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Valuation of financial institutions
From M&A to CECL, RSM has the valuation solutions you need
Ongoing consolidation and continuing regulatory demands are driving valuation needs for financial institutions, especially for regional and community banks. With competition for both market share and talent increasing, many banks seek exit strategies, while others evaluate growth through acquisition, raising a myriad of mergers and acquisitions-related valuation and due diligence concerns.
With 85 years of experience serving the needs of more than 1,500 financial institutions across the country, RSM brings the range of experience and depth of understanding needed when confronting complex valuation issues, including:
Valuations for mergers and acquisitions
Whether buying or selling, you can count on RSM to quickly and accurately determine values of equity, as well as individual assets and liabilities. RSM works with management teams when they go through the vetting and due diligence process to determine the value of assets and liabilities of the target, and the resulting impact on capital.
RSM also provides the value of the acquired assets and assumed liabilities once an acquisition occurs for financial reporting purposes. We know how to get beneath the surface to address pressing issues, such as identifying specific factors that impact value, including portfolio concentrations, quality of underwriting, collateral values and strength of customer retention. Assets and liabilities of financial institutions that we value include:
- Commercial and consumer loans, including impaired loans
- Core deposit intangible assets
- Trust department and other customer-based intangible assets
- Real estate, including corporate headquarters, branches and other real estate owned, as well as favorable and unfavorable leases
- Leasehold improvements and other fixed assets
- Certificates of deposit
- FHLB advances and other borrowings
- Trust preferred securities and subordinated debt
- Contingent consideration
Valuations for management and tax planning
When bank ownership is considering a sale or a purchase, we work with management to help determine the value of their bank or a target. Targets not only include other institutions, but also branches and companies providing financial services.
When a bank is restructuring for tax purposes, or ownership is transferring stock, a valuation of the equity may also be needed. In valuing the equity of a bank or target, we consider multiple factors specific to the subject entity, such as historical performance, quality of management team, market focus and competitiveness of the market, as we analyze the market information on performance and pricing.
RSM understands financial institutions
The Financial Accounting Standards Board’s new current expected credit loss (CECL) rules and other evolving regulatory demands require sophisticated reporting and compliance capabilities. These include gathering and analyzing historical loan performance, as well as other market information, to apply to the current portfolio to estimate life of loan losses. Our financial institution valuation team is uniquely qualified to assist management with this process, routinely performing this analysis in the valuation of loan portfolios.
Our proven leadership serving financial institutions means we understand your industry and its challenges, as well as the unique realities of your institution. Combining our extensive experience, our deep team and our commitment to your success means timely and accurate valuation services that give you the information you need to make the right decisions in a challenging climate.
RSM’s financial institution valuation team is active in presenting and attending industry conferences, and training to stay on top of regulatory and market developments. These factors play a key role in the valuation of a bank and other financial service companies. The team is also active in the RSM’s CECL task force committee.
In addition, RSM’s national valuation team is comprised of industry thought leaders holding accreditations from the American Society of Appraisers, the Institute of Business Appraisers, the CFA Institute and the American Institute of CPAs. We constantly monitor accounting pronouncements and interpretations, and judicial precedents, to help ensure our approach is consistent with a constantly evolving regulatory environment.
How can we help you?
To discuss how our team can help your business, contact us by phone 800.274.3978 or
Suzanne Wonser Marra