DIVIDENDS
i] oe National Bank Act provides that directors of any national
bank “may, semi-annually, declare a dividend of so much of
the net profit of the association as they shall judge expedient.” Al-
though the word “‘semi-annually” occurs in the language of the act,
there appears to be no prohibition against declaration of more fre-
quent dividends, when the bank’s directors deem such a course
advisable.
Within ten days after a dividend has been declared the president
or cashier of the bank must attest to the Comptroller under oath the
amount of the dividend, and the amount of net earnings in excess of
such dividends.
A national bank may, with the approval of the Comptroller and
of shareholders owning two thirds of its stock, declare a stock dividend
(see page 44).
Circumstances in which dividends may not be declared are:
(a) If the bank’s surplus fund is not equal to 20 per cent. of its capital stock and
one-tenth of the net profits for the preceding half year is not carried to
surplus.
(b) When the bank’s balance at the Federal Reserve Bank is below the amount
required by law.
(c) If losses have at any time heen sustained equal to or exceeding the bank’s
undivided profits then on hand.
(d) No dividend shall be made, while a bank continues its operation, to an
amount greater than the net profits on hand, minus the bank’s losses and
bad debts. “Bad debts” within the meaning of the National Bank Act are
those debts on which interest is past due and unpaid for a period of six
months. unless such debts are well secured, and in process of collection.
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