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Originally published February 11, 2011 in Crain’s Detroit Business by Tom Henderson

ADVISERS: DPP & Partners; Schiff Hardin LLP, Crowe Horwarth LLP

There ought to have been another category for Level One Bank of Farmington Hills to enter for this year’s M&A Awards: Most difficult deal.

Its acquisition of four branches of Farmington Hills-based Paramount Bank on Dec. 10 after the struggling bank was shut by state and federal regulators was anything but normal.

“Usually, you get a 90-day time frame for these FDIC-assisted deals,” said Level One CEO and President Patrick Fehring, who had bought $180 million in assets from Farmington Hills-based Michigan Heritage Bank when it was shut by regulators in April 2009.

“We got a call from the FDIC the week before Thanksgiving inviting us to get involved in the Paramount situation,” said Fehring.

The invitation to put in a bid came with a caveat: Regulators at the Federal Deposit Insurance Corp. wanted the relatively young community bank — it began operations in 2007 and had about $240 million in assets — to raise an additional $8 million in equity capital before the deal could close.

As of Sept. 30, Paramount had $253 million in assets and $214 million in deposits

“I said, “No problem. We have the normal 90 days, right? We can be ready by then.'”

” “No,’ they said, “you have about 20 to 30 days,’ ” Fehring recounted.

Things proceeded at a frantic pace. He had to get approval from his board, enlist investment banker Donnelly Penman & Partners of Grosse Pointe, get an offering document put together and circulated among would-be investors and get commitments signed. Not to mention doing the due diligence of Paramount and its troubled books to see if a deal was worth doing.

“It made it very exciting,” said Fehring. “We’d get the offering in people’s hands and they’d say, “We’ll get back to you in a couple of weeks.’ And we’d say, “No, you’ve got two days.’ ”

By early December, he’d raised the $8 million. On Dec. 10, a Friday, the deal closed. That Monday, all four Paramount branches opened as Level One branches.

By | February 11, 2011