2006 Louisiana Laws - RS 6:263 — Cash dividends; stock repurchase or redemption; capital surplus required

§263.  Cash dividends; stock repurchase or redemption; capital surplus required

A.  The board of directors of a state bank may not declare or pay any cash dividends for a period of two years from the issuance of its certificate of authority or for such shorter period as the commissioner may prescribe.  Thereafter, the board of directors of any state bank may quarterly, semiannually, or annually declare dividends on its stock by complying with the provisions of this Section and the bank's articles of incorporation and bylaws.

B.  No cash dividends may be declared or paid unless the bank has unimpaired surplus equal to fifty percent of the outstanding capital stock of the bank.  The bank's unimpaired surplus shall not be reduced below fifty percent by the payment of any cash dividend.

C.  A state bank may purchase or redeem its own stock if after such purchase or redemption the bank is in compliance with applicable statutory and regulatory capital requirements, and its remaining unimpaired surplus equals or exceeds fifty percent of the outstanding capital stock of the state bank remaining after such purchase or redemption, provided that:

(1)  Prior approval of the commissioner shall be required if the total of all cash dividends declared and paid by the state bank and amounts used to redeem or repurchase the state bank's stock during any one year would exceed the total of its net profits of that year combined with the net profits from the immediately preceding year.  For the purposes of this Section, "net profits" is defined as the remainder of all earnings from current operations and other assets, after deducting from the total thereof all current operating expenses, paid and accrued cash dividends on preferred stock, if any, all federal and state taxes, cash dividends on common stock paid or accrued, and amounts paid or accrued to redeem or repurchase stock over the calculation period.  Negative net profits shall not be rounded to zero in the calculation.

(2)  A state bank shall not purchase or redeem its stock when its combined capital stock and unimpaired surplus is less than, or such purchase or redemption would reduce its combined capital stock and unimpaired surplus below, the aggregate amount payable on liquidation upon any issued shares which have a preferential right to participate in the assets in event of liquidation and that remain after the purchase of redemption and cancellation of any shares in connection therewith.

(3)  Stock which has been redeemed or repurchased must be accounted for under the par method of accounting.

(4)  Stock purchased or redeemed is canceled and thereby restored to the status of authorized and unissued shares, unless the articles provide otherwise, except that stock of the state bank acquired pursuant to R.S. 6:416(B) shall be canceled upon the expiration of the period permitted under that Section unless prior to that date the stock had been disposed of by the state bank.

(5)  The redemption or repurchase of a state bank's own stock or the stock of its parent company may not be effected for the sole purpose of speculation or to evade any applicable requirements of federal or state law.  Such acquisitions must comply with all applicable federal and state securities laws.

Acts 1984, No. 719, §1, eff. Jan. 1, 1985; Acts 1986, No. 10, §1; Acts 1991, No. 232, §1, eff. July 2, 1991; Acts 1992, No. 231, §1, eff. Sept. 1, 1992; Acts 1997, No. 1003, §1; Acts 2001, No. 915, §1, eff. June 26, 2001; Acts 2003, No. 570, §1, eff. June 27, 2003.