July 2005

   

President's Letter

Dear Chesapeake Chapter Members:

As my term as President of your Chapter draws to a close, I’d like to take this opportunity to thank the Board Members and volunteers that worked so hard throughout the year to make it a success. Without their support, guidance and hard work, we could not have accomplished what we did. I’d also like to thank the following sponsors for their continued support: Maryland Bankers Association for their support in co-sponsoring Business Banking Sales and the Annual Regulators Panel, Lerch Early & Brewer and Cambridge Capital, LLC for their sponsorship of the Regulator Panel. We truly appreciate your support. If any of our professional members would like to sponsor an event during the upcoming year, our website provides details on the different sponsorship levels. We held several other general membership events during the year and are working to get the calendar set for the upcoming program year. We also continue to sponsor the RMA Mentor courses for your training needs. Watch the website and your e-mail for information about the exciting events that will be coming.

Finally, I’d like to thank the Board Members whose terms of service have ended. Your years of dedication and support have made the chapter stronger. Personally, I am very grateful for your wisdom, support, and friendship throughout my years on the board and especially during my past year as President.

Please consider getting involved in the Chapter as a volunteer. It can be a truly rewarding experience!!

Cheryl Dahut
Sandy Spring Bank

Back to top

1031 Exchange

What is a 1031 Exchange?
Typically, a property owner is taxed on any gain realized from the sale of his property. However, through what is known as a Section 1031 Exchange, the tax on the gain is deferred until some future date. The deferment is like getting an interest free loan on tax dollars you would have owed on a cash sale. More equity is retained, and that helps you move into properties of higher value each time you use a 1031 exchange.

Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of the property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of “like-kind”, while deferring the payment of federal income taxes and some state taxes on the transaction. “Like-Kind” refers to the use of the property and not to its grade or quality. “1031” property may be mixed as to type and still be like kind. As an example, you may exchange land for a duplex, or a commercial building for a retail store. Property held outside the USA and it territories does not qualify for exchange with property held within the USA.

A like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold, the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

Benefits of exchange versus selling:

  • Section 1031 is one way to postpone or eliminate taxes due on the sale of qualifying properties
  • Tax deferrals allow you to have more money available to invest in another property.
  • Any gain from depreciation recapture is postponed
  • One can acquire and dispose of properties to reallocate their investment portfolio without paying tax on any gain

Time Restrictions:
A taxpayer has 45 days after the date that the relinquished property is transferred to properly identify potential replacement properties. The exchange must be completed by the date that is 180 days after the transfer of the relinquished property, or the due date of the taxpayer’s federal tax return for the year in which the relinquished property was transferred, whichever is earlier.

If the taxpayer does not meet the time limits, the exchange will fail and the taxpayer will have to pay any taxes arising from the sale of the relinquished property.
At closing, proceeds are transferred to a third party, also known as Qualified Intermediary (QI) or exchange facilitator –who holds them until they are used to acquire the new property.

Jo Taylor
First Mariner Bank

Back to top

Bankruptcy Abuse Prevention and 2005 Consumer Protection Act

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ushered in changes that impact those working on the lending and finance side of the transaction as well: bankers and credit managers. Changes do affect small business cases in many ways. Hear how at a joint breakfast and panel discussion on September 13 at the Marriott Baltimore/Washington Int’l Airport presented by the Chesapeake Chapter of RMA and the Mid-Atlantic National Association of Credit Managers. Three experts in bankruptcy law will decode the new Act and answer your questions. You'll hear from:

Linda V. Donhauser, Esquire, Miles & Stockbridge P.C.
Richard L. Costella, Esquire, Miles & Stockbridge P.C.
Irving E. Walker, Esquire, Saul Ewing LLP

The panel will help you learn your role in Bankruptcy Abuse Prevention as they cover key points such as:

  • New restrictions for Chapter 11 plan confirmation proceedings
  • New restrictions on debtors' assumption and rejection of leases
  • New defenses for preference and other avoidance litigation
  • New provisions affecting asset protection trusts
  • New provisions for cross-border (international) cases and proceedings
  • An overview of dramatic changes affecting consumer cases

For information and registration, visit http://www.rmachesapeake.org/events.html.

Back to top

 

 

 



 

Welcome New Members

Muzaffer Balta
Financial Economist
Comptroller of the Currency

William Bocek
President
Chesapeake Bank of Maryland

William Drummond
Vice President
Farmers & Mechanics Bank

Michael Johnson
Compliance Adminstrator
First Mariner Bank

William Lucas
Senior Vice President
Chesapeake Bank of Maryland

Eugene Waldron
Portfolio Manager
Bay National Bank

Ronald Whitmore
Vice President & Senior Loan Review Analyst
Woodsboro Bank

Janice Williams
Credit Officer
EagleBank

Back to top

RMA Webinars Boost Summer Learning

RMA Web Seminars offer several options to boost summer learning. The web based courses are web-delivered, instructor-led training courses that offer several advantages over traditional classroom courses including the convenience of no travel time, travel cost or time out of the office. They are typically conducted in two 90-minute sessions held one week apart. All a participant needs is an Internet connection and a telephone. Plus, they are interactive so you can ask questions and receive instant feedback in real time. For more information on summer options and others, visit the RMA website. August courses include:

RMA OpRisk Tools: August 17
Pensions & Off Balance Sheet Risks in Financial Accounting: August 15/22
Strategies for Evaluating Your Borrower's Management Team: August 18/25

Back to top

Commercial Real Estate Lending Forum

RMA's Commercial Real Estate Lending Forum, in Baltimore, MD, September 29-30, 2005, is for commercial real estate lenders and experienced commercial lenders involved in income property lending. You will hear from guest speakers on a variety of topics and will engage in round table discussions with the group. Topics include: what permanent financing lenders look for, REITs and mortgage conduits, lender liability and environmental issues, construction loan administration, underwriting issues involving various property types, and market trends.   

For more information on RMA's Commercial Real Estate Lending Forum in Baltimore, MD, or to register, please click here.

Back to top

RMA Conference Comes to DC

Save the date: October 8 - 11, 2005

Join industry leaders at our Annual Risk Management Conference to help you more successfully identify, assess, and manage credit risk, operational risk, and market risk… and shape new and more effective responses to these risks. The conference is located right in our territory at the Marriott Wardman Park Hotel.

Hear from these featured speakers:
John A. Allison IV, Chairman and CEO, BB&T Corporation, who has lead the bank in its growth and acquisition of scores of community banks since taking over as Chairman and CEO in 1989.

Tim Russert, consummate capital insider, NBC’s Washington Bureau Chief and host of Meet The Press.

John E. Silvia, Ph.D. is the Chief Economist for Wachovia Bank, N.A. He has worked on Capitol Hill as Senior Economist for the U.S. Senate Joint Economic Committee and Chief Economist for the U.S. Senate Banking, Housing and Urban Affairs Committee.

For complete conference details click here. And if you register by August 31, you save $100 on your registration fees.

Back to top