Capital

Intangible Assets

Also known as Intangibles

Intangible assets are non-physical assets other than goodwill — core deposit intangibles, customer relationships, and certain servicing rights. Most are deducted from regulatory capital, so like goodwill they widen the gap between book and tangible equity.

Formula

Reported on Schedule RC separately from goodwill. Core deposit intangibles arise in acquisitions to value the acquired deposit base; they amortize over time. Most intangibles are deducted from CET1 capital, though limited mortgage servicing assets can be partially included.

Why it matters

Intangibles, with goodwill, are what separate book equity from tangible common equity. They reflect acquisition activity and, because regulators largely disallow them, they overstate the capital actually available to absorb losses.

How to interpret

Read intangibles alongside goodwill and tangible common equity. Amortizing intangibles shrink over time, so a high balance at a recently acquisitive bank will decline; the key question is how much of reported equity survives once all intangibles are stripped out.

Thresholds

Worked example

Frequently asked