BEST PRACTICES IN BANK INTEGRATIONS ALL THINGS APPRAISAL

BEST PRACTICES IN BANK INTEGRATIONS – ALL THINGS APPRAISAL: TIPS &TRICKS AUGUST 6, 2014

What you are about to experience are the views of these three individuals…

• Deloris L. Kraft-Longoria, MAI Chief Appraiser, Frost Bank (San Antonio, TX) • Eric K. Schwartz, MAI, SRA SVP, Chief Appraiser, Amegy Bank (Houston, TX) • Justin D. Slack, MAI, SRA, AI-GRS, AI-RRS VP, Commercial Appraisal Mgr, Home. Street Bank (Seattle, WA)

• Where do you Start? • Does size matter? • Policy(s) & Procedures • Personnel & Cultures • Vendor Lists • Systems

WHERE DO YOU START?

READY…. . SET…. . WAIT FOR IT…. GO! • Appraisal Departments • Approved Appraiser List(s) Mgmt • Credit Administration • Other 3 rd-Party Vendor Mgmt • Business Units – AMCs – Environmental Consultants – Building Inspectors/ Engineers – PP/ Equipment Appraisers

DOES SIZE MATTER?

PIT FALLS

PIT FALLS… • Not being included in Due Diligence team • Not being a part of merger team and/or included in meetings prior to merger • Lack of list of appraisal assignments in the works – Who is the Client after LD-1? – Who is the Intended User after LD-1? • Appraisal Coordinator or Personnel left after merger • Acquired Bank had no Appraisal Division or Collateral Management System (CMS) • Lack of written policies to train acquired bank personnel – To use CMS system – When & how to order an Appraisal

…& MORE PIT FALLS • Incorporating Ordered Appraisal Assignments into CMS – Setting up files, gathering all data • Payment of AMC/Appraiser of Appraisal Assignments in the works – Dual payment • Lack of market knowledge in new footprint • Lack of sufficient personnel to handle the “new normal” (workload) • Specialized Property Types – – Mining operation Agricultural properties C-Stores Country Clubs

POLICIES &PROCEDURES • Who gets to stay? – Combined? – Are you really the devil? • Who is your regulator now? – Different wrinkles – Different cycles – Different expectations

PERSONNEL &CULTURES…

…PERSONNEL & CULTURES Bank A • Chief Appraiser (Certified Appraiser) • Review Appraisers (2) • Department Admin. Bank B • Appraisal Dept. Administrator (non-certified Manager) • Review Appraisers (3) • Environmental Consultant • Evaluator

VENDOR MANAGEMENT • Approved Appraiser Lists – Update and Add New Appraisers to Lists due to new terror ties or markets • 3 rd-Party Reviewers – Continue to use or eliminate • Environmental Consultants – Incorporate additional environmental contractors to list

VENDOR MANAGEMENT • Building Inspectors/ Engineers • Order Management Systems • Appraisal Management Company(s) – Coordinate with AMC’s in regards to open assignments • Complete reviews, payment of the appraiser • Cloud Storage

APPRAISAL MANAGEMENT SYSTEMS

APPRAISAL MANAGEMENT SYSTEMS • • • RIMS You. Connect (Real Wired) Oasis (Global DMS) Lender Portal (EDR) FNC’s system – Commercial, Residential and Environmental CMS system • Others

APPRAISAL MANAGEMENT SYSTEMS • Platform Integrations – Pre/Post – Identify challenges • Key points to consider: – – – Administrative and support personnel needs assessment Budgetary constraints Integrating systems with differing cost allocations Line reporting conflicts Cultural conflicts!!!!! – Understand the weaknesses and strengths of each AMS – SWOT Analysis: Do you need to perform one? – Single or multi-platform process management • Different systems for commercial and residential?

OTHER ISSUES – USPAP Issues – Who is the client and intended user if the acquired entity no longer exists? – Are there additional expense burdens associated with: • AMC Audits • Manpower allocations • Duplication of review and support staffing – – – Retain performing vendors Annually evaluate vendors (establish protocols if absent) In-service training – may be necessary at both institutions Establishing performance expectations Valuing designations (cultural issue)