According to a recent study by Grant Thornton, the number of banks and other financial institutions that have converted from “C” to “S” Corporation status increased again last year.

In 2003, there was a net increase nationally of 160 banks and thrifts that made the conversion, according to the annual study by Grant Thornton, which has N.C. offices in Charlotte and Raleigh.

Additional findings of the study show that a national total of some 2,000 (21 percent) of the more than 9,300 FDIC-insured banks and thrifts were S Corporations as of March 31, 2003.

In the Southeast, about 13 percent of banks elected S Corporations status. More specifically, in North Carolina, more than 2 percent of the banks, and in South Carolina, almost 4 percent, have converted to S Corporation status. For stock-thrifts in the region, 14 percent of the conversions in the Carolinas have converted to S Corporation status.

Other Southeastern states such as Georgia, Florida and Tennessee are showing bank S Corporation conversion percentages as high as 16 percent, 19 percent and 17 percent respectively. Stock-thrift S Corporation conversion percentages in these states are 20.0 percent, 23 percent and 25 percent respectively.

Grant Thornton says a total of 221 banks and 23 stock-thrifts have successfully made the S Corporation conversion in the Southeast to date. This includes two banks and one stock-thrift in North Carolina and three banks in South Carolina out of a total of 191 banks and thrifts in both states.

On the national level, the study states that the total assets of banks and thrifts electing S Corporation status only represents 3 percent of all FDIC-insured assets.

“The differences in the historical regulatory and income tax environment in various states have affected the ability as well as the desire to make the S Corporation election,” said Ted Thomas, tax senior manager in Grant Thornton’s Carolinas financial institution practice. “However, the S Corporation election remains an important tax and business planning tool that financial institutions in the Carolinas should consider. Banks and thrifts that are able to convert start saving immediately.”

Grant Thornton: