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What is the definition of core deposit intangible?

Kyle Mckinney

in Student Loans

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Melissa Norris on May 29, 2018

a premium paid to acquire the core deposits of an institution. The premium is the amount paid in excess of the dollar amount of the deposits, and under accounting rules, the premium appears in the books of an intangible asset. Definitions of core deposits vary. Core deposits are defined by the Office of the Comptroller of the Currency (OCC) as "the deposit base". The deposit base, while usually not restricted, is generally based on stable customer relationships the bank can expect to maintain for an extended period of time. There are a variety of opinions with regard to the deposits constitute a financial institution's "core deposits"; however, the market forces of the particular financial institution should be considered in the determination of the deposits base. In general, in the more distant markets of metropolitan areas, there is less competitive environment, therefore, in the underground environments of CDs > 100k are not considered to be core deposits, certain Cds > 100k can be considered core deposits. Core deposits represent a stable source of money. The value of the core deposit intangible is derived from the difference between the cost of a strong core in comparison with the most favorable market alternative. The measurement of the initial core deposit intangible is achieved through the dissemination of the benefits over the economic life of the core deposits and the discounted back to their present value.


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