12 C.F.R. § 5.64 Earnings limitation under 12 U.S.C. 60.
Title 12 - Banks and Banking
(a) Transfers to capital surplus. Subject to the restrictions in 12 U.S.C. 56 and this subpart, the directors of a national bank may declare and pay dividends as frequently and of such amount of undivided profits as they judge prudent. However, a national bank may not declare a dividend unless capital surplus equals or exceeds the capital stock of the bank, except: (1) In the case of an annual dividend, the bank may declare a dividend if the bank transfers 10 percent of its net income for the preceding four quarters to capital surplus; or (2) In the case of a quarterly or semiannual dividend, or any other special dividend, the bank may declare a dividend if the bank transfers 10 percent of its net income for the preceding two quarters to capital surplus. (b) Earnings limitation. For purposes of 12 U.S.C. 60, a national bank may not declare a dividend if the total amount of all dividends (common and preferred), including the proposed dividend, declared by the national bank in any calendar year exceeds the total of the national bank's retained net income of that year to date, combined with its retained net income of the preceding two years, unless the dividend is approved by the OCC. A national bank shall submit a request for OCC approval of a dividend under 12 U.S.C. 60 to the appropriate supervisory office. (c) Surplus surplus. Any amount in capital surplus in excess of capital stock required by 12 U.S.C. 60(a) (referred to as “surplus surplus”) may be transferred to undivided profits and available as dividends, provided: (1) The bank can demonstrate that the surplus came from earnings of prior periods, excluding the effect of any stock dividend; and (2) The board of directors of the bank approves the transfer of the surplus surplus from capital surplus to undivided profits. [61 FR 60363, Nov. 27, 1996, as amended at 64 FR 60098, Nov. 4, 1999]
Title 12: Banks and Banking
PART 5—RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES
Subpart E—Payment of Dividends
§ 5.64 Earnings limitation under 12 U.S.C. 60.
