A. Permanent capital stock shall consist of common stock, which shall have full voting rights, and may also include preferred stock. Such stock shall have a par value of not less than one cent ($0.01) per share, and the proceeds thereof, to the extent of such par value, shall be set apart and be nonwithdrawable, and shall be a reserve to absorb losses after all surplus, undivided profits, and other reserves available for losses have been depleted.

B. 1. With the approval of the State Banking Commissioner and subject to the conditions as the Commissioner may prescribe, a bank may purchase its own stock as treasury stock.

2. Preferred stock shall not be issued for a limited term, nor shall it be redeemable at the option of the holders. An association shall not bind itself by contract to redeem its preferred stock upon the happening of certain events, other than dissolution. However, preferred stock shall be subject to redemption at any time at the option of the association, with the prior approval of the Commissioner and only if, subsequent to the redemption, the association would meet its minimum capital requirements as imposed by applicable federal law.

C. Any paid-in surplus with respect to common stock may be made available for payment of organization and initial operating expenses or may be credited to surplus, or the contingent reserve, or the federal insurance reserve, or be transferred to common or preferred stock as a stock dividend, prorated to the holders of common stock. An association shall not issue permanent capital stock for a consideration other than cash or for a price less than par value thereof, except that, with the approval of the Commissioner, stock may be issued for a consideration other than cash in connection with mergers, consolidations or transfers and, when fully paid, the stock shall be kept unimpaired to the extent of its par value.

D. A stock association may declare and distribute cash dividends from net earnings, surplus or undivided profits. With the prior consent of the Commissioner, the stock of an association may be reduced by resolution of the board of directors approved by vote or written consent of the holders of a majority of the outstanding stock of such association to such amount as the Commissioner shall approve, and any such reduction shall be credited to the contingent reserve account and shall not be available for dividends to common stockholders; provided, any reduction in the amount of permanent capital stock is subject to the provisions of this section and Section 381.20 of this title, fixing minimum permanent capital stock requirements.

E. No cash dividends shall be declared on common stock unless, subsequent to the dividends, the association would continue to meet its minimum capital requirements as imposed by the Commissioner or the Director of the Office of Thrift Supervision. Subject to the provisions of this act, permanent capital stock shall be entitled to such rate of dividends, if earned, as declared by the board of directors.

Added by Laws 1978, c. 168, § 31, eff. July 1, 1979. Amended by Laws 1987, c. 61, § 10, emerg. eff. May 4, 1987; Laws 1990, c. 118, § 15, emerg. eff. April 23, 1990; Laws 1993, c. 183, § 55, eff. July 1, 1993; Laws 2000, c. 81, § 52, eff. Nov. 1, 2000.