & Byron has been named a Tier 1 Metropolitan “Best Law Firm” in 29 practice areas by U.S. News – Best Lawyers® in 2018.
October 31, 2017
Fredrikson & Byron announces the addition of six associates to the firm’s Minneapolis office.
October 17, 2017
Attorneys Kristy Dahl Rogers and Olivia N. Kilgore have joined Fredrikson & Byron’s Des Moines office.
October 5, 2017
September 1, 2017
Effective for tax years beginning after December 31, 2016, a “financial institution” for Minnesota tax purposes includes both corporations and “other business entities,” such as limited liability companies, that perform financial institution activities.
Community banks require a consistent flow of incoming capital for growth and success in the market. One flexible and effective method bank holding companies can use to raise capital is a stock or capital notes offering.
By Christopher D. Pham & N. Chethana Perera
Last year, banks worldwide experienced cyber attacks through the SWIFT messaging system.
June 1, 2017
Should keeping a bank account or financial adviser in Minnesota be considered when determining where a person is a resident?
March 1, 2017
When we normally think of the term “decanting,” we think of it applying to wine. When one decants a bottle of wine, the wine is poured from the bottle into a decanter where the wine is exposed to air which allows it to “breathe.” Now when this term is used, it can also be applied to trusts in Minnesota.
In 2016, the Department of Labor issued its final “conflicts of interest” rule, which broadens the definition of “fiduciary” and the scope of investment advice under the Employee Retirement Income Security Act of 1974, as amended.
Financial Institution Bond May Cover Losses from Fraudulent Wire Transfers – Even Where Bank Employees Are at Fault
Even the most well-designed security plan for preventing financial losses from fraudulent acts has a potential weak spot—the humans at the bank who are responsible for implementing the plan.
December 1, 2016
Financial institutions have not been shy about challenging Minnesota Department of Revenue tax determinations in court. For example, in the 1980s and early 1990s, the banking industry prevailed against the state’s unconstitutional imposition of the bank excise tax. Then, in 1998, Firstar Corporation (headquartered in Wisconsin) convinced the Minnesota Supreme Court that, for purposes of the corporate franchise tax, the bank’s sale of an office building in Wisconsin was “nonbusiness income” taxable only in Wisconsin, rather than “business income” apportioned among several states, including Minnesota.
September 21, 2016
Fredrikson & Byron shareholder Karen L. Grandstrand will receive the Outstanding Director award for her work on the TCF board of directors. This annual award is presented by Twin Cities Business, in association with the National Association of Corporate Directors, for exceptional service to companies by outside board members.
September 1, 2016
By Steven E. Helland & Karla L. Reyerson
Is your bank’s website accessible to the visually impaired? If it is not – or if you are not sure – now is the time to address this issue as businesses across the country are receiving demand letters and being made parties to legal claims for alleged violations of the Americans with Disabilities Act (ADA).
By J. Marc Ward
Whether you are looking to buy a bank or thinking about selling, there are some considerations to keep in mind in order to accomplish your goal—get the best price. This brief guidance is for buyers hoping not to overpay for a bank, as well as for sellers trying to sell their bank for the highest price.
Banks and other employers may need to update their policies, practices and agreements due to recently enacted employment and benefits requirements, including the following:
June 1, 2016
Significant changes to Minnesota trust law became effective on January 1, 2016. The changes adopt a number of new concepts and modernize Minnesota’s laws to be similar to the trust laws of other retirement-friendly states. The act consists of 11 new articles based, in large part, upon the Uniform Trust Code (UTC), as well as a new chapter that includes the concept of trust decanting (together, the New Act). This latter subject will be covered in a future article. The New Act will apply to all trusts created before, on or after January 1, 2016, with limited exceptions.
Are You Sure It’s from the CEO? Protect Your Bank and Customers from Business Email Compromise Crimes
By Asmah Tareen
Recently, a successful company fell victim to a crime that is increasingly targeting companies with a global presence and traveling executives. The Company’s accountant received an email from the CEO instructing him to send out several wire transfers totaling over $100,000. The accountant tried to confirm the instructions by phone but was unable to reach the CEO who was traveling overseas. When the accountant replied to the email with a follow-up question, he received an abrupt reply reprimanding him to get it done. Although there were internal checks in place and a controller raised questions, the air of business urgency won out and the wire transfers were ultimately sent. Shortly afterward, the Company realized that the instructing email was not from the CEO but from cyber thieves.
December 2, 2015
During the financial crisis, many banking organizations became subject to enforcement actions that required banks and bank holding companies (BHCs) to obtain approval from their regulators to pay dividends and redeem stock. At the same time, the Federal Reserve issued Supervision and Regulation Letter SR 09-4 (February 24, 2009, as revised March 27, 2009). This SR letter places ongoing restrictions on the payment of BHC dividends and the redemption of BHC stock even after enforcement actions are lifted.
New limited liability company (LLC) laws became effective in Minnesota and North Dakota earlier this year, ushering in a significantly different legal landscape relating to the rights and responsibilities of LLC members and management and third parties dealing with LLCs in those states. Although banks and bank holding companies are not typically structured as LLCs for regulatory reasons, banks and bank holding companies commonly establish LLC subsidiaries to engage in tangential activities such as insurance sales or holding other real estate (OREO). Therefore, it is important for banks to note the changes to the LLC laws. This article highlights some important aspects of Minnesota’s new LLC law (Minnesota’s New Act) and North Dakota’s new LLC law (North Dakota’s New Act) (or, the New Acts).
September 23, 2015
Fredrikson & Byron acted as legal counsel to Twin Cities-based Beacon Bank (subsidiary of Excelsior) in reaching a definitive agreement to be purchased by Alerus Financial, N.A.
The Supreme Court Decides: The DOL’s Interpretation Regarding Pay for Mortgage Loan Officers Is Enforceable
September 1, 2015
The U.S. Supreme Court has decided that the federal Department of Labor’s (DOL’s) March 24, 2010, Administrator’s Interpretation that mortgage loan officers typically must be paid as nonexempt employees under the federal Fair Labor Standards Act (FLSA) is enforceable. This means that, unless an exception applies, mortgage (and other) loan officers must, like all nonexempt employees, keep a time record of all time worked, receive no less than minimum wage for every hour worked, and be paid overtime for all hours worked over 40 in a work week.
June 1, 2015
By J. Marc Ward
What goes on when crafting an acquisition agreement to purchase a company? Or to say it differently, why do lawyers insist on one phrase or word over another? “Legalese” has its place.
Fredrikson & Byron Represents Central Bancshares, Inc. in Agreement to Merge with MidWestOne Financial Group, Inc.
November 24, 2014
Fredrikson & Byron acted as legal counsel to Central Bancshares, Inc. (Central), a community bank holding company based in Golden Valley, Minnesota.
September 3, 2014
Banks, like all employers, must keep up with the ever-changing federal and state employment laws and requirements. Several important changes that banks must not miss have taken effect or will take effect soon.
By J. Marc Ward
Bank acquisitions and the number of banks for sale have shown an uptick in activity in the first half of 2014. The twin pressures of succession planning and increased regulatory burdens have caused many bank owners to consider selling their banks.
Fredrikson & Byron Ranked Among Top Three Law Firms Nationally in Domestic Bank and Thrift Merger Deals by American Banker
August 22, 2014
Fredrikson & Byron, P.A. received a top three national ranking in the American Banker’s annual listing of Top Lead Legal Advisers in Domestic Bank and Thrift Merger Deals for the first half of 2014.
June 2, 2014
Following the “Great Recession” of 2008 and 2009, banks were forced to foreclose on a number of mortgages granted to defaulting borrowers. As a result, banks’ portfolios of “other real estate owned” grew significantly. Although the economy is recovering, these OREO properties continue to demand significant attention. While there are many regulatory issues related to OREO properties, this article will focus on some of the real estate related considerations for managing your OREO.
March 3, 2014
By Robert K. Ranum & Beau J. Hurtig
A recent Securities and Exchange Commission (SEC) change to Rule 506 of Regulation D under the Securities Act of 1933 may provide an additional tool for bankers considering a capital raise.
September 1, 2013
By Thomas W. Garton and Matthew L. Stortz
A new tax tool has been added to our transaction tool kit. It may prove useful in certain bank transactions where the acquired bank (or holding company) is an S Corporation.
May 1, 2013
As you are no doubt aware, many aspects of the Affordable Care Act become effective on January 1, 2014. One of those requirements is the “shared responsibility” (sometimes called the “pay or play”) penalties that may be assessed on “applicable large employers.”