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The Bank's bad debt recapture amount may impact the amount and timing of capital distributions to the Company
−Removed: The Bank had $99.2 million in pre-1988 bad debt reserves in accumulated deficit at March 31, 2024, which equates to an unrecorded deferred tax liability of $24.3 million.
+Added: The Bank had $ 85.5 million in pre-1988 bad debt reserves at June 30, 2024, which equates to an unrecorded deferred tax liability of $ 18.0 million.
The Bank is anticipated to have a net loss for tax purposes in the current year due to the sale of securities in October 2023 associated with the securities strategy and will therefore have a negative accumulated earnings and profits for fiscal year 2024.
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This additional tax expense will reduce the amount of earnings that will be available to be distributed to the holding company during the current fiscal year, at a minimum.
−Removed: Management is researching and analyzing the Bank's tax issues associated with the pre-1988 bad debt recapture.
−Removed: Management is also evaluating the timing of capital distributions from the Bank to the holding company during the current fiscal year.
−Removed: See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended March 31, 2024 and December 31, 2023" and "Item 1.
+Added: Management is currently evaluating the income tax issues associated with the pre-1988 bad debt reserves and the timing and amount of capital distributions to be made from the Bank to the holding company during the remainder of the current fiscal year and in future periods.
+Added: There is some uncertainty related to how the Bank's current earnings and profits, beginning in fiscal year 2025, should be treated in relation to distributions from the Bank to the Company and the associated impact, if any, on the pre-1988 bad debt reserves.
+Added: See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended June 30, 2024 and March 31, 2024" and "Item 1.
Financial Statements - Note 6.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.