2005 Vermont Code - § 2080. — Reserve allocations

§ 2080. Reserve allocations

(a) Immediately before the payment of each dividend, the gross earnings of the credit union shall be determined. From this amount, there shall be set aside sums as a regular reserve for contingencies in accordance with the following schedule:

(1) A credit union in operation for more than four years and having assets of $500,000.00 or more shall set aside

(A) ten percent of gross income until the regular reserve shall equal four percent of the total outstanding loans and risk assets, then

(B) four percent of gross income until the regular reserve shall equal five percent of the total outstanding loans and risk assets;

(2) A credit union in operation less than four years or having assets of less than $500,000.00 shall set aside

(A) ten percent of gross income until the regular reserve shall equal seven and one-half percent of the total outstanding loans and risk assets, then

(B) five percent of gross income until the regular reserve shall equal ten percent 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;

(4) Any entrance or annual membership fees, charges and transfer fees shall, after payment of organization expenses, be added to reserve funds.

(b) The reserve fund shall belong to the credit union and shall be used to meet losses except those resulting from an excess of expenses over income and shall not be distributed except on liquidation of the credit union, or in accordance with a plan approved by the department of banking, insurance, securities, and health care administration. The board of directors may increase or, if the reserve fund equals or exceeds 10 percent of the outstanding loans to members excluding loans to other credit unions, decrease the proportion of the net earnings to be thus set aside, and may transfer part or all of the undivided earnings to the reserve fund.

(c) If the commissioner determines that the reserve established pursuant to the foregoing paragraphs is inadequate for any reason, he may require the establishment of such additional reserves as he deems necessary for the protection of the shareholders. (Added 1967, No. 312 (Adj. Sess.), § 1, eff. March 22, 1968; amended 1969, No. 18, § 9, eff. March 11, 1969; 1975, No. 70, § 9; 1977, No. 189 (Adj. Sess.), § 1; 1981, No. 192 (Adj. Sess.), § 3; 1983, No. 227 (Adj. Sess.), § 6; 1989, No. 225 (Adj. Sess.), § 25(a); 1995, No. 180 (Adj. Sess.), § 38(a).)