Entegra Financial in Franklin, N.C., has adopted a plan to preserve the value of about $12.2 million deferred tax assets.
The $984 million-asset company said the plan is intended to discourage a certain type of ownership change that would restrict Entegra's ability to use its deferred tax assets to offset taxable income and reduce its tax liability.
Entegra, formerly known as Macon Financial, holds a $31.9 million net operating loss carryforward with a deferred tax asset value of $11.2 million for federal income tax. It also holds a $39.1 million net operating loss carryforward with a deferred tax asset value of $1 million for North Carolina state income tax.
The type of ownership change described by Entegra would occur if the company's "five-percent shareholders," as defined by Section 382 of the Internal Revenue Code, increased their combined stake in Entegra by more than 50% within the span of three years.
The plan is intended to discourage 5% shareholders from increasing the size of their stakes in the company, and to discourage other shareholders from reaching the 5% threshold.
Under terms the plan, Entegra declared a dividend of one preferred stock purchase right for each share of the company's outstanding common stock. Shareholders of record on Nov. 27 or later can receive the right to purchase preferred stock.
The tax plan will not affect Entegra's earnings and is not taxable.