Pub. 3 2013-2014 Issue 2

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE “A word to the wise: When you take over loans you also take over the liability. You are responsible for maintaining the SBA guaranty.” WORD TO THE WISE: BANKS BUYING BANKS WITH SBA PORTFOLIOS BETTER CHECK OUT THE CLOSETS! L ately, we are seeing an issue arising from the recent spate of banks acquiring other banks, in their own states or across the country. When banks buy banks with SBA portfolios, they often don’t review those port- folios. This can lead to unpleasant surprises and potential future losses, pitfalls that can be avoided or minimized with a little fore - thought and planning. Let’s think of it in terms of buying a house. Most people inspect the big things: how’s the foundation, the plumbing, the electricity? But often they don’t check out the closets. By the same token, banks acquiring other banks perform due diligence on the big-picture is- sues, typically the commercial and consumer loan portfolios, and the deposits. If there’s an SBA portfolio, they might not take a close look because SBA isn’t a dominant depart - ment. This becomes especially important when the acquiring bank doesn’t have an SBA vern hansen Colorado Associate J.R. Bruno & Associates