PART VI. RESERVE ALLOCATIONS

 

§412:10-600  Regular reserve.  (a)  Atthe end of each accounting period and before the payment of any dividend, eachcredit union shall set aside from its gross earnings the following reserveagainst contingencies:

(1)  A credit union in operation for less than fouryears or having assets of less than $500,000 shall set aside ten per cent ofits gross earnings until the regular reserve equals seven and a-half per centof its total outstanding loans and risk assets, whereupon the credit unionshall set aside five per cent of its gross earnings until the regular reserveequals ten per cent of its total outstanding loans and risk assets.

(2)  A credit union in operation for four or moreyears or having assets of $500,000 or more shall set aside ten per cent ofgross earnings until the balance in the regular reserve equals four per cent ofits total outstanding loans and risk assets, whereupon the credit union shallset aside five per cent of its gross earnings until the regular reserve equalssix per cent of its total outstanding loans and risk assets.

(b)  Whenever a credit union's regular reserveaccount falls below the percentages required by this section, the credit unionshall notify the commissioner and shall make up the deficiency by regularcontributions in such amounts as may be needed to maintain the required level.

(c)  The commissioner may decrease or waiveentirely the reserve requirement for an individual credit union in one or moreaccounting periods when in the commissioner's opinion such a decrease isnecessary or desirable.

(d)  The regular reserve shall belong to thecredit union and shall be used to meet losses on risk assets and to meet suchother classes of losses as are approved by the commissioner.  The regularreserve shall not be distributed except on liquidation of the credit union, orin accordance with a plan approved by the commissioner. [L 1993, c 350, pt of§1]