How do fair-value marks work in bank M&A, and why do interest-rate marks 'come back' through earnings?

At close, the target's loans, securities, and even deposits/debt are restated to fair value. RATE marks arise when acquired fixed-rate assets carry below-market coupons: they are written down, cutting day-one tangible book, but the discount then ACCRETES back into interest income over the assets' remaining life — mechanically boosting the pro forma NIM and EPS, which is why high-rate environments produce ugly TBV dilution but flattering accretion. CREDIT marks absorb expected loan losses; under CECL, non-purchase-credit-deteriorated loans additionally require a day-two allowance built through the provision line — the much-complained-about 'CECL double count.' Sophisticated investors discount accretion-driven earnings because they are a wasting, non-cash tailwind.