We are all bank customers. We make our banks the economic heartbeat of the communities they serve. It is every bank’s responsibility to know their customers, meet their customers’ needs, participate in local civic activities and assist with charitable causes. To do all that, banks in Kentucky must have the ability to thrive. But increasingly, our banks face an obstacle to that, and we have a stake in that problem.

Banks in Kentucky are hindered by an unfair tax structure. Banks are taxed, on average, 92 percent more than other corporations in Kentucky, regardless of how large or small those corporations are. Not only are banks taxed much more than other corporations, they have to pay taxes when they have little or no profit. Nowhere in America do businesses have such a financial burden; Kentucky’s taxes on banks are the highest in the nation.

Paying 92 percent more than other corporations is bad enough, but you have to consider that 92 percent is just an average. Some banks pay much more. Some community banks are paying more than 1,000 percent more than corporations in Kentucky. That’s because the bank tax is based on capital rather than profit, and Kentucky has some of the best capitalized banks in the country. That has made our banks strong during difficult economic times, when other states’ banks have failed, but the tax makes our strength in capital become a weakness because more capital means more taxes.

So how does this affect bank customers? An unfair tax structure for Kentucky banks hurts our communities in ways that you may not realize. The tax burden restricts the good banks can do – investing in our communities, helping our communities grow through small business loans and home loans and contributing to civic and charitable causes.

Some of our communities still have banks lucky enough to succeed, even in light of taxes more than 92 percent of those imposed on other corporations. Many other banks have not been so lucky, and because of the burden of such an inequitable tax structure, they have not succeeded. Kentucky has lost 38 banks in the last five years. We stand to lose even more if the tax structure is not fixed. Local, vibrant banks are so important to vibrant, local communities. The future is in our hands. Banks should be allowed the same tax structure as other corporations in Kentucky, allowing us to take better care of our communities.

Dan M. Harbison

President and CEO

Farmers National Bank

Bowling Green

J. Brent Bugg

President and CEO

Fredonia Valley Bank

Fredonia

Tony M. Salyer

President

American Bank & Trust

Bowling Green

Gary Broady

President and CEO

Franklin Bank & Trust Co.

Franklin

Tommy Ross

Chief Executive Officer

South Central Bank

Glasgow

Terry Bunnell

Chairman, president and CEO

The Peoples Bank

Marion/Glasgow

M. Todd Kanipe

President and CEO

Citizens First Bank

Bowling Green

Tom Jones

President, CEO and director

Morgantown Bank & Trust

Morgantown

Brian White

President and CEO

Auburn Banking Co.

Russellville