NAB acquires TierOne assets and liabilities
National Australia Bank Limited (NAB) subsidiary Great Western Bank (“GWB”) announced the acquisition of certain assets and liabilities of TierOne Bank from the Federal Deposit Insurance Corporation (FDIC) for US$76 million. The company said the acquisition includes all of TierOne’s approximately US$1.9 billion in deposits and US$1.9 billion in loans under an agreement where the FDIC absorbs 80% of credit losses arising on the loan portfolio and related assets.
NAB said the loss share agreement has a term of 10-years for residential mortgages and five years for all other loans.
“The acquisition is earnings accretive and the GWB loan portfolio remains more than 100% deposit funded following the acquisition,” the company said.
“It is estimated the acquisition will require less than 10 basis points of Group tier 1 capital.”
NAB Group Executive Asia, New Zealand and the United States, Andrew Thorburn, said the acquisition increases Great Western’s distribution and customer base in selected states that together have an agricultural output greater than Australia’s.
NAB said GWB has an option to acquire TierOne branches at fair market value, or assume the relevant leases, and to make employment offers to TierOne employees.
TierOne has 59 branches in Nebraska, nine in Iowa and one in Kansas.
“Great Western Bank has a strong risk framework supported by the appropriate local and NAB Group resources to manage the acquired loan portfolio, which has been reviewed in detail,” Mr Thorburn said.
“We announced our intention to acquire part of TierOne in 2009 and this is an excellent opportunity to continue to grow our business in the United States on the base of attractive core deposits.”
At the close of trade Friday, NAB shares were trading at $24.36.
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