Bank Acquisitions in a Time of Change

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1 Bank Acquisitions in a Time of Change September 22, 2010 Beth DeSimone Counsel Arnold & Porter LLP Washington, DC Deborah Prutzman Chief Executive Officer The Regulatory Fundamentals Group LLC New York, NY Thomas Rees Managing Director FTI Consulting Philadelphia, PA

2 Current Environment Legislative and Regulatory Environment Difficult for Financial Institutions The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act) will likely make it more difficult for financial institutions to compete Increased capital requirements Increased compliance costs Higher bar for institutions to make acquisitions Basel III will increase the floor for capital Fair value accounting may increase volatility in earnings and capital Environment conducive to mergers and acquisitions if financially healthy and no regulatory issues 2

3 The Dodd Frank Act Increases Costs The Dodd Frank Act contains provisions that will increase costs to and reduce earnings on financial institutions Capital Rules/ The Collins Amendment Same capital standards for holding companies as for banks. No Trust Preferred securities Impact on companies with no current capital Phase in period Volcker Rule Proprietary trading and investing in hedge funds and private eqity funds curtailed Exceptions and phase ins Impact on earnings 3

4 Impact of the Dodd-Frank Act (cont.) Consumer Financial Protection Establishment of CFPB and focus on consumer financial protection Increased compliance costs Increased data collection burdens Mortgage lending overhaul Debit card processing fees Retention of risk Requirements to make acquisitions Well-managed and well-capitalized at holding company level Impact of any enforcement orders on financial institutions Nationwide interstate branching now allowed 4

5 Regulatory Environment Regulators focused on increasing safety and soundness of industry Strategic player (existing bank holding companies and banks) are preferred as buyers Private equity is encouraged to take minority, non-control positions only Shelf charter process for private equity to bid on failed institutions continues, but is difficult to navigate Recapitalizations of troubled but not failed institutions appear to be more advantageous and may be a good model if there is a lack of strategic buyers 5

6 Bank Acquisitions: Relevant Regulatory Guidance 2008 Fed Policy Statement on Equity Investments in Banks and Bank Holding Companies Eases certain restrictions on private equity firms ability to invest in banks without becoming subject to the Bank Holding Company Act 2009 FDIC Policy Statement on Qualifications for Failed Bank Acquisitions Imposes certain restrictions on private equity firms ability to invest in failed banks through the shelf charter process or otherwise 6

7 2008 Fed Policy Statement The Policy Statement makes four principal revisions to Federal Reserve precedent: Ability for investors holding between 15% and 24.9% of a class of voting securities to have a representative on the bank s board of directors, and in some cases two representatives Increased permissible levels of non-voting equity investments from 25% of the total equity to 33% in certain instances Increased ability for a minority investor to communicate with management and advocate for specific policies Added non-affiliation commitments to prevent acting in concert among private equity investors 7

8 Review Focus Business Relationships Business relationships between the investor and the banking organization will continue to be closely reviewed The Fed believes that business relationships between an investor and the banking organization could result in a controlling influence Business relationships need to be quantitatively and qualitatively limited for a non-control determination The greater the investor s percentage holdings of voting securities holdings, the more concern the Fed will have with business relationships 8

9 Review Focus Restrictive Covenants Restrictive covenants in any agreements between the investor and the banking organization will continue to be closely reviewed Covenants that substantially limit the discretion of management over major policies and decisions suggest control Covenants limited to those that protect the rights of a particular class of security holder, such as limiting the issuance of additional senior securities or providing limited information and consultation rights, are generally consistent with non-control 9

10 Acquisition of Failed Banks 2009 FDIC Policy Statement SOP applies to Investors Private investors, including private equity firms, buying failed banks Prohibits bids by investors that hold 10% of equity of the failed bank SOP does not apply to Already completed acquisitions Investment in institution with composite CAMELS rating of 1 or 2 for 7 consecutive years (with FDIC approval) Investors in ventures with holding companies that have a strong majority interest in the bank and an established record for successful operation of banks Investors with 5% of total voting power of the acquired bank or its holding company FDIC can waive any provision of SOP if in best interest of deposit insurance fund and goals of SOP can be accomplished by other means 10

11 Capital / Strength Requirements Acquired institution must maintain ratio of Tier 1 common equity to total assets of at least 10% for 3 years from acquisition date, remain well-capitalized thereafter Failure to meet these levels will result in undercapitalized designation Deleted requirement from proposed SOP that acquirer must serve as source of strength via direct capital injections Cross Support : If one or more investors own 80% or more of 2 or more institutions, must pledge the commonly owned stock to FDIC FDIC can waive where exercise of pledge would not decrease cost of failure to deposit insurance fund Prohibits new extensions of credit by acquired institution to investors, their investment funds, and/or any affiliate of either 11

12 3-Year Prohibition on Sales Continuity of Ownership provision reflects FDIC concerns regarding: Ownership/management instability Desire to ensure bank owners are invested in bank s successful and prudent operation in the long term Provision prohibits investors from selling/transferring their interest in acquired bank for 3 years from acquisition without FDIC approval FDIC shall not reasonably withhold approval for transfers to affiliates who agree to abide by SOP Prohibition does not apply to mutual funds defined as open-end investment companies registered under the Investment Act of 1940 that issue securities redeemable on demand 12

13 Structure/Transparency Requirements No complex and functionally opaque ownership structures Difficult to ascertain beneficial ownership and decision-making parties; ownership/control separated Limitations on ownership by entities domiciled in secrecy law jurisdictions Countries with laws that limit regulatory transparency Investors must be subs of companies subject to comprehensive consolidated supervision as recognized by Fed, and must agree to disclose certain information on business activities to regulators Disclosures to FDIC required from all investors about investors and all entities in ownership chain Size of capital fund(s), diversification, return profile, marketing documents, management team, business model 13

14 Buy a Bank or Create from Scratch? De Novo Banks: Total Openings, By Year ( ) Source: SNL Financial, as of 9/11/

15 Buy a Bank or Create from Scratch? Recent Shelf Charter Deals Investor group Number of acquisitions from FDIC Avg discount on assets (%) Avg deposit premium (%) North American Financial Holdings Inc Jefferson Bancorp Inc Bond Street Holdings LLC Community & Souther Holdings Inc Median for all failed bank deals since 1/1/ Source: SNL Financial, as of 7/22/

16 Failed Banks Sold by FDIC Failed Banks Sold by FDIC Avg Franchise Premium / Deposits (%)

17 Whole Bank Acquisitions Whole Bank Acquisitions Avg Price / Book (%)

18 Due Diligence: An Overview Objectives: Verify quality of assets and business being acquired Gain understanding of how target will perform in future business cycles Investigate red flags and identify unknown potential problems and negotiating points Identify any compliance and governance issues that can lead to liability and losses 18

19 Due Diligence: Areas of Focus Asset Quality: Loans Credit quality of loan portfolio Underwriting policies Review of loan files Adequacy of Allowance for Loan Losses Investment portfolio Other than temporary impairment analysis Liquidity 19

20 Due Diligence: Areas of Focus Funding Analysis: Cost of Funds Deposit demographics and concentrations Other Assets/Liabilities Deferred Taxes 20

21 Due Diligence: Areas of Focus Quality of Earnings: Identify non recurring gains and losses Sale of securities Sale of loans or other assets Ensure appropriate accruals Vacations, bonuses Remove one time and start-up costs Normalize FDIC fees 21

22 Due Diligence: Areas of Focus Regulatory Issues Understand relationship with regulatory agencies Review terms of formal or informal agreements Evaluate compliance function BSA/ALM/OFAC Compliance CRA Fair lending Review regulatory capital Deferred tax and other limits 22

23 Due Diligence: Areas of Focus Control Environment External Audit/Audit Committee Internal Audit function Policies and Procedures Information Technology Review contracts/service providers Evaluate capabilities and capacities 23

24 Regulatory Approvals for Business Plans Application process and criteria Three critical factors: Experienced management team with regulatory finesse Business plan Capital 24

25 Regulatory Approvals for Business Plans Three critical factors: Experienced management team with regulatory finesse Why is regulatory finesse required? 25

26 U.S. Bank Regulatory Jurisdiction Prior to Dodd-Frank Public Holding Company and/or Intermediate Holding Company Federal Reserve or OTS Non-Bank Subsidiary Federal Reserve or OTS Other regulators (SEC, State insurance departments, etc.) Bank or Thrift Primary Banking Regulators: OCC, OTS, Fed, FDIC, and/or State Other: FDIC as insurer NOTE: YELLOW BOXES REPRESENT POTENTIAL REGULATORS PRIOR TO DODD-FRANK Subsidiary of Bank or Thrift Same as above Other regulators (SEC, State insurance departments, etc.) Source: The Regulatory Fundamentals Group LLC 26

27 U.S. Bank Regulatory Jurisdiction After Dodd-Frank* * Shown after month transition period of OTS to other agencies Changes Affecting Financial Industry as a Whole (see details on following pages): Bureau of Consumer Financial Protection (new bureau) Office of Financial Research (new office) Limited Federal Preemption & Expanded Authority of State Attorneys General (new powers) Public Holding Company and/or Intermediate Holding Company Primary Regulators: Financial Stability Oversight Council ($50B in assets or systemically important), and FDIC (pursuant to liquidation authority, special examinations if $50B in assets or systemically important and not generally sound ), or Federal Reserve (financial, bank & thrift holding companies) Non-Bank Subsidiary Primary Banking Regulators: Federal Reserve Financial Stability Oversight Council (if systemically important) FDIC (pursuant to liquidation authority, special examinations if systemically important and not generally sound ) Back-up Regulator: Primary Regulator of bank or thrift as shown in box on the right (see ) Other Regulators: SEC, State insurance departments, etc. Back-up Regulator: FDIC (special examinations if not generally sound and engaging in conduct that poses foreseeable, material risk to the Deposit Insurance Fund) Bank or Thrift Primary Banking Regulators: OCC (national banks, federal thrifts & all thrift rulemaking) Fed (state Fed-member banks) FDIC (state thrifts except rulemaking, state chartered insured non-fed member banks) Chartering State Bureau of Consumer Financial Protection (exclusive consumer rulemaking authority; primary enforcement & exclusive examination if over $10B in assets; participates in exams if smaller) Back-Up Regulators: FDIC (special examinations of all divisions of insured depository to assess risk to Deposit Insurance Fund) Fed (to recommend action to primary regulator) FDIC Gains Additional Oversight Power (new powers) Source: The Regulatory Fundamentals Group LLC Subsidiary of Bank or Thrift Same as above Other regulators: (SEC, State insurance departments, etc.) State consumer financial laws apply 27

28 Effects of Dodd-Frank on U.S. Bank Regulatory Jurisdiction OFFICE OF THRIFT SUPERVISION (OTS) ELIMINATED See Title III, especially Federal Reserve assumes OTS powers over thrift holding companies and their non-bank subsidiaries; retains authority over state member banks, bank holding companies and their non-bank subsidiaries OCC assumes OTS powers over federal thrifts & rulemaking over all thrifts; retains authority over national banks FDIC assumes OTS powers over state thrifts (except rulemaking); retains authority over state non-fed member banks FINANCIAL STABILITY OVERSIGHT COUNCIL CREATED See Title I, especially 161(b), 162, 165 OFFICE OF FINANCIAL RESEARCH CREATED See Title I, especially 152 Identifies and assumes authority over systemically significant non-bank financial companies and bank holding companies with $50B+ in assets Enhances monitoring of systemic risk & prudential standards Sets policy and oversees bank regulatory agencies Subpoena power over any financial company (including bank holding companies, systemically important non-bank financial companies, companies predominantly engaged in activities that are financial in nature, insured depository institutions, and insurance companies) Authorized to collect and analyze data on behalf of the Financial Stability Oversight Council to assess threats to US financial stability and to issue regulations Research and Analysis Center to promote best practices for risk management, monitoring risk, and evaluating stress tests Source: The Regulatory Fundamentals Group LLC 28

29 Effects of Dodd-Frank on U.S. Bank Regulatory Jurisdiction BUREAU OF CONSUMER FINANCIAL PROTECTION CREATED See Title X CHANGES TO PREEMPTION LANDSCAPE See Title X, especially 1042 FDIC AUTHORITY EXPANDED See Title II and Revised Interagency MOU on Special Examinations (approved July 12, 2010) Exclusive rulemaking and supervisory authority for federal consumer financial laws over any person offering consumer financial products or services Exclusive consumer rulemaking authority over all banks/thrifts; primary enforcement and exclusive examination authority for banks/thrifts with over $10B in assets; may participate in exams of smaller banks/thrifts OCC state law preemption authority limited to case-by-case basis, and only with substantial evidence that law discriminates against national banks or prevents or significantly interferes with ability to engage in the business of banking Expands authority of state attorneys-general: state consumer financial laws fully applicable to subsidiaries and affiliates of national banks and thrifts may enforce any applicable laws against national banks may bring civil actions against national banks and federal thrifts to enforce regulations under Title X Continuous onsite staff presence at certain large depositories May conduct special examinations of any insured depository institution, bank holding company with $50B+ in assets, or systemically important non-bank financial company (limited to companies that are not generally sound ) Examinations may be conducted independent of primary regulator, and without need to prove a requisite level of risk Source: The Regulatory Fundamentals Group LLC 29

30 Regulatory Approvals for Business Plans Three critical factors: Experienced management team with regulatory finesse Business plan 30

31 What should business plans address? Regulators are very mindful of the causes of recent bank failures and what is occurring in the news When preparing your business plan, make sure to satisfy regulatory concerns related to recent bank failures. These concerns include: Lack of board and management oversight. Weak loan underwriting and credit administration practices. Deviation from the bank s business plan, in particular, by increasing loans for the acquisition, development and construction of real estate 31

32 What should business plans address? (continued) Reliance on wholesale funding sources, brokered and large time deposits, which are usually more expensive than consumer deposits Lack of management focus on concentration of loans in high risk sectors Management and Board failure to implement adequate risk management practices, particularly when assets grow rapidly Poorly monitored incentive and compensation programs Failure to adequately staff key operational areas Source: FDIC, Office of the Inspector General, Semiannual Report to the Congress, October 1, 2009 March 31,

33 On a More Quantitative Basis Regulators are likely to focus on key risk factors: Capital Leverage ratio Tier 1 and Total Risk Based Capital Ratios Concentrations Today particularly commercial real estate and Acquisition, Development and Construction Close review of pricing and underwriting standards where concentrations exist Close review of credit administration standards 33

34 On a more quantitative basis (continued) Credit and Asset Quality Adversely Classified Items Coverage Ratio (level of classified assets) Texas Ratio: nonperforming assets (loans and ΔREO) / (tangible common equity + loan loss reserve) Classified loans to total loans and to total assets Delinquencies in the 30-89, 90+ and nonaccrual categories ALLL (Allowance for Loan and Lease Losses) to Loans Ratio Net charge offs Other factors relating to specific business of bank being acquired 34

35 On a More Quantitative Basis (continued) Profitability ROAA (Return on Average Assets) The provisioning for the ALLL NIM (Net Interest Margin) Overhead Expense Ratio Funding Net Non-Core Funding Dependency Ratio, i.e. the level of non-core funding Assumptions concerning the direction of interest rates and review of simulation models Liquid Assets to funding Basel III is adding new components here that will trickle down over the next 5-10 years 35

36 CAMELS Rating Capital Adequacy: Capital commensurate with the nature and extent of risks and the ability of management to control these risks Asset Quality: The quantity of existing and potential credit risk associated with loan and investment portfolios, OREO and other assets, as well as off-balance sheet transactions Management: Capability of board of directors and management to identify, monitor, measure and control risk to ensure safe and efficient operation in compliance with applicable laws. Earnings: The quantity and trend of earnings and factors that may affect the sustainability or quality of earnings. Liquidity: Whether the institution will be able to maintain a level of liquidity sufficient to meet financial obligations in a timely manner and to fulfill legitimate banking needs of its community Sensitivity to Market Risk: The degree to which changes in interest rates, foreign exchange rates, commodity or equity prices can adversely affect earnings or economic capital Uniform Financial Institutions Rating System (UFIRS) as adopted by FFIEC in 1979 and revised in FRB Supervisory Letter (SUP). 36

37 Regulatory Approvals for Business Plans Three critical factors: Experienced management team with regulatory finesse Business plan Capital 37

38 Basel III: A Summary On September 12, the Group of Central Bank Governors and Heads of Supervision issued a press release announcing its full endorsement of the proposed reforms to the Basel III framework. The full press release can be accessed at Key concepts on capital and liquidity To be presented to the G-20 countries in Seoul, Korea on November for final approval 38

39 Basel III: Some Key Concepts on Capital Capital conversion buffer 2.5% required If below, payment of dividends and discretionary bonuses will be constrained Countercyclical buffer of 0-2.5% Leverage ratio Special rules to be developed for systemically important banks Key definitions are changing, e.g., Tier 1 capital no longer to include deferred tax assets or goodwill 39

40 Basel III: Some Key Concepts on Liquidity New ratios: Liquidity coverage ratio (30 days) Net stable funding ratio New regulatory tools: Contractual maturity mismatch Funding concentration Available unencumbered assets Market-related monitoring tools 40

41 Basel III: Capital Requirements 41

42 Basel III: Phase-in timing 42

43 Impact on Bank Acquisitions Higher capital, but probably not higher than U.S. regulators currently requiring for smaller transactions Increased focus on liquidity depending on implementation New reporting requirements with attendant costs for systems, data capture, etc. Impact may differ by type of acquirer Foreign Banks Systemically important institutions Complexity of determining ROA, etc. 43

44 Impact of New Accounting Rules FASB Exposure Draft (ED): Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities Comprehensively addresses accounting for all financial instruments Emphasis on fair value accounting IASB issuing multiple EDs to address financial instruments: IFRS 9 (Classification and Measurement) Impairment ED issued in November 2009 Hedge Accounting ED to be issued in

45 FASB Financial Instruments Exposure Draft Key Provisions: Recognition and Measurement Loans, equity securities, debt securities, loan commitments, deposits, other financial assets and liabilities Impairment Hedge Accounting Accrual of Interest Income Presentation and Disclosure Requirements 45

46 FASB Financial Instruments Exposure Draft Three Principal Categories of Financial Instruments: Fair value with changes in Fair Value recognized in net income (FV-NI) Fair value, with changes in fair value recognized in other comprehensive income (FV-OCI) Amortized Cost (limited to short-term receivables and payables and debt if qualifying criteria met) 46

47 FASB Financial Instruments ED FV-NI FV with changes recognized in Net Income: Initial and subsequent measurement at FV At inception, any difference between the transaction price and FV is immediately recognized as a gain or loss in net income; Must identify whether the transaction includes other elements Examples: Trading Instruments Derivatives Equities Hybrid instruments 47

48 FASB Financial Instruments ED: FV-OCI Debt instruments (assets or liabilities) may be classified as FV-OCI if three criteria are met: Cash flow characteristics Business Strategy Embedded derivatives not required to be separated FV-OCI instruments subject to credit impairment Examples: loans, debt instruments, certain beneficial interests 48

49 FASB Financial Instruments ED: Other Key Provisions New Impairment Model: Applicable to loans and debt instruments Eliminates incurred loss model and probability threshold for recognizing impairment Entity would recognize impairment when it does not expect to collect all contractual amounts due on an originated financial asset, or all amounts originally expected to collect upon acquisition of a purchased financial asset Would result in larger allowances at time of loan origination 49

50 FASB Financial Instruments ED: Other Key Provisions Deposit liabilities: requires that core deposits be measured each period at the present value of the average core deposit amount valuation is based on a present value method that is a hybrid between amortized cost and fair value deposits identified as a stable source of funds would be discounted at a rate equal to the difference between next best alternative source of funding and the all-in-cost-to-service rate over the implied maturity 50

51 FASB Financial Instruments Exposure Draft Implications: - Greater volatility in earnings and capital measures - Basel III would require OCI amounts to be included in regulatory capital; implementation of ED would increase volatility further - Need to consider risk-weights of target s assets and sources of capital - More complex analysis of deposit liabilities and asset impairment 51

52 Speaker Contact Information 52

53 Beth DeSimone, Counsel Beth DeSimone practices in the corporate and financial institutions areas. She advises on all aspects of financial regulation. Ms. DeSimone structures and negotiates mergers and acquisitions of, and investments in, financial services companies. She also focuses on establishing new financial institutions and nonbank subsidiaries and assisting institutions in strategic planning and charter review. In addition, she drafts and reviews necessary corporate documentation and regulatory applications for all types of financial entities and transactions. Ms. DeSimone also concentrates in the consumer banking area. She structures lending and deposit programs for banks and financial services companies, including lending programs that facilitate the exportation of interest rates from one state to another. She negotiates business alliances to expand consumer product and services opportunities to new customers, using new technologies. She also assists in structuring and resolving issues associated with card products and alliances of all types, including international remittance cards, payroll cards, government benefit cards, health savings account cards, gift cards, and other prepaid card products. Ms. DeSimone is a regular contributor to the blog on consumer marketing legal issues, Ms. DeSimone assists in resolving regulatory issues arising under mortgage and other lending activities, including those arising under the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, and the Truth in Lending Act, and assists clients in monitoring the effectiveness of their fair lending programs. She assists clients in monitoring proposed legislation and regulation and in understanding the implications of regulatory change. Ms. DeSimone received her JD from College of William and Mary in 1984 and her BA from Wheaton College in Arnold & Porter LLP, 555 Twelfth Street, NW, Washington, DC Beth.DeSimone@aporter.com 53

54 Deborah Prutzman, CEO Deborah Prutzman is the CEO of The Regulatory Fundamentals Group, LLC, a consulting company. RFG leverages more than 250 years of experience in the financial services industry to provide strategic business and investment advice incorporating a full appreciation of the complex regulatory environment. RFG has been retained by private investment groups and billion-dollar plus organizations to assist in developing and implementing their banking strategy, to coordinate due diligence at target banks and, more generally, to provide strategic advice relating to a possible entry into the US financial services space. Deborah has an exceptionally wide-ranging and deep background in the domestic and international financial services industry, with depth in regulatory risk management and corporate governance. She has earned a reputation for helping financial institutions thrive despite difficult business circumstances. In her varied career, Ms. Prutzman has served as a partner in Paul, Weiss, Rifkind, Wharton & Garrison and Arnold & Porter, where she concentrated on banking issues. As General Counsel to the Merrill Lynch Global Bank Group, she conceived and managed the reorganization of Merrill s US banking operations to create a full service federal thrift. Her 60+ person legal team handled regulatory and product issues with a focus on a knowledge management system to assure quality and consistency of results and business partner understanding of key issues. She served as General Counsel of CLS Services, the world s foreign exchange netting system during its start-up stages. In the absence of precedent, she developed rules and contracts that satisfied the laws and regulations of 13 jurisdictions and 63 shareholder institutions. At RFG she has assembled a team of similarly highly-skilled experts with decades of expertise in bank regulatory environments. Their objective is to bring clients a level of counsel, creativity and practical expertise that cuts across complex technical areas in a manner that is not readily available elsewhere. The Regulatory Fundamentals Group LLC, 222 Park Avenue South, Suite 7E, New York, NY x1 DPrutzman@RegFG.com 54

55 Thomas Rees, CPA, CFA, CFE Thomas G. Rees is a Managing Director in FTI s Forensic and Litigation Consulting practice located in King of Prussia, PA. He provides clients with a variety of consulting and litigation related services, including determining the accounting for complex transactions, conducting forensic accounting examinations, and preparing expert testimony. Mr. Rees also conducts due diligence on bank acquisitions and assists clients with bank regulatory issues. He has extensive experience researching and interpreting generally accepted accounting principles (GAAP) and specific expertise in capital markets and financial instruments including derivatives and securitization. He specializes in banking and regulatory matters, including fair value and impairment accounting issues, valuing complex securities, preparing SEC filings and accounting position papers, and helping to resolve the accounting, disclosure and other issues in SEC enforcement or bank regulatory actions. Mr. Rees previously served as the Deputy Chief Accountant at the Office of the Comptroller of the Currency (OCC), a Division of the U.S. Treasury Department responsible for regulating national banks. In his ten years with the OCC, Mr. Rees held management positions in the Chief Accountant s Office and the Treasury and Market Risk Division and was responsible for developing and interpreting supervisory policy relating to accounting, auditing, financial reporting, capital markets, risk-based capital and risk management. Tom is a frequent speaker at industry conferences on emerging accounting and other issues. Currently, he leads accounting seminars for the Center for Professional Education, Inc. and is an adjunct faculty member of the University of Maryland, University College. Mr. Rees holds an M.B.A. from the University of Delaware and a B.S. in Accounting from Arizona State University. He is a Certified Public Accountant, a Certified Fraud Examiner and a Chartered Financial Analyst and is a member if the of the CFA Institute and the American Institute of Certified Public Accountants. FTI Consulting, 660 American Avenue, Suite 104, King of Prussia PA thomas.rees@fticonsulting.com 55