The MPS Deposit Intangible Valuation Service provides the purchase accounting entries required for compliance with FAS 141. Custom estimates of the fair value, economic life, and amortization period associated with acquired core deposits are specifically produced for compliance purposes. Value estimates can also be produced for acquired CD’s and loans.
With this MPS service, your institution is empowered to:
- Determine the core deposit intangible, useful economic life, and amortization period values required to complete the accounting entries for FAS 141 compliance
- Support the value paid for acquired deposits in any transaction to investors, stock analysts, and other capital market participants
- Establish the values of acquired CD's and loans, to correctly set up purchased accounting treatments for these elements of transaction value
- Retrospectively determine the core deposit intangible, useful economic life, and amortization period values required to complete the accounting entries for FAS 147 compliance
- Understand deposit valuation from the buyer's and seller's perspectives to aid in negotiations
MPS Core Deposit Intangible Valuation Report
This report is for managers who need to determine the core deposit intangible (CDI) value, useful economic life, and amortization specification for acquired deposits (e.g. branch or whole-bank purchase) to meet requirements for FAS 141 reporting. CD’s and loans can also be valued for purchase accounting treatments.
Reports match specific characteristics of the acquired deposits to the valuations by using custom inputs for value drivers such as non-interest expense and immediate balance outflows. Run off balances used to calculate useful economic lives and verify amortization method (accelerated or straight line) are unique to each report. They are selected based on the geographic location of the acquired deposits and other characteristics.
Run off balances data are derived from core deposit forecasts produced by MPS as part of analyzing specific client data for individual core deposit accounts. Run off is based on aggregated information representing billions of dollars of deposits and the individual decisions of millions of depositors, as reflected in specific monthly records. No other core deposit intangible valuation service employs such precise and audit defensible term related data.
MPS employs the preferred “alternative funding” method for calculating CDI values, customized by applying local FHLB district term advance rates as discount rates or user specified inputs. The superiority of MPS methodologies is evidenced in the hundreds of reports delivered to clients and accepted by their accounting firms and regulators over the last several years.