Texas Pioneers "Partnership Banks." (Limited Banking Associations Taxed like Partnerships and Subchapter S Companies)

By Cocheo, Steve | ABA Banking Journal, February 1994 | Go to article overview

Texas Pioneers "Partnership Banks." (Limited Banking Associations Taxed like Partnerships and Subchapter S Companies)


Cocheo, Steve, ABA Banking Journal


It looks like a bank. It acts like a bank. And to borrow from former Citicorp chief Walter Wriston's observation about Merrill Lynch, it even "quacks like a bank." In fact, it is a bank.

But it's also something more. It is a "limited banking association"--a new corporate creature that can now be chartered in Texas, and that is taxed like a partnership, rather than as a corporation.

Best of both worlds

Last June, Texas banking law was changed to permit formation of or conversion to these quasi partnerships. The concept was patterned after limited liability companies, a form of business organization pioneered in Wyoming that has spread to about 34 other states.

Typically, of course, corporate earnings are subject to double taxation: First, the corporation itself pays taxes on its earnings; second, the corporation's shareholders pay taxes on any dividends.

By contrast, earnings of partnerships and Subchapter S companies are taxed only once. Under IRS rulings, limited liability corporations-which provide owners with a corporate-style shield against liability--qualify for partnership tax treatment.

Banks can't be constituted as partnerships or S corporations, explains Kenton McDonald, an attorney with Matthews & Branscomb, Corpus Christi, Texas. However, using the Wyoming limited liability corporation statute as a guideline, McDonald worked with Texas state bankers associations to obtain legislation permitting a banking version of this form of organization.

After several unsuccessful attempts, the limited banking association legislation passed.

Mostly transparent

To the public, a limited banking association would look like any other commercial bank, with the exception of "LBA" or "Limited Banking Association" following its name. Structurally, the bank would operate much the same too, with some changes in terminology. Instead of being called shareholders, owners would be called "participants." The board of directors would be called the "hoard of managers."

For the most part, "it's just semantics," says Al Jones, president and CEO of $200 million-assets American National Bank, Corpus Christi, which is readying an application. Jones says American National has about 100 shareholders.

Transfers of an individual's ownership in an LBA are a bit trickier than simply selling stock of an ordinary bank. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Texas Pioneers "Partnership Banks." (Limited Banking Associations Taxed like Partnerships and Subchapter S Companies)
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.