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Dividends
Question: 'Tis the season to set our dividend for the year. Any limitations?
Answer: Yes. For state banks, remember that dividends must be taken out of unrestricted surplus. You can't reduce your certified surplus without prior permission from the Banking Commissioner.
For national banks, 12 USC 60 provides: "The approval of the Comptroller of the Currency shall be required if the total of all dividends declared by such association in any calendar year shall exceed the total of its net income of that year combined with its retained net income of the preceding two years, less any required transfers to surplus or a fund for the retirement of any preferred stock." Also, 12 USC 56 provides that no dividends may be paid if losses exceed undivided profits.
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Comments & Questions
If you would like
to comment on legislative topics or if you have questions about this
information please call our public affairs expert, Mae Beth Palone at
(800) 749-4228 or E-mail mbpalone@ibat.org.
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