1. (1) For purposes of declaring and paying dividends in accordance with S.C. Code Section 34-26-710, the following definitions shall be applied:

   1. (a) "Current Earnings" is defined as fiscal year-to-date Net Income (after the payment of prior dividends during the current fiscal year) less any transfers to the Regular Reserves that a credit union must fund through year-to-date income.
   2. (b) "Undivided Earnings" is defined as the post-closing balance of the Undivided Earnings account as of the end of the prior fiscal year and adjusted for any decreases during the current year that were funded by Undivided Earnings.

2. (2) A credit union may declare a dividend that is to be paid from Undivided Earnings without making a written request to the Commissioner of Banking for a prior approval if:

   1. (a) after the dividend payment, the credit union will have a net worth ratio (as defined by 12 C.F.R Sections 702.2) of at least 8%;
   2. (b) the credit union's rating is a 1 or a 2; and

   3. (c) it has adequately provided for loan losses.

      In such a case, the credit union may pay the dividend. However, the credit union must within 30 days of paying the dividend send a letter to the Commissioner of Banking identifying the amount and date of the dividend paid and certifying that the credit union met the three requirements of this regulation at the time the dividend was paid.

      Provisions of a formal or informal enforcement action may limit a credit union's ability to pay a dividend that would otherwise be permissible as described in this regulation.

Editor's Note

This regulation became effective July 23, 1982.

HISTORY: Amended by SCSR 49-5 Doc. No. 5286, eff May 23, 2025.