New Federal Reserve SR Letter Requires Notice Before Savings Associations May Declare Dividends

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Effective July 21, 2011, any savings association that is a subsidiary of a savings and loan holding company (SLHC) must provide notice to its applicable Federal Reserve Bank at least 30 days before declaring a dividend. The duty to review and process these notices is one of the new responsibilities the Board assumed on July 21 as part of the supervisory and rulemaking authority previously held by the Office of Thrift Supervision (OTS) with respect to SLHCs.

The 30-day prior notice is required by statute. The statute also provides that the 30-day period runs from the date the notice is submitted to the agency, and that a dividend declared during the review period or without filing the notice is null and void.

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