The Federal Bank of St Louis is introducing a new online tool for prospective bank mergers and acquisitions.
The free, self-help online service, dubbed ‘CASSIDI’ (Competitive Analysis and Structure Source Instrument for Depository Institutions), is available at cassidi.stlouisfed.org.
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.
With information from financial institutions around the country and updated regularly, CASSIDI allows participants to find financial institutions and view information such as subsidiaries and branches, and history and operating markets.
Searches can also be performed for banking market, including a market definition, structure and concentration, history, and even a map.
A ‘what if’ (pro forma) Herfindahl-Hirschmann Index (HHI) analysis is also provided. 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% of each bank’s share of deposits in the market and 50% 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% 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.