Riser (SB 99) Act No. 135
Prior law required that the following criteria be used in determining the fair market value of
bank stock for purposes of determining tax liability:
(1)Stockholder equity as defined by law for purposes of valuation shall serve as a four
times factor, 80%.
(2)Annual net earnings of the individual banking institution shall serve as a one time
factor, 20%.
Required that annual net earnings be adjusted to remove that portion of earnings based on
U.S. obligations by deducting a percentage of annual net earnings based on the ratio of
interest on U.S. obligations to total operating income.
New law retains these provisions of prior law.
Prior law provided that negative earnings shall not be considered in this formula, and there
shall be no earnings loss carried forward or backward. Provided that for purpose of
computing the one time, 20% earnings factor, the earnings shall be capitalized by multiplying
the annual net earnings of the banking institution by the average price earnings ratio for all
banks in the U.S. as published by a nationwide recognized bond and securities rating firm.
New law provides that negative earnings be included in the formula, but there shall be no
earnings loss carried forward or backward and that in computing the one time, 20% earnings
factor, the earnings may also be capitalized by multiplying the annual net loss of the
institution multiplied by the average price earnings ratio for all banks in the U.S. as published
by a nationwide recognized bonds and securities rating firm.
Effective August 1, 2014.
(Amends R.S. 47:1967(D))