As a bank grows, there are a number of distinct advantages that can be gained through the formation of a bank holding company. Although disadvantages may also exist in specific situations, your organization may want to explore the opportunities of forming a holding company. Some of the more significant advantages include:
- Expansion of capital opportunities
- Reduction of after-tax cost of capital
- Potential opportunities to enhance liquidity and improve operating efficiency when more than one bank is under the holding company's ownership
- Vehicle to buy stock from shareholders who want to sell
- Opportunity to engage in a broad range of business activities, thus diversifying sources of revenue at the holding company level
- Flexibility in structuring corporate transactions that may be otherwise unavailable to an insured institution standing alone
DD&F can assist you in evaluating the advantages and disadvantages of forming a bank holding company in your specific situation. We will also assist you by structuring the transaction and, with your assistance, work with management to prepare the applications and pro forma financial statements as required by your regulators.