St. Louis Fed Introduces New Online Tool for Prospective Bank Mergers and Acquisitions


ST. LOUIS — Any banking or thrift institution contemplating a merger or acquisition can now save effort and expense when performing critical research for the process by accessing a free, self-help online service recently developed by the Research division of the Federal Reserve Bank of St. Louis.

Dubbed "CASSIDI®" (Competitive Analysis and Structure Source Instrument for Depository Institutions), the new program is available at CASSIDI® enables anyone to search for banking market definitions, view banking market concentrations, and perform preliminary scenarios for prospective mergers or acquisitions, saving potential participants money and time.

"CASSIDI® is a one-stop shop for banking competition needs," said Adam Zaretsky, an economist with the Reserve Bank.

Attorney Leonard Essig, with the St. Louis-based law firm of Lewis, Rice & Fingersh LC, has found CASSID®I very helpful. "I've run several prospective scenarios for clients," he said, "and I'm confident when I use the system that it's giving me not only the correct market definitions, but also it's capturing all the banks and branches I need to make an accurate evaluation."

With information from financial institutions around the country and updated regularly, CASSIDI® allows participants to:

  1. Find virtually any financial institution and view information such as subsidiaries and branches, history and operating markets.
  2. Find a banking market, including a market definition, structure and concentration, history, and even a map.
  3. Perform a "what if" (pro forma) Herfindahl-Hirschmann Index (HHI) analysis. With this tool, participants can see how a potential merger or acquisition would change a banking market's concentration. Used by regulators to gauge the competitiveness of a market, HHI is computed by taking the sum of the square of 100 percent of each bank's share of deposits in the market and 50 percent of each thrift's share. A market with only one bank would have a ranking of 10,000, while a city with 10 banks each with 10 percent of the market would have an HHI of 1,000. Any merger for which the resulting HHI exceeds 1,800 or increases more than 200 points may attract more scrutiny from regulators.

With branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.

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