Definition of Default The definition of default used in the estimation of ECL is consistent with the definition of default used for internal credit risk management purposes. Loans are determined to be in default and classified as impaired when payments are contractually past due 90 days or more, when we have commenced realization proceedings, or when we are of the opinion that the loan should be regarded as impaired based on objective evidence. Objective evidence that a loan is impaired may include significant financial difficulty of a borrower, default or delinquency of a borrower, breach of loan covenants or conditions, or indications that a borrower will enter bankruptcy. Financial assets are reviewed on an ongoing basis to assess whether any should be classified as impaired. Loans that have become impaired are monitored closely by a specialized team with regular reviews of each loan and its realization plan. Impaired loans are returned to performing status when the timely collection of both principal and interest is reasonably assured and all delinquent principal and interest payments are brought current. Write-offs Financial assets are written off, either partially or in full, against the related allowance for credit losses when we conclude that there is no realistic prospect of future recovery in respect of those amounts. When financial assets are secured, this is generally after all collateral has been realized or transferred to us, or in certain circumstances, when the net realizable value of any collateral and other available information suggests that there is no reasonable expectation of further recovery. In subsequent periods, any recoveries of amounts previously written off are recorded as a reduction to the provision for credit losses in the consolidated statements of income. 3. ACQUISITION On June 1, 2020, we acquired 100% of the common shares of iA Investment Counsel Inc., comprising the businesses of T.E. Wealth and Leon Frazer & Associates (the wealth acquisition), in exchange for $86,816 cash. The wealth acquisition is accounted for in accordance with IFRS 3 Business Combinations as described in Note 1. The results of operations from the wealth acquisition have been included in our consolidated financial statements since the acquisition date. T.E. Wealth and Leon Frazer & Associates provide financial planning and wealth management services that target high-net-worth clients as well as investment management and financial education services to Indigenous communities. The wealth acquisition has a significant client base in Ontario as well as across Canada, including Quebec, Alberta and British Columbia.
Along with approximately $6 billion of off-balance sheet assets under management, advisement and administration, the following table summarizes the fair value of the assets acquired and liabilities assumed on the acquisition date:
June 1 2020 52,506 33,123
Assets and Liabilities Acquired at Fair Value
Goodwill
$
Intangible assets
Property and equipment
5,703 3,303
Cash and non-interest bearing deposits with financial institutions
Other assets (1)
10,384
Other liabilities (2)
(18,203)
Net Assets Acquired
$
86,816
(1) Includes accounts receivable of $9,870, with a carrying value which approximates fair value. (2) Includes a deferred tax liability of $7,767.
Intangible assets include customer relationships, brands, and software. Goodwill primarily reflects the value of future growth prospects and expected business synergies from combining the acquired businesses with our existing wealth management businesses. The goodwill and the majority of intangible assets are not deductible for income tax purposes. The operations of the wealth acquisition were included in our results for the full year ended October 31, 2021. From June 1, 2020 to October 31, 2020, the wealth acquisition contributed $14,681 of non-interest income and a net loss of $661, including after-tax acquisition and integration costs of $2,442 and amortization of acquisition-related intangible assets of $898. If the acquisition had occurred on November 1, 2019, the wealth acquisition would have contributed approximately $36 million to wealth management non-interest income and a net loss of approximately $2 million, including the estimated amortization of acquisition-related intangible assets of approximately $2 million, to the year ended October 31, 2020.
CWB Financial Group 2021 Annual Report | 77
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