Designing an [Optimal ] Capital Structure

US Banker, September, 2005 by Thomas W. Killian

A number of developments in the past few years have dramatically changed the framework for evaluating capital structure alternatives for U.S. insured depository institutions of all sizes. First, the implementation of Financial Accounting Standards Board Statement No. 141, effective in 2001, precluded the use of pooling of interest accounting, thereby creating goodwill in premium merger transactions. Second, the adoption of FASB Interpretation No. 46 in 2003 disallowed General Accepted Accounting Principles recognition of minority interest treatment for trust preferred securities in favor of recognition as long-term debt. Third, the Federal Reserve's final capital rule in April confirmed the Tier 1 capital treatment of trust preferred, but mandated the deduction of goodwill from...

Read the full article with a Free Trial at MyWire.

Premium Content Partnership | MyWire provides an in-depth online archive library of reference works.