The first item on your regulatory due diligence procedure/checklist should be to make sure you have a representative on your bank's acquisition task force.
As the acquiring institution, you must make every effort to understand the regulatory successes and failures in the recent past--"recent" meaning the last supervisory exam cycle or two. The objective here is to determine if there's unfinished business that will attach to your company (as the new owner.)
You need to know what violations and systemic weaknesses were noted in the exam reports and related correspondence. Did the acquired bank's management and BOD agree to a course of action that would stop any ongoing violations and reasonably assure that these problems would not recur? Based on internal audits (and any sampling you might be able to do), did management actually DO what was promised?
Did any of those past violations trigger a formal enforcement action? If so, is the bank still under any enforcement order or agreement?
Did any past violations result in a referral from the bank's regulator to another agency? To what extent will this "unfinished business" transfer to you as the new owner? Will the cost of regulatory "clean-up" dictate a reduction in the acquisition price your bank offers?
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...gone fishing.
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