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Another point on S-corps

I was very pleased to see Mike Welch, in his Oct. 2 column "Bank credo: do as we say, not as we do" shed some light on the S-corporation topic which many in the industry and I would guess most credit union board members probably did not understand very well....

By Staff Writer | Updated on October 22, 2002

I was very pleased to see Mike Welch, in his Oct. 2 column “Bank credo: do as we say, not as we do” shed some light on the S-corporation topic which many in the industry and I would guess most credit union board members probably did not understand very well. There is another advantage to the S-Corp shareholders that the article didn’t mention directly. Since the bank avoids paying taxes, everything else being equal, the bank enhances its book value by the amount of taxes saved. Since banks typically sell for around twice book value or more, the shareholder also increases the value of his stock investment, by approximately double the amount of tax savings, each year. An arcane point of finance. Martin Breland President/CEO Tower FCU Laurel, Md.

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