§1762. Reserves

(a) At the end of each accounting period the gross income shall be determined. From this amount, there shall be set aside, as a regular reserve against losses on loans and against such other losses as may be specified in regulations prescribed under this chapter, sums in accordance with the following schedule:

(1) A credit union in operation for more than four years and having assets of $500,000 or more shall set aside (A) 10 per centum of gross income until the regular reserve shall equal 4 per centum of the total of outstanding loans and risk assets, then (B) 5 per centum of gross income until the regular reserve shall equal 6 per centum of the total of outstanding loans and risk assets.

(2) A credit union in operation less than four years or having assets of less than $500,000 shall set aside (A) 10 per centum of gross income until the regular reserve shall equal 7½ per centum of the total of outstanding loans and risk assets, then (B) 5 per centum of gross income until the regular reserve shall equal 10 per centum of the total of outstanding loans and risk assets.

(3) Whenever the regular reserve falls below the stated per centum of the total of outstanding loans and risk assets, it shall be replenished by regular contributions in such amounts as may be needed to maintain the stated reserve goals.

(b) The Board may decrease the reserve requirement set forth in subsection (a) of this section when in its opinion such a decrease is necessary or desirable. The Board may also require special reserves to protect the interests of members either by regulation or for an individual credit union in any special case.

(June 26, 1934, ch. 750, title I, §116, formerly §12, 48 Stat. 1221 ; Oct. 25, 1949, ch. 713, §3, 63 Stat. 890 ; renumbered §17 and amended Sept. 22, 1959, Pub. L. 86–354, §1, 73 Stat. 634 ; Mar. 10, 1970, Pub. L. 91–206, §2(1), 84 Stat. 49 ; renumbered title I, §116, and amended Oct. 19, 1970, Pub. L. 91–468, §§1(2), 9, 84 Stat. 994 , 1017; Apr. 19, 1977, Pub. L. 95–22, title III, §305, 91 Stat. 52 ; Nov. 10, 1978, Pub. L. 95–630, title V, §502(b), 92 Stat. 3681 .)

Amendments

1978-Subsec. (b). Pub. L. 95–630 substituted "Board" for "Administrator" in two places, and "its opinion" for "his opinion".

1977-Subsec. (a). Pub. L. 95–22 substituted "At the end of each accounting period the gross income shall be determined" for "Immediately before the payment of each dividend, the gross earnings of the credit union shall be determined", reduced the impact of existing regular reserve requirement by limiting their applicability to credit unions in operation for less than four years or having assets of less than $500,000, and added regular reserve requirements relating to credit unions in operation for more than four years and having assets of $500,000 or more.

Subsec. (b). Pub. L. 95–22 inserted provision permitting Administrator to decrease the reserve requirement set forth in subsec. (a) of this section when in his opinion such a decrease is necessary or desirable.

1970-Subsec. (a). Pub. L. 91–468, §9, redesignated first sentence as subsec. (a) and changed the base for reserve credits from net income to gross income as follows: 10 percent until the regular reserve equals 7½ percent of total outstanding loans and risk assets, then 5 percent until the regular reserve equals 10 percent of outstanding loans and risk assets.

Subsec. (b). Pub. L. 91–468, §9, redesignated second sentence as subsec. (b) without substantial change.

Par. (2). Pub. L. 91–206 substituted "Administrator" for "Director".

1959-Pub. L. 86–354 substituted "charges", "each dividend period", "any dividends" and "Director", for "fines", "each year", "any dividend" and "director", respectively, inserted "continue to" and redesignated cls. (a) and (b) as (1) and (2).

1949-Act Oct. 25, 1949, amended section generally, changing the requirement that fees and fines and 20 percent of net earnings of each year must be set aside in a reserve fund to make it unnecessary for anything to be set aside after the reserve fund is equal to 10 percent of the total amount of the member's shares on deposit.

Effective Date of 1978 Amendment

Amendment by Pub. L. 95–630 effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of Pub. L. 95–630, set out as a note under section 1752 of this title.

Section Referred to in Other Sections

This section is referred to in section 1781 of this title.