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Measuring Risk During Growth | Due Diligence and Acquisitions

November 15, 2017
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Due Diligence and Acquisitions

 Top Questions To Address For Due Diligence and Acquisitions

Each business day, a bank or credit union gets acquired by another in the United States. Smaller financial institutions are consolidating at a clip of five percent a year. The number of banks above $1 billion in assets has grown over 10% since 2012. When talking with CEOs of financial institutions, most institutions that have grown over $1 billion in assets want to be over $10 billion in just a few years. Those institutions over $10 billion want to grow equally as fast to $50 billion.

While some of this growth will come organically, the majority will come via mergers and acquisitions. These activities come loaded with risk—reputational risk, operational risk, market risk, credit risk, and compliance risk.

When acquiring new institutions, measuring your risk of BSA/AML compliance is an important part of the due diligence process. Financial institutions should prepare for increased regulatory scrutiny to avoid liability and penalties.


Here are some questions you should try to answer before, during, and after your due diligence:

  • Do you have the expertise to analyze the other’s institution’s BSA/AML program?
  • What if the other institution is using an outdated monitoring tool or is manual in their review of suspicious activity?
  • What skills will you acquire from the other institution’s team?
  • What new lines of business will the combined entity enter?
  • Do you have the proper risk mitigation in place for those lines of business?
  • Will the acquisition result in lookbacks that will impact your ability to stay current on daily work?
  • How will you merge the two institutions’ customer or member bases into one monitoring solution?

As your institution grows make sure you do your due diligence and develop a plan of implementation for a strong culture of compliance.

Banker’s Toolbox is committed to helping institutions grow successfully. We’ve had years of experience helping institutions of all sizes successfully navigate the risk associated with BSA and AML concerns. With our large customer base, we see institutions that make acquisitions often and we help them navigate the risk assessments that need to happen during the due diligence process of acquiring another institution.


M&A Compliance Resources:

A strong culture of compliance needs to be in place to have a successful acquisition. Discover how to evaluate the target financial institution’s BSA risk, evaluate the target financial institution’s BSA compliance, and develop a successful integration plan. Take home resources to help guide you through these acquisitions.


Banker’s Toolbox believes in “Success. Not JUST Software”. This rings true especially during times of growth. Learn more from our customers’ testimonials. Our BSA/AML software paired with our team of experts arms you with the tools you need to have a successful merger/acquisitions. Find out how we can help your institution navigate the compliance risk associated with BSA and AML concerns during times of growth. Ask the experts!

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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