Category Archives:Subchapter S Bank Association

Kennedy Sutherland Presenting at Bank Holding Company Association Seminar

Join Kennedy Sutherland attorneys, Patrick J. Kennedy Jr. and Dub Sutherland, as they present at the 2015 Bank Holding Company Association Spring Seminar in Bloomington, Minneapolis on May 4th, 2015. The seminar will “Build on a Foundation of Success,” giving financial institutions the information & networking opportunities they need to take their bank holding company to the next level. The seminar is bigger & better than ever with an expanded Monday session, more breakout sessions, & outstanding speakers.

This year Kennedy Sutherland will be part of a new special two-part session that will look at the current issues affecting Sub S banks and holding companies, and investment strategies designed to make the most of a sub S election.


MONDAY, May 4, 2015

2:30 p.m. ~ Registration Desk Opens

3:00 p.m. to 4:00 p.m. ~ “Sub S Issues & Opportunities”
Kevin Powers of Crowe Horwath, LLP, will look at the current issues facing holding companies and banks incorporated under subchapter S rules and compare C vs. S in the current tax environment.

William D. “Dub” Sutherland of Kennedy Sutheland LLP will discuss challenges and opportunities in managing Sub S shareholders, Board and Bank, including specific thoughts on succession planning.

4:00 p.m. to 5:00 p.m. ~ “How to Leverage Your Sub S Election”

Randy Rouse, executive vice president and chief investment officer of Broadway Bank, will share his bank’s investment strategy for making the most of its S election. Broadway is a $2.4 billion community bank in San Antonio, Texas. He is a regular presenter at the annual conference of the Subchapter S Bank Association and is making his first BHCA seminar presentation.

Patrick Kennedy, Jr. of Kennedy Sutherland LLP will provide the most current update on legislative and regulatory matters affecting Subchapter S banks, including discussion of the Association’s Capital Access Initiative as well as other legislative opportunities.

5:00 p.m. to 6:30 p.m. ~ Reception

6:30 p.m. to 7:30 p.m. ~ Dinner

7:30 p.m. to 8:30 p.m. ~ “Eyeing Rates and Other Economic Indicators”

Economist Edmund Seifried will survey the economic landscape, identifying the areas of potential trouble and opportunity for community bank owners. Seifried is the chief economist of the Sheshunoff Affiliation Programs and serves on the faculty of several banking schools.

View the Full Agenda

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S Corporations & Charitable Donations

The principal limitations on S corporations generally relate to the types of entities that can elect Subchapter S treatment and the number and types of shareholders that can own stock in such an entity. These limitations have evolved in a myriad of ways over the last twenty years to significantly expand the versatility of the S corporation as a choice of entity. This article will focus on the expansion of eligible shareholders to include charitable organizations, and the implications this change has on both shareholders who wish to make charitable contributions of S corporation stock and organizations that wish to accept such gifts. Importantly, shareholders seeking to contribute S corporation stock to a charity and organizations seeking to accept such contributions should be fully aware of the tax consequences to both parties that may result from such a gift.

Prior to 1998, Internal Revenue Code (“Code”) Section 1361 provided that only individuals, estates, and certain trusts could own stock in a Subchapter S corporation. A transfer of stock to an ineligible person (such as a non-U.S. resident) or entity would trigger a termination of the S election and tax treatment under general corporate income tax laws, including double taxation and other unfavorable provisions avoided via passthrough tax treatment. Depending on when such a transfer was discovered by the corporation or the Internal Revenue Service (“IRS”) the result could be substantial back taxes and penalties. At that time, S corporations were also limited to 35 shareholders and members of a family could not be treated as a single shareholder. In 1997, Congress enacted The Small Business Job Protection Act of 1996 (P.L. 104-88), a wide-ranging piece of legislation that contained a number of S corporation tax reforms. For example, the shareholder limit was increased to 75, the definition of trusts eligible to hold S corporation stock was expanded, and, importantly, banks were added to the list of organizations eligible to elect passthrough tax treatment under Subchapter S. In addition to these and other changes, however, the strict limitation on owners of S corporation stock was expanded to include an entirely new entity type – exempt organizations.

The Small Business Job Protection Act of 1996 amended Code Section 1361(b)(1)(B) to provide that an S corporation includes any eligible corporation which does not “have as a shareholder a person (other than an estate, a trust described in subsection (c)(2), or an organization described in subsection (c)(6)) who is not an individual…” Further, Section 1361(c)(6) permits organizations which are “(A) described in section 401(a) or 501(c)(3), and (B) exempt from taxation under section 501(a)” to hold S corporation stock. The result of these provisions was to allow tax-exempt charities and tax-exempt retirement plans (including employee stock ownership plans “ESOPs” but not individual retirement accounts “IRAs”) to own S corporation stock. Beginning in 1998, S corporation shareholders could now make gifts of their S corporation stock to charitable organizations. Due to the nature of S corporations as closely-held businesses, S corporation stock may be, by far, the most valuable asset held by these potential donors – and the only means they have of making a substantial charitable donation. Conversely, charitable organizations now have access to a new, potentially large, source of giving – shares of closely-held, S corporation stock. While this increased flexibility with respect to S corporation stock and charitable giving may be welcome by both shareholders and charities, alike, there are important potential tax consequences from both the donor’s and charity’s perspective that must be fully appreciated.


Three of the major issues associated with making a donation of S corporation stock to a charity are: (1) whether the stock is subject to any transfer restrictions; (2) whether the donor or S corporation are comfortable with giving a charitable organization legal rights in the S corporation; and (3) whether the donor will be able to deduct the full, appreciated value of the stock for income tax purposes.

Transfer Restrictions

An important component of the organization and management of an S corporation is the shareholder agreement. Because of the closely-held nature of S corporations, many shareholder agreements impose restrictions on the transfer of stock among individuals. For example, transfers of stock may require notice to and approval by the board of directors of the S corporation or independent legal opinions that the transfer will not cause an inadvertent termination of the corporation’s S election. These transfer restrictions are utilized both to protect the S corporation from a termination and the associated tax liability and to guide the trajectory and management of the corporation. In fact, some shareholder agreements impose an outright prohibition on ownership of stock by 501(c)(3) organizations. Comprehensive shareholder agreements and transfer restrictions are especially important in the case of Subchapter S banks, which tend to have larger and more diverse shareholder groups. Finally, transfer restrictions could also prevent the charity from selling the stock after the gift has been made. Before deciding to gift S corporation stock to a charity, a donor must ensure that such a transfer is permissible under the S corporation’s shareholder agreement and that any preconditions to transfer, such as notice and approval by the board are strictly followed.

Legal Rights

Once a review of the shareholder agreement has confirmed no legal restrictions on a gift of stock to a charity, a donor must determine whether he or she is willing to grant the charitable organizations legal rights in the S corporation that are associated with being a shareholder. While this may not be a serious issue for an S corporation with a large shareholder group, any gift of stock to a charity will confer ownership rights (albeit minority ownership rights) to that charity. In the case of an individual who owns all or substantially all of the stock of an S corporation, they will be ceding some control of that entity to the charitable organization and should appreciate that before making such a gift. Additionally, depending on the transfer restrictions set forth in the shareholder agreement, a donor must be comfortable with a potential sale of the stock by the charity to a third party.

Charitable Deduction

A donor of S corporation stock must also be aware of the rules regarding charitable deductions. First, under Code Section 170(f)(8), gifts in excess of $250 require proof of the donation in the form of a “contemporaneous written acknowledgement” from the charity. This acknowledgement must list the amount of any cash and description of any property contributed, state whether the charity provided any goods or services in consideration for the property received, and provide an estimate of the value of such goods or property provided to the donor. Second, to the extent the value of the stock exceeds $5,000 the donor must complete all or a part of IRS Form 8283 and file with his or her income tax return in the year of the gift. If the value of the stock exceeds $10,000 the donor is required to obtain a “qualified appraisal” from a “qualified appraiser” that includes specific information required by the Code and Treasury Regulations. An appraisal summary and Form 8283 signed by both the donor and appraisal must be included with the donor’s tax return. Finally, a donor must be aware that the income tax deduction associated with the gift of the stock will often be less than the appraised value of the stock.

Contributions of appreciated stock are generally a favorable vehicle for making large charitable contributions. Such a contribution produces tax benefits for both the donor and the donee. Not only will the donor receive a tax deduction for the full appraised value of the stock, but the donor also avoids recognizing any gain related to the appreciation of the stock. The charity will also not be subject to tax on the dividends or passive income realized from holding the stock as an investment, nor will it be taxed on the gain on sale of the stock. The rules change, however, in the case of an S corporation.

For purposes of calculating the corresponding charitable tax deduction, a gift of S corporation stock is treated like a gift of a partnership interest. Code Section 170(e)(1), which sets forth the rules governing charitable deductions for contributions of ordinary income and capital gain property states in part that:

“For purposes of applying this paragraph in the case of a charitable contribution of stock in an S corporation, rules similar to the rules of section 751 shall apply in determining whether gain on such stock would have been long-term capital gain if such stock were sold by the taxpayer.”

Under these rules, the charitable deduction allowed is equal to the appraised value of the stock less the proportionate share of ordinary income the donor would have recognized upon liquidation of the S corporation. Essentially, a hypothetical liquidation of the S corporation takes place and all proceeds are distributed to its shareholders. To the extent the shareholders proportionate share of the distribution would produce ordinary income (e.g. inventory or depreciation recapture) versus a capital gain, the donor’s charitable deduction would be reduced by that amount. As such, donors may lose some of the value that would be associated with a gift of appreciated stock of a C corporation. Donors relying on the charitable deduction from a gift of S corporation stock to reduce tax liability must take care to calculate the appropriate amount of the deduction.


A charitable donation of S corporation stock can also present tax challenges for the charitable organization receiving the gift. As previously mentioned a gift of C corporation stock to a charitable organization generally does not result in any tax liability to the charity either while the charity holds the investment and receives dividends on the stock or when the charity later disposes of the stock. Conversely, in the hands of a tax-exempt organization, S corporation stock would subject the entity to unrelated business income tax (“UBIT”) on both distributions made  to the charity while it held the stock, as well as on the gain on sale of the S corporation stock. UBIT seeks to prevent the shifting of business assets from a taxable corporation to tax-exempt entities. In furtherance of this purpose, Code section 512(e) imposes UBIT on 501(c)(3) charitable organizations, and 401(a) qualified plans such as 401Ks that hold S corporation stock.  Such entities are subject to UBIT on all items of income, loss, or deduction that flow through to the entity as an owner of S corporation stock and also on any gain or loss from the disposition of that S corporation stock. Depending on the organizational structure of the entity (e.g. corporation or trust) the UBIT rate is equal to the top tax rate for that entity.

Careful planning on the part of the exempt organization is crucial to ensure that distributions from the S corporation are sufficient to cover any UBIT liability during the time period that the organization plans to hold the stock. This may include reviewing the S corporation’s distribution policies and financial projections and specifically addressing the issue of distributions to cover taxes with the S corporation prior to accepting any gifts of stock. This issue may be of particular concern to charities reviewing a potential gift of stock of an S corporation bank – where federal banking agency regulations may limit or prohibit shareholder distributions based on bank capital requirements. Tax-exempt organizations must also be aware of the donor’s basis in the stock. When the stock is transferred to the charity, the charity assumes the donor’s basis. Upon disposition, the charity will be liable for UBIT on the difference between the sale price of the stock and the basis transferred from the donor. Charities that receive gifts of stock with a very low basis will be subject to a larger tax liability when they later dispose of the stock. Whether a charity plans to hold the S corporation stock for a long time, or dispose of it quickly, they must factor in the ability to satisfy this tax liability.


The ability for tax exempt charitable organizations to own S corporation stock opened up an avenue for charitable giving to individuals who own closely-held S corporations and whose largest asset is often the stock in that corporation. It also gave these charities access to a new form of corporate giving. Charitable donations of S corporation stock, however, require detailed review and analysis of both the practical and economic consequences of the gift as well as the tax consequences to both the donor and the charity. By gifting appreciated S corporation stock, donors potentially risk a part of their charitable deduction depending on the amount of ordinary income they would be deemed to receive in a hypothetical liquidation of the S corporation. From a charity’s perspective, assurance of sufficient distributions is essential to ensure the tax-exempt organization has cash to cover UBIT liability associated with income earned on the S corporation stock. The charity also must know the basis in the stock to calculate the tax liability on its eventual disposition and be able to properly value the charitable contribution. Both parties should carefully determine whether the responsibilities and restrictions associated with holding S corporation stock make a charitable donation of that stock a worthwhile endeavor for each party.

For more information or questions regarding Charitable Donations of S Corporation Stock and Charities as S Corporation Shareholders contact Patrick J. Kennedy, Jr.

Shareholder Divorce for S Corps

One of the most important aspects of managing an S corporation shareholder group is knowing when and how the family attribution rules apply to treat multiple shareholders within the same family as a single shareholder for purposes of the 100 shareholder limit. Due to apparently conflicting provisions in the Internal Revenue Code (the “Code”) and Treasury Regulations (the “Regulations”) there is often confusion regarding how to treat a married couple that later divorces. Originally, the Code and Regulations treated spouses as a single shareholder and upon divorce, as separate shareholders. The enactment of the family attribution rules in 2004, however, changed this rule so that both spouses and former spouses would always be treated as a single shareholder. While seemingly a minor distinction, noting this rule may be important for S corporations that are approaching the 100 shareholder limit.

The general rule applying to married couples and family is found in Code Section 1361(c)(1)(A):

For purposes of subsection (b)(1)(A) [referring to the shareholder limit], there shall be treated as one shareholder –
(i) a husband and wife (and their estates), and
(ii) all members of a family (and their estates).

The Regulations go on to state that this treatment “will cease upon dissolution of the marriage for any reason other than death.”  Reading these two provisions alone, it appears clear that spouses are treated as a single shareholder, but on divorce they are treated as separate shareholders. The later enacted provisions describing the family attribution rules, however, contradict this clear cut rule.

Code Section 1361(c)(1)(B)(i) provides that for purposes of the family attribution rules “the term ‘members of a family’ means a common ancestor, any lineal descendant of such common ancestor, and any spouse or former spouse of such common ancestor or any such lineal descendant.” (emphasis added). The Regulations go on to reiterate this family attribution rule that both a spouse and a former spouse will continue to be treated as a member of the family. The result is a contradiction between Regulation Section 1.1361-1(e)(2) and Regulation Section 1.1361-1(e)(3), stating first that upon divorce spouses are treated as separate shareholders and later that spouses and former spouses are treated as members of a family, and thus, as a single shareholder.

This contradiction resulted from a drafting error when the family attribution rules were enacted in 2004. Congress should have repealed earlier-enacted provision dealing solely with a husband and wife, which were later subsumed within the broader family attribution rules. This was likely not done because the Code sections merely reveal a redundancy between Code subsections (c)(1)(A)(i) and (c)(1)(A)(ii) and the contradictory provision appears in the Regulations enacted thereunder.

In summary, spouses and former spouses (whether by divorce, death, or otherwise) should always be treated as a single shareholder due to the “family attribution rules.” In discussing this issue with a colleague, I discovered a useful analogy: “The family attribution rules are like the mob. Once you’re in the family, you’re always in the family.”

For questions or more information regarding Shareholder Divorce and the Family Attribution Rules for S Corps contact Patrick J. Kennedy, Jr.

Kennedy Sutherland to Speak at Bank Holding Company Association's Seminar

Patrick J. Kennedy, Jr., managing partner of Kennedy Sutherland LLP, will be speaking at the Bank Holding Company Association’s Fall Seminar scheduled for October 6-7 at the Minneapolis Airport Marriott Hotel. Mr. Kennedy will be speaking at the Breakout session on Tuesday on Access to Capital and other Subchapter S Bank Issues for bank holding companies. You can register for the conference here.


MONDAY, Oct. 6, 2014

5:00 p.m. to 6:30 p.m.   ~   Registration and reception
6:30 p.m. to 8:30 p.m.   ~   Dinner and program

“Leadership Lessons from Two World Series” Al Newman played for the Minnesota Twins from 1987 to 1991, just long enough to play in two World Series. The switch-hitter filled in where needed, including second base, third base, shortstop and left field. In 1990, he was part of a record-setting two triple plays in a single game. Also playing for the Expos and Rangers, Newman concluded his career as a coach. In addition to stories from the baseball diamond, Newman will share ideas for converting his experiences into useful leadership lessons.

TUESDAY, Oct. 7, 2014   ~    General Session

7:30 a.m. to 8:30 a.m.   ~   Registration/breakfast
8:15 a.m. to 8:30 a.m.   ~   Annual BHCA Business Meeting

8:30 a.m. to 9:30 a.m.             

“Behind the M&A Headlines” Steven P. Kent, president of River Branch Capital, LLC, Chicago, will take us beyond the press releases and newspaper stories in a comprehensive look at the bank mergers and acquisitions scene. Planning to buy or sell a bank, branch or holding company? Kent will describe the current market, analyze the trends and offer ideas about how to succeed in an M&A marketplace that seems to be heating up. Prior to joining River Branch Capital, Kent was Managing Director at Keefe, Bruyette & Woods, Inc., for 13 years.

9:30 a.m. to 10:30 a.m.           

“The Tech-Savvy Board: Helping Directors Understand Technology” Jack Vonder Heide, president of Technology Briefing Centers, Inc., Chicago, leads this information-packed session designed for your directors and senior management. IT risk and strategy has become more consequential as customers migrate to electronic delivery channels. New laws, guidance and regulations require a higher level of board and senior management focus on IT. Vonder Heide provides an easy-to-understand overview of current and emerging bank technology issues with a practical assessment of their benefits and risks.

11:00 a.m. to Noon  ~   Breakout Sessions: Choose from four timely topics listed below.

12:15 p.m. to 12:45 p.m.  ~   Lunch

1:00 p.m. to 1:45 p.m.              

“Surveying the Economic Landscape” Laura Kalambokidis, the new state economist for Minnesota, will share her thoughts on current economic conditions, including taxes, labor markets, interest rates and more from a national, regional and state perspective. Kalambokidis, a professor in the Department of Applied Economics with the University of Minnesota, is an expert on public sector economics and tax policy issues.

2:00 p.m. to 3:00 p.m.            

“Forecast for Weathering Today’s Business Environment” Paul Douglas, former KARE 11 and WCCO television personality, is a nationally respected meteorologist at WeatherNation TV, a new 24/7 weather channel. Founder of Media Logic Group, Douglas and his colleagues provide weather services for a variety of media outlets. A scientist and an entrepreneur, Douglas will share insights based on his experience working in a high-visibility, drastically-changing industry, as well as starting his own businesses.

TUESDAY’S Breakout Sessions

Session A       “Turn Risk into Rewards: How to Avoid Regulatory-Inspired Mediocrity”
New regulatory requirements are fundamentally changing the way bank managers develop risk/reward strategies for their organizations. Bart Smith of Performance Trust Capital Partners, Chicago, will share insights into the regulatory process and discuss keys for managing regulatory issues. Smith is a former senior manager with the FDIC.

Session B      “Bitcoin: Opportunity, Risk or Fad?
We’ve all heard of Bitcoin, but how many of us can explain what it is and how it works? In this session, George Meinz and Hailey Hollenhorst of the Gray Plant Mooty (St. Cloud, Minn.) law firm will provide a primer, with comments about how this open-source payments system might affect your bank.

Session C       “Deal Closed, Now What?”
The accounting and legal work in a bank merger or acquisition transaction is not complete at the end of the closing. What happens as the acquirer begins to merge two sets of books into one? What balance sheet implications should be considered before a potential buyer even considers a deal? Douglas Winn and Brenda Lidke of the Wilary Winn Risk Management firm in St. Paul, walk us through the post-merger accounting implications of a bank M&A transaction.

Session D      “Access to Capital and Other Subchapter S Issues”
While offering tax advantages, subchapter S incorporation status raises unique issues which can affect an organization’s ability to raise capital. Patrick J. Kennedy, Jr. of the Kennedy Sutherland LLP law firm of San Antonio, Texas, will look at the issues specific to subchapter S bank holding companies and banks.

Kennedy Sutherland to Speak at ESOPs Web Seminar

Close to 250 S corporation banks across the country sponsor an employee stock ownership plan.  ESOPs can be an effective tool in the right situation to create a market for bank stock, obtain tax incentives, raise capital and reward employees with the ability to own bank stock.  This program will explore the advantages and disadvantages of ESOPs and dispel myths associated with them.  Even if your bank has an ESOP, the program will provide useful information on how you can get more out of your ESOP.


-Overview of leveraged and non-leveraged ESOP transactions

-Transfers of 401(k) assets by employees to purchase shares of bank stock in the ESOPs

-Use of an ESOP to raise capital

-Overview of IRS requirements applicable to S corporation ESOPs

-Overview of bank regulatory requirements applicable to ESOPs


This session is a cost-effective way to learn more about ESOPs to help you determine if one could be helpful to your bank, or how you can get more out of the ESOP you currently have.  You may train as many individuals as you like for one set price.  There will be no travel costs, time lost from work and no one will be required to leave the institution.


This program is directed to CEOs, Presidents, CFOs, Human Resources Directors and members of the Board of Directors.


Alexander Mounts
Krieg DeVault LLP

Patrick J. Kennedy, Jr.
Managing Partner
Kennedy Sutherland LLP


FDIC Guidance for Subchapter S Banks

The FDIC, yesterday afternoon, issued guidance outlining the circumstances under which the Agency would approve an S corporation bank’s request for relief from the dividend restrictions imposed under the Basel III capital conservation buffer. Exceptions will generally be granted to 1- and 2- rated banks which are adequately capitalized and are not subject to a written supervisory directive. While the guidance only applies to capital conservation buffer considerations, it does recognize that there may be other circumstances such as a bank returning to a healthy condition that might present circumstances where a dividend exception could be granted. The Agency noted that it does not expect the concern to be an issue for some time as a result of the three year phase-in through 2019. We are pleased that the FDIC recognizes the unique circumstances under which S corporation banks operate and hope this guidance will result in greater recognition and willingness by the Agencies to consider case by case dividend approvals to pay taxes in a broader set of circumstances, beyond the capital conservation buffer issue. Importantly, the Agency recognizes that the ability to pay dividends is a crucial element of an S corporation bank’s capital access strategy.  A more detailed description of the issuance follows.

Financial Institution Letter (“FIL”) 40-2014, issued by the FDIC, provides detail on the considerations for approving exceptions from the capital conservation buffer dividend restrictions as contemplated by 12 CFR 324.11(a)(4)(iv). The FIL was issued in response to broad-based industry concern about the ability of S corporation bank shareholders to satisfy their tax liability under dividend payout restrictions imposed by the capital conservation buffer.

Under the Basel III capital rules, a capital conservation buffer – measured as a percentage of a bank’s risk-based based capital ratio above the minimum requirements – serves to limit the amount dividends a bank can pay when the capital ratios fall below the buffer. Beginning in 2016, the capital conservation buffer will be phased-in over three years to a maximum buffer of 2.5% above minimum requirements, effective in 2019. If a bank’s risk-based capital ratio is greater than 2.5% above the minimum requirements, no dividend payout restrictions are imposed. As the capital ratio falls below this buffer, dividends are limited to between 20% and 60% of eligible retained income and bank’s with capital ratios that are not 0.625% above the minimum requirements may not pay any dividends.

These dividend payout restrictions have a unique effect on S corporation banks, where income, and thus tax liability, is passed through to its shareholders. Most S corporation shareholders rely on distributions from the corporation to satisfy this tax liability. The dividend payout restrictions imposed by Basel III can impair bank shareholders’ ability to pay the tax due by creating a situation in which S corporation bank shareholder recognize income from the S corporation, but regulatory restrictions prohibit a corresponding distribution to the shareholder.

FIL-40-20-14 explains that in certain circumstances an exception from the capital conservation buffer and dividend payout restrictions is available where (i) the circumstances warrant the payment of dividends, (ii) such payment is not contrary to the purpose of the rule, and (iii) the payment would not impair the safety and soundness of the bank. The FDIC emphasizes that this inquiry will be based on the particular facts and circumstances of each bank making a request. The FIL goes on to describe four factors that will be considered in each request for an exception from the rules:

1.   Is the S corporation requesting a dividend of no more than 40%  of net income?
2.   Does the requesting S corporation believe the dividend payment is necessary to allow the shareholders of the bank to pay income taxes associated with their pass-through share of the institution’s earnings?
3.   Is the requesting S corporation bank rated 1 or 2 under the Uniform Financial Institutions Rating System and not subject to a written supervisory directive?
4.   Is the requesting S corporation bank at least adequately capitalized, and would it remain adequately capitalized after the requested dividend?

The FIL goes on to describe how it will evaluate each of these factors and states that generally, request for an exemption to allow a dividend to S corporation bank shareholders to satisfy their tax liability will be granted where the above-described factors have been met by the requesting bank.

For further information, see the full text of FIL-40-2014 and the accompanying press release. If you have any questions regarding the FIL or implementation of the capital conservation buffer, please contact us at (210) 228-9500.

Congressional Letter on Sub S Banks and Basel III

The American Bankers Association along with the Subchapter S Bank Association continues to urge bankers to contact the Agencies to express their concerns and ask that the rules be amended to eliminate the negative impact of the capital conservation buffer requirement’s limitation/prohibition on distribution on S Corp banks. The goal is to get the Agencies to effect a change during the phase-in period of the Final Rule that will address the problem. This is a Basel rule problem that should be resolved by the banking agencies. They are asking that the Basel rules take into account the unique structure of S-Corps in a way that provides equal treatment for C-Corp and S-Corp banks.

Congressional Letter on Sub S Banks and Basel III


17th Subchapter S Bank Association Conference

Save the Date for the 17th Annual Subchapter S Bank Association’s Annual Conference being held on October 23-24th, 2014 at The Hilton Palacios Del Rio in San Antonio, TX. We also will be hosting the 2nd Annual Community Banking in a New World Conference the day before on October 22nd at The Hilton Palacios Del Rio. Both are great conferences to attend packed with useful information and networking opportunities with others in the industry.

This year, for the first time, the conference is being held at the newly renovated Hilton Palacios Del Rio Hotel right on the banks of the San Antonio river walk. After Day 1 of the conference we’ll meet for a good ole Texas reception where you can network and discuss operations with other professionals in your industry and get to know our speakers on a personal level. There’ll also be plenty of time to savor some good ole Mexican food or stroll along the San Antonio River Walk and enjoy al fresco dining, shopping, lush landscapes, quaint pathways, cascading waterfalls, outdoor art and relaxing patios.

Group Room Rate: $209 per night  (additional $25 fee per person)
Each individual guest must make their own reservations by calling:

1-800-HILTONS by September 30, 2014.

They must identify themselves as members of Subchapter S Bank Association, in order to receive the room rates that have been established for the Group.

All reservations must be guaranteed and accompanied by a first night room deposit or guaranteed with a major credit card. Reservations cancelled within 72 hours prior to the arrival date will be charged for the first night’s room and tax. Check-in time is 3:00 PM on the day of arrival and check-out time is 12:00 PM on the day of departure. Guest services can arrange to check bags for those arriving early when rooms are unavailable.

Reserve your room now!