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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
221
:
ORGANIZATION AND MANAGEMENT OF CREDIT UNION
Subchapter
005
:
NET WORTH; RESERVES; DIVIDENDS
§
31506. Dividends to shareholders; conditions precedent
(a) The
governing body of any credit union may declare a dividend from the credit
union's current period undivided earnings, which dividend shall be calculated
as provided in this subchapter for any period determined by the governing body.
(b)(1) The
governing body may declare a dividend from the undivided earnings of a prior
period of the credit union without the prior approval of the Commissioner if,
following such distribution, the remaining net worth of the credit union will
be more than a two-percent margin above the greatest of:
(A) the minimum
net worth required by this subchapter or by standards established by the
Commissioner;
(B) the net
worth ratio requirement of a well-capitalized credit union as defined under the
prompt corrective action guidelines of the National Credit Union
Administration; or
(C) such other
net worth requirement as established for the credit union by the Commissioner.
(2) Any other
distribution of earnings from a prior period of the credit union may be made
only with the prior written approval of the Commissioner.
(c)(1) Earnings
from all sources for the period for which a dividend is to be paid, except as
provided in sections 31502, 31503, 31504, and 31505 of this title, may be
credited to the profit and loss account of the credit union, and the following
items shall be charged against such account in the determination of the amount
available for dividends to shareholders:
(A) all
operating expenses paid or incurred by the credit union in the management of
its affairs, the collection of its debts, or the transaction of its business;
(B) the interest
paid or accrued on debts owed by the credit union;
(C) all losses
projected or incurred on loans and leases in excess of the allowance for loan
and lease loss account; and
(D) all losses
projected or incurred on investments according to generally accepted accounting
principles.
(2) The credit
balance of the profit and loss account as thus determined shall constitute the
current period net earnings of the credit union at the close of such period,
and shall be applicable to the payment of dividends except as provided in
subsection (d) of this section.
(d) No dividend
shall be credited or paid without the prior approval of the Commissioner,
unless the credit union has:
(1) Made good
any existing impairment of its net worth below the standards established by the
Commissioner.
(2) Carried to
its reserve account such part of its net earnings as may be required by the
standards established by the Commissioner, as the same may be amended from time
to time.
(3) Carried to
its allowance for loan and lease loss account such part of its earnings as is
required by section 31503 of this title.
(4) Carried to
its special reserve account such part of its earnings as is required by section
31505 of this title.
(e) Dividends
may be paid on shares and share certificates at various rates with due
consideration of the conditions that pertain to each type of account such as
minimum balance, notice, and time requirements.
(f) Subject to
the liability and standards set forth in 11B V.S.A. § 8.33, other than
subdivision 8.33(b)(2), when any dividend shall be declared in excess of the
amount available for dividends as determined in accordance with the provisions
of this section, the directors voting for such dividend may be held jointly and
severally liable to the credit union for the amount of the excess so declared,
unless specifically permitted and approved by the Commissioner. The provisions
of 11B V.S.A. § 8.33(b)(2) shall not apply to dividends declared by the
directors. (Added 2005, No. 16, § 1, eff. July 1, 2005.)