ofits and losses shall be apportioned at least annually. In computing earnings or dividends on shares, the rate shall be applied to the value thereof, subject to regulations prescribed by the by-laws or directors in respect of payments on such shares since the last prior apportionment. Interest unpaid, although due or accrued, on debts owing to any association, shall not be included in calculation of its profits available for dividends; nor shall any association, except with the previous written consent of the commissioner, enter or at any time carry on its books any of its assets at a valuation exceeding its actual cost to such association. If the loan reserve mentioned in this section shall not equal 5 percent of the aggregate unpaid principal amount of the outstanding loans at the time of each apportionment of profits, the directors, before declaring any dividends, shall set aside as a loan reserve not less than 5 percent of the net profits accruing since the last prior apportionment and shall continue so to do until said loan reserve shall amount to at least 5 percent of the aggregate unpaid principal amount of the loans in force secured by real property. Such loan reserve shall be available at all times to meet any losses, whether arising from loans or otherwise, but the directors of any association at their option may charge losses against earnings, undivided profits or surplus. If at any time said

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loan reserve shall be in anywise impaired, it shall thereafter be restored in like manner. Said loan reserve shall include such sum, if any, as the directors of such association may transfer from its surplus or undivided profits to said loan reserve. Every association may, in addition to a dividend on its stock at a rate equal to that declared and paid or credited on installment shares, if any, set aside from and out of the net profits, if any, at each annual distribution thereof an amount not exceeding 1 per cent per annum on the average loans in force during such period, or a proportionate amount at each semiannual, quarterly or other distribution, from which to declare additional dividends on its stock; provided, however, that at least one-tenth of the amount so set aside shall be carried to stock surplus until such surplus shall amount to at least 25 per cent of the par value of the outstanding stock, and if at any time thereafter such stock surplus shall be in anywise impaired, it shall thereafter be restored in like manner. Subject to the requirements of this section as to the loan reserve and stock surplus, and subject to the provisions of other sections of this act expressly restricting the declaration or payment of dividends, the directors of any association not issuing shares may make, declare and pay dividends on the stock of so much of the surplus profits arising from the business thereof as to them appears advisable.

SOURCE: GC §41502.