djasking

Good News from BMO; Write-Down for TD Bank?

I am not sure I see the argument for an impairment charge on goodwill associated with the purchase of Banknorth. Whether or not the return has met expectations, and it is far too early to tell, the assets have shown no sign of impairment. Impairment charges usually follow significant earnings declines. As for the name change, is that really where the value was centered, or was it the market share, branches, customers, account officers, and portfolio? Finally, as the article points out, goodwill is not included as capital for regulatory purposes, so what effect would an impairment charge really have other than to reduce taxable income and improve cash flow? All goodwill does is acknowledge the fact that the assets wouldn't otherwise trade at the lowly 1x book value.