On January 25th, Jonathan and I returned to the studio to record the latest podcast for The Bank Account. We’re trying to live up to our commitment to podcast more often in 2019 then we did in 2018; nothing like setting a low bar!
We first briefly discuss the latest IRS regulations for the taxation of Subchapter S banks and the reactions that we’ve seen from our clients on tax reform. Generalization appears virtually impossible, as we’ve seen reactions ranging from terminating Subchapter S elections, doing transactions and forgoing Subchapter S elections, sticking with the status quo, and, as Jonathan puts it, “Sub S or Die.”
We then turn to a hypothetical scenario that both Jonathan and I think about from time to time; what if we decided to cease providing legal services and instead attempted to become bank officers. What would our first steps be as a new Chief Strategy Officer of a hypothetical depository institution. Jonathan suggests beginning with the question of whether the institution is a true “community bank,” with a provocative definition for the term. Per Jonathan, a “community bank” is one whose existence is self-justified, as an irreplaceable benefit to the community it serves. (Jonathan than proceeds with an approach that even he admits might be better suited for a visual presentation.)
I suggest instead that the first question should be what is expected/desired by the institution’s shareholders. Depending on the shareholder base and their expectations for the institution, different strategic approaches are called for.