Failed Banks Competency Center
While acquiring a troubled financial institution is a likely topic of discussion at every bank's board meetings and at many private equity firms, the process of moving from the boardroom to the playing field is complicated. Even for institutions that are serial acquirers, the rules of engagement are difficult to follow and seem to change with each new deal. Crowe Horwath provides guidance surrounding the entire life of a deal, starting with pre-deal considerations, continuing through the acquisition process, and ending with the integration of the newly acquired entity, as well as lessons learned and insights gained from extensive experience helping clients navigate the complexities of acquiring failed institutions as well as from what happens once the deal is done.
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Valuing Core Deposit Customer Intangibles A core deposit intangible (CDI) asset arises in an acquisition when an acquired bank has a stable deposit base composed of funds associated with long-term customer relationships. The intangible asset value derives from customer relationships that provide a low-cost source of funding. CDIs are common assets, as most acquired banks have some level of stable depositors to whom they pay interest at a rate lower than the rate they would pay alternative funding sources.
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