Asset Purchases

alt_moonHow ARCSys
Can Support You

CECL requires new Asset Purchases guidance for loan pool purchases and mergers. ARCSys statistical modeling and additional services can support your Fair Market Value calculations when valuing purchased financial assets. Under CECL, allowances are now considered part of the purchase accounting process. It is imperative to ensure the allowances calculated are equal to the acquirer’s allowances from Day 1.

alt_how_arcsys_can_support_you

alt_moonOur Process

alt_our_process
  • alt_model_purchasesRecommendation of segment class identification for continuous model purchases
  • alt_calculationCalculation of expected allowance at purchase
  • alt_estimation_of_fairEstimation of fair value based on liquidity risk, interest rate risk, prepayment risk, and credit risk
  • detailed_reportsDetailed reports on the analysis of the Fair Market Value determination

The best CECL analytics are built with

Key Changes in
Merger Accounting

alt_market_value CECL allowances are calculated by the acquirer as part of the Fair Market Value calculation and posted through the merger journal entries
alt_provision_account Changes in CECL allowances after a merger are run through a provision account
alt_loans_investments Allowances are required for loans and investments

Key Changes in
Purchase Loan Accounting

alt_purchased_credit_deteriorated Determination of Purchased Credit Deteriorated (PCD) determined before purchase
alt_fair_market_value CECL allowances are calculated by the acquirer as part of the Fair Market Value calculation and posted through the purchased accounting journal entries
alt_changes_in_cecl Changes in CECL allowances after a merger are run through a provision account
alt_the_acquirer_after_the_merger

It is imperative that the allowance prescribed at the merger is utilizing the same method and model that will be applied by the acquirer after the merger.

alt_moonARCSys Consulting