Alabama Code 5-5A-21. Surplus; restriction on dividends
Terms Used In Alabama Code 5-5A-21
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- preceding: means next before. See Alabama Code 1-1-1
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
- year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
Every bank shall transfer to surplus each year at least 10 percent of its net earnings until the surplus of such bank shall be equal to at least 20 percent of its capital, and it shall be unlawful for such bank to declare or pay a dividend in excess of 90 percent of the net earnings of such bank until the surplus of such bank shall be equal to at least 20 percent of capital.
Thereafter the prior written approval of the superintendent shall be required if the total of all dividends declared by the bank in any calendar year shall exceed the total of its net earnings of that year combined with its retained net earnings of the preceding two years, less any required transfers to surplus. No dividends, withdrawals or transfers may be made from the bank’s surplus without the prior written approval of the superintendent.
For the purpose of this section the term “net earnings” 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, state and local taxes.