Section 109. Closing of books; profits; how to be computed

1. Every bank
  and every trust company shall close its books not less  frequently  than
  annually  for  the  purpose  of  transferring  its  net  profits  to the
  undivided profits and surplus fund accounts.
    2. To determine the amount of  gross  income  of  any  bank  or  trust
  company for the purpose of computing its net profits for any period, the
  following items may be included:
    (a) All income received or properly accrued, provided that no interest
  shall  be  accrued  upon interest-bearing assets upon which a default of
  principal or interest has existed for a period which shall be determined
  by  the  superintendent  except  interest-bearing  assets   secured   by
  collateral  the  ascertained  value  of  which  is at least equal to the
  amount at which the asset plus all interest accrued thereon  is  carried
  on its books.
    (b)  Realizable  profits  resulting  from a revaluation to ascertained
  current  market  of  a  foreign  exchange  position,  provided  that   a
  consistent  practice  is  followed in the deduction from gross income of
  losses so resulting.
    (c) Amounts added to cost or charged to amortization reserve  for  the
  purpose  of  amortizing  discounts on securities purchased for less than
  par, provided that no discount shall be  amortized  on  securities  upon
  which a default exists.
    (d)  Any  profits actually realized from the sale or other disposition
  of securities, real estate or other property.
    (e) Amounts recovered on  assets  previously  charged  off,  including
  amounts  allowed  by  the superintendent on account of assets previously
  disallowed by him and other amounts allowed by the board of directors on
  account of assets previously disallowed by it. For the purpose  of  this
  paragraph  amounts transferred to valuation reserves shall be considered
  as amounts charged off.
    (f) Provided the superintendent shall have approved, and only  to  the
  extent  of  such  approval,  any  increase in the book value of the real
  estate and building or buildings thereon used by  it  as  its  place  or
  places of business.
    (g)  Such  other  items  as the superintendent, in his discretion, may
  permit to be included.
    3. To determine the  amount  of  net  profits  for  such  period,  the
  following items shall be deducted from gross income:
    (a)  All  expenses  paid or properly accrued in the transaction of its
  business and the management of its affairs.
    (b) Interest paid or properly accrued upon debts owing by it.
    (c) Amounts deducted from cost or credited to amortization reserve for
  the purpose of amortizing premiums on securities purchased for more than
  par.
    (d) All losses  sustained,  including  assets,  or  portions  thereof,
  disallowed by the superintendent, and other assets, or portions thereof,
  disallowed  by  the  board  of  directors.  With  the  approval  of  the
  superintendent, any items referred to in this paragraph may be excluded.
  For the purposes of this paragraph, provision for disallowances  may  be
  effected  by charge off or by establishment of valuation reserve and any
  existing valuation reserve may be deducted from  the  related  asset  in
  determining the amount of loss sustained.
    4.  The balance thus obtained shall constitute the net profits of such
  bank or trust company for such period.