(7) For more information on the UBPR, see http://www.ffiec.gov/ubpr.htm.
of thriving banks State interviewed Arkansas 1 Colorado 1 Illinois 1 Indiana 1 Iowa 1 Kansas 3 Kentucky 2 Louisiana 1 Michigan 1 Minnesota 1 Missouri 2 Nebraska 1 New York 1 Oklahoma 2 Oregon 1 South Dakota 1 Tennessee 1 Texas 5 Wisconsin 1 Total 28 Table 11A Criteria for Assigning Banks to Peer Groups in the UBPR Peer Offices in urban No.
Also, there are three thrifts doing business in the two-county market, which aren't required to file UBPRs
, so their numbers are not included in the overall snapshot presented.
We find that the net profit rates of S-banks tend to exceed those of similarly sized C-banks, even after S-bank earnings are adjusted by the UBPR estimate of federal income taxes that they would have had to pay if they were subject to the corporate income tax.
The UBPR includes an adjustment to banks' pre-tax income for tax-exempt earnings.
The UBPR, however, provides two measures of bank profits designed to permit such comparisons: (i) pre-tax income adjusted for earnings on tax-advantaged securities and (ii) after-tax income adjusted for the federal corporate income tax that S-banks would have had to pay if they were C-banks.
The UBPR would report the adjusted net income of the S-bank as $700,000, the same as the net income of the C-bank, and the adjusted ROA of each bank would be 1.4 percent.
In addition to the standard ROA and ROE measures, the dashed lines in Figures 2 and 3 also show median earnings rates based on the alternative measure in which the earnings rates of S-banks are reduced by the UBPR estimates of the tax that they would have had to pay if subject to the federal corporate income tax.
Adjusting ROA and ROE to include the UBPR estimate of federal income taxes has a large impact on median earnings rates for S-banks across all size ranges.
The UBPR tax adjustment of S-bank profits closes much of the gap between the after-tax profit rates of S- and C-banks of similar asset size.
The UBPR adjustment to the net income of S-banks does not take into account any differences in the applicability of state corporate income or other taxes between S- and C-banks.