§ 54-109.86. Transfers to regular reserve. - North Carolina Statutes

Article14J.

Reserve Allocations.

§ 54‑109.86.  Transfersto regular reserve.

(a)        At the end of eachaccounting period the gross income shall be determined. From this amount, thereshall be set aside, as a regular reserve against losses on loans and againstsuch other losses as may be specified in regulations prescribed pursuant tolaw, sums in accordance with the following schedule:

(1)        A credit union inoperation for more than four years and having assets of five hundred thousanddollars ($500,000) or more shall set aside

a.         Ten per centum (10%)of gross income until the regular reserve shall equal four per centum (4%) ofthe total of outstanding loans and risk assets, then

b.         Five per centum (5%)of gross income until the regular reserve shall equal six per centum (6%) ofthe total of outstanding loans and risk assets.

(2)        A credit union inoperation less than four years or having assets of less than five hundredthousand dollars ($500,000) shall set aside

a.         Ten per centum (10%)of gross income until the regular reserve shall equal seven and one‑halfper centum (7 1/2%) of the total of outstanding loans and risk assets, then

b.         Five per centum (5%)of gross income until the regular reserve shall equal ten per centum (10%) ofthe total outstanding loans and risk assets.

(3)        Whenever the regularreserve falls below the stated per centum of the total of outstanding loans andrisk assets, it shall be replenished by regular contributions in such amountsas may be determined by the Administrator to maintain the stated reserve goals.

(b)        The Administrator,with the advice and consent of the Credit  Union Commission, may increase ordecrease the reserve requirement set forth in subsection (a) of this sectionwhen such an increase or decrease is deemed necessary or desirable in order toconform to the reserve requirements of federally chartered credit unions.

(c)        In addition to suchregular reserve, special reserves to protect the interests of members shall beestablished:

(1)        When required byregulation; or

(2)        When found by theAdministrator, in any special case, to be necessary for that purpose.

(d)        Nothing in thissection shall be construed as limiting the amount that a credit union may setapart to its reserve fund. (1915, c. 115, s. 21; C.S., s. 5222; 1939, c. 400, s.2; 1955, c. 1135, s. 1; 1969, c. 69, ss. 2, 10; 1975, c. 538, s. 1; 1979, c.293; 1997‑456, s. 27.)