Printer Friendly

Worthen's ace in the hole.

Worthen's Ace In The Hole

Although the press continues to overlook the situation, bank observers are aware that Worthen Banking Corp.'s record earnings the past few years have been boosted by hefty tax-loss carry forwards from the mid-1980s.

Last year, for example, Worthen paid just $900,000 in taxes on $20.2 million in pretax net income. This year, the carry forwards are expected to run out, and Worthen will have to start paying taxes in earnest.

Better make that next year.

Or the year after that.

Worthen won an appeal to the Internal Revenue Service in April, ending more than three years of negotiations. The victory, not widely reported, should mean about $6 million in tax credits to the bank during the next three years.

A deposit premium amortization related to Worthen's acquisition of Bevill Bresler and Schulman initially was disallowed by the IRS following 1986's massive tax code changes.

The new ruling restored the resulting net operating loss carry forward.

At least two other banks, one in Atlanta and one in Denver, have prevailed against the IRS in similar cases.

Andrew Melton, Worthen's CFO, says the IRS settlement means the bank will pay "nominal" taxes -- less than 5 percent -- in 1991.

In 1992 and 1993, the tax rate should be about 25 percent. The bank becomes fully taxable in 1994.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Worthen Banking Corp. wins in appeal to Internal Revenue Service for more tax credits
Publication:Arkansas Business
Date:Jun 3, 1991
Words:223
Previous Article:Category killers.
Next Article:Secret herbs and spices.
Topics:


Related Articles
First Commercial first in assets.
Worthen's closer look.
The little bank that could: First Community Bank of Conway making money after only four months.
First commercial subsidiaries top banks; three FCC banks lead state in return on average equity.
Worthen sale could benefit affiliates' top executives.
Worthen no. 1; Danville's profits up 60 percent.
Worthen: from bottom to Boatmen's.
Start-ups, IPOs, mergers dominate state banking.
Assembly Required.
Rental refinance. (Real Deals).

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters