(a) Restriction on dividends. Dividends shall be available only from undivided earnings, if any.
(b) Payment of dividends if undivided earnings depleted. The board of directors of a ``well capitalized'' federally-insured credit union that has depleted the balance of its undivided earnings account may authorize a transfer of funds from the credit union's regular reserve account to undivided earnings to pay dividends, provided that either--
(1) The payment of dividends will not cause the credit union's net worth classification to fall below ``adequately capitalized'' under subpart B or C of this part; or
(2) If the payment of dividends will cause the net worth classification to fall below ``adequately capitalized,'' the appropriate Regional Director and, if State-chartered, the appropriate State official, have given prior written approval (in an NWRP or otherwise) to pay a dividend. [65 FR 8584, Feb. 18, 2000, as amended at 67 FR 71093, Nov. 29, 2002]