Net undivided profits and dividends.

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(a) A bank may not declare or pay a dividend in an amount greater than its net undivided profits then on hand.

(b) In determining net profits for the purpose of declaring a dividend, a bank may not include in its calculations

(1) loan loss reserves and losses in excess of reserves, including loans or other credits upon which interest for a period of six months is due and unpaid, unless the loan or credit is well secured and in the process of collection;

(2) interest accrued but not collected on loans or other credits upon which the interest due is more than 90 days delinquent;

(3) interest collected but not earned;

(4) assets or depreciation that the department has required to be charged off;

(5) the appreciation of any asset above its actual cost to the bank; and

(6) any accrued expenses, interest or taxes due from the bank.


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