§ 6-409 — Dividends.

A. Withdrawal of capital - Dividends - Bad debts - Banks and trust companies. Without the prior written approval of the Commissioner, no bank shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital or surplus. If losses have at any time been sustained by any such bank, equal to or exceeding its undivided profits then on hand, no dividend shall be made, and no dividend shall ever be made by any bank, while it continues its banking operations, to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due to any bank, on which interest is past due and unpaid for a period of six (6) months, unless the same are well secured and in process of collection, shall be considered bad debts within the meaning of this section. No trust company shall declare or pay any dividend to an amount greater than its net undivided profits then on hand, deducting therefrom: 1. All losses; 2. All debts, unless the same are well secured, on which interest for a period of one (1) year is past due and unpaid and debts upon which final judgment has been recovered but has been for more than one (1) year unsatisfied and on which interest for a period of one (1) year is unpaid, unless the same are well secured; 3. All assets or depreciation which the commissioner or a duly appointed examiner may have required to be charged off; and 4. All expenses, interest and taxes accrued or due from the trust company. After providing for the deductions set forth, the board of directors of a trust company may, at any regular meeting, declare a dividend out of so much of the net undivided profits of the trust company as they judge expedient. Interest unpaid, although due or accrued, shall not be included in the calculation of net undivided profits. B. Dividends - When payable - Restrictions. 1. The directors of any bank or trust company may, quarterly, semiannually or annually, declare a dividend of so much of the net profits of the corporation as they shall judge expedient, except that, until the surplus fund of a bank shall equal its common capital, no cash dividends shall be declared unless there has been carried to the surplus fund not less than one-tenth (1/10) part of the bank's net profits of the preceding half year in the case of quarterly or semiannual dividends, or not less than one-tenth (1/10) part of its net profits of the preceding two consecutive half-year periods in the case of annual dividends: Provided that, for the purposes of this section, any amounts paid into a fund for retirement of any preferred stock of any such bank out of its net earnings for such period or periods shall be deemed to be additions to its surplus fund if, upon the retirement of such preferred stock, the amounts so paid into such retirement fund may then properly be carried to surplus. In any such case the bank shall be obligated to transfer to surplus the amounts so paid into such retirement fund on account of the preferred stock as such stock is retired. 2. The approval of the Commissioner shall be required if the total of all dividends declared by a bank in any calendar year shall exceed the total of its net profits of that year combined with its retained net profits of the preceding two (2) years, less any required transfers to surplus or a fund for the retirement of any preferred stock. 3. For the purpose of paragraph 2 of this subsection, the term "net profits" shall mean 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, accrued dividends on preferred stock, if any, and all federal and state taxes.

Legislative History

Added by Laws 1965, c. 161, § 409. Amended by Laws 1971, c. 352, § 7; Laws 1997, c. 111, § 44, eff. July 1, 1997.