§1207. Dividends; capital surplus required

A. The board of directors of a savings bank shall not declare or pay any cash dividends for a period of two years from the issuance of its certificate of authority or for such shorter period as the commissioner of financial institutions may prescribe. Thereafter, the board of directors of any savings bank may quarterly, semiannually, or annually declare cash dividends on its stock by complying with the provisions of this Part and the savings bank's articles of incorporation and bylaws.

B.(1) No cash dividends may be declared or paid until a savings bank has surplus equal to twenty percent of the outstanding common stock of the savings bank, provided that surplus shall not be reduced below that twenty percent level by the payment of the cash dividend.

(2) Prior approval of the commissioner shall be required if the total of all cash dividends declared and paid by the savings bank and amounts used to redeem or repurchase its stock during any one year would exceed the total of its net profits of that year combined with the net profits from the immediately preceding year.

C. Each financial institution converting to a savings bank, before a declaration of a cash dividend on its common stock, shall transfer not less than one-half of its net profits of the preceding six months to its paid-in surplus until it shall have paid-in surplus equal to twenty percent of capital stock.

D. For the purposes of this Part, "net profits" is defined as the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, after deducting from the total thereof all current operating expenses, actual losses, paid and accrued dividends on preferred stock, if any, all federal and state taxes, and cash dividends on common stock paid or accrued over the calculation period. Negative net profits shall not be rounded to zero in this calculation.

Acts 1990, No. 816, §1, eff. Sept. 1, 1990; Acts 2003, No. 56, §1, eff. May 23, 2003.