No, we do not believe that you need a tax allocation agreement with your holding company.

In an interagency policy statement on tax allocations, the federal banking agencies recommended that all financial institutions with a holding company structure have a written, comprehensive tax allocation agreement to address intercorporate tax policies and procedures. However, in an addendum to the policy, the agencies clarified that neither the policy statement nor the addendum apply to an insured depository institution, its holding company or other affiliates “if the holding company is not subject to corporate income taxes at the federal or state level.” Because your holding company is an S corporation, in our view your bank and its holding company are not required to maintain a tax allocation agreement.

For resources related to our guidance, please see:

• Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (1998) (“[T]he Agencies recommend that financial institution members of a consolidated group have a written, comprehensive tax allocation agreement to address intercorporate tax policies and procedures.”)

• Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (2014) (“The Agencies also received some informal inquiries regarding the applicability of the Addendum to holding companies that have elected S corporation status for federal income tax purposes. The Addendum and Interagency Policy Statement concern tax allocation agreements between an IDI, its parent company, and its affiliates. Accordingly, the Addendum and Interagency Policy Statement does not apply to an IDI, its holding company, or other affiliates if the holding company is not subject to corporate income taxes at the federal or state level.”)

• Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (2014) Footnote 3 (“S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.”)