|The following are some examples of the kinds of attributes and situations,
which prompt a premium valuation to be calculated:
- Credit Quality, as evidenced by original credit criteria,
credit bureau risk scores, behavior scores, bankruptcy scores,
and the trends of those score patterns.
- Attrition Rate, the percentage of accounts and balances
(and the profitability of those accounts), that close voluntarily
(customer requested closure) vs. involuntary (bank revoked).
- Income Yields, the APR, annual fee structure, nuisance
fee structure, teaser rates outstanding, the percentage revolving.
- Open vs. Closed, the percentage of accounts and balances,
that are open to buy vs. those that are closed (but who also may
be paying as agreed and, therefore, not delinquent).
- The Policies and Processes at the seller and the degree
to which those vary from those of the buyer, creating improvement
- The Data Processor of the seller, and that of the buyer,
necessitating a conversation of accounts or merely a simple transfer
- The ROE/ROA hurdle rates at the buyer, the minimum returns
- The Operating Expense of the buyer.
- The Life Span/Premium Amortization Period used by the
buyer, typically 7-10 years.
- Any unusual liabilities or other conditions, that are
to be assumed by the buyer (i.e., facility, staff, equipment,
- Portfolio size, as most successful buyers have some "minimum