Proper management of capital is becoming a more important issue for shareholder-oriented banks and thrifts, and special cash dividends have become a valuable tool offering immediate relief in the face of stockholder activism and market pressure for capital efficiency.

In deciding whether to pay a special cash dividend, a company should consider the fundamental tax and accounting issues as well as the less obvious issues of state law limits on corporate activity, securities law disclosure requirements, regulatory limitations, and the effect on existing or proposed stock-based benefit plans.

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