Fair Value

Banks determine fair value (the value they can reasonably place on loans) using a variety of factors. Those factors include but are not limited to the following:

• Similar transactions for cash;
• Secondary market values of similar financial instruments;
• The credit standing of the debtor or guarantor
• Prevailing interest rates;
• Available pricing options
• Anticipated delays in receipt of payment; and
• Tax consequences

References

BC = Banking Circular
OCC = Bulletin

See also Accounting

Capital Treatment for FAS 166 and FAS 167 (ASC 860 & 810) (OCC 2010-5, February 2010), Final Rule

Accounting for Loan Swaps (BC 200, May 1985)
Provides guidance in accounting for loan swaps, principally of foreign borrowers