Financial Reporting Services
for Banks
The current financial reporting environment for banks is marked by a movement from historical cost to fair value accounting with an attendant increase in the complexity of accounting measurements
Recent Work
Portfolio Valuations
Valuations of equity (common and preferred), debt, and esoteric structured securities issued by banks and held by investment fund clients
Loans
Numerous valuations of loan portfolios with unpaid principal balances of less than $100 million to over $10 billion for financial reporting related to business combinations and periodic fair value disclosures
Deposits
Valuations of depositor customer relationship (core deposit) intangible assets, as well as mark-to-market adjustments for fixed term deposits
Other Liabilities
Valuations of bank borrowings, subordinated debt, and trust preferred securities for financial reporting related to business combinations and periodic fair value disclosures
Contingent Consideration
Valuation of earn-outs, loss-share agreements, and the like for purposes of estimating the total transaction consideration and recognizing other contingent assets and liabilities
Goodwill
Determination of the fair value of reporting units for purposes of completing goodwill impairment tests
What We Do
Services Overview
Mercer Capital’s professionals possess a knowledge of relevant accounting pronouncements and have expertise in valuation techniques appropriate for financial statement reporting.
For financial reporting compliance, Mercer Capital provides valuation services regarding:
Company securities issued in specific transactions
Customer relationships, including depository relationships (also referred to as core deposit intangible assets)
Non-competition and employment agreements
Preferred stock, trust preferred securities and other non-equity instruments
Other unique contractual or separable intangibles recorded under ASC 805 (formerly SFAS 141R)
Mark-to-market analysis of loan and deposit portfolios
Impairment tests regarding goodwill and other intangible assets
Equity or equity-linked instruments issued as compensation
Restricted stock
Service Focus
Loan Portfolio Valuation
Mercer Capital professionals have extensive experience in valuing loan portfolios for M&A transactions, financial and tax reporting, and transactions requiring an independent determination of fair value.
Mercer Capital performs purchase price allocations on 10% to 15% of announced bank deals
Recurring valuations to assist clients in complying with the fair value disclosures required under ASU 2016-01
Diligence on behalf of potential acquirers or targets for purposes of assessing the pro forma financial impact of transactions
Transaction structuring, regulatory and tax compliance, and financial reporting related to sub-portfolios of loans transferred in
discrete transactions, such as related party transactions and spin-outs to non-bank workout entities
Portfolios range from clean to highly distressed, with portfolios ranging in size from one loan to over $10 billion in unpaid principal
Mercer Capital’s loan valuations are thoroughly documented and have been reviewed by the primary accounting firms serving the financial services industry
Service Focus
Goodwill Impairment Testing
Mercer Capital provides goodwill impairment testing and intangible asset valuation services grounded in deep valuation expertise, financial reporting knowledge, and a thorough understanding of the financial services industry. We assist financial institutions nationwide with independent fair value opinions for reporting units under ASC 350, including Step 1 impairment testing.
Key Contacts
Newsletter
Bank Watch Newsletter
Brought to you by the Financial Institutions Team of Mercer Capital, these monthly newsletters are focused on bank activity in five U.S. regions. Each edition of Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions in your region, providing insight into financial institution valuation issues.