§ 28-7-1-24 — Regular reserve requirements; undivided profits account; financial statements; allowance for credit losses

Indiana § 28-7-1-24

• Jurisdiction: Indiana
• Art. 7: SPECIALIZED FINANCIAL INSTITUTIONS
• Ch. 1: Credit Unions

Text

(a) All entrance charges shall, after payment
of the organization expenses, be known as reserve income, and shall be
added to the regular reserve of the credit union. At the close of the
dividend period, there shall be set apart to the regular reserve ten
percent (10%) of gross income until the regular reserve shall equal
seven and one-half percent (7 1/2%) of the total of outstanding loans,
then five percent (5%) of gross income until the regular reserve shall
equal ten percent (10%) of the total of outstanding loans. Whenever the
regular reserve falls below ten percent (10%) or seven and one-half
percent (7 1/2%) of the total of outstanding loans, it shall be
replenished by regular contributions to maintain the reserve goals of
seven and one-half percent (7 1/2%) or ten percent (10%). The regular
reserve shall be held to meet contingencies and shall not be distributed
to the members except upon dissolution of the credit union.
(b) A credit union may have an undivided profits account. The
undivided profits account may be transferred to the regular reserve.
(c) The department may, by rule, revise the formula prescribed by
this section. A revised formula must be prudent and must reasonably
be expected to protect the credit unions.
(d) Financial statements of credit unions must provide for full and
fair disclosure of all assets, liabilities, and members' equity, including
such allowance for credit loss accounts necessary to present fairly the
financial position, and all income and expenses necessary to present
fairly the results of operation for the period concerned.
(e) The maintenance of the allowance for credit losses or other
losses does not exempt a credit union from the requirement set forth in
subsection (a). The totals of the regular reserve and the allowance for
credit losses account shall be combined for determining the percentage
of gross income to be transferred to the regular reserve.
(f) Loan and investment losses of a credit union must be charged
against the corresponding loan or investment category of the allowance
for credit losses. Adjustments to the allowance for credit losses shall be
made before the distribution of any dividend so that the allowance for
credit loss represents the value of loans and investments and
anticipated losses resulting from:
(1) uncollectible loans, investments, notes, and contracts
receivable, including any uncollectible accrued interest receivable
thereon;
(2) assets acquired in liquidation of loans; and
(3) loans purchased from other credit unions.
(g) Adjustments to the allowance for credit losses must be recorded
in the appropriate allowance for credit loss subcategory corresponding
to the asset type being reserved against.
Formerly: Acts 1961, c.182, s.24; Acts 1969, c.133, s.7; Acts
1974, P.L.130, SEC.7. As amended by Acts 1977, P.L.294, SEC.12;
P.L.164-1988, SEC.13; P.L.8-1991, SEC.31; P.L.1-1992, SEC.156;
P.L.14-1992, SEC.127; P.L.228-1993, SEC.7; P.L.263-1995, SEC.21;
P.L.192-1997, SEC.20; P.L.35-2010, SEC.163; P.L.186-2015, SEC.38;
P.L.69-2018, SEC.56; P.L.30-2024, SEC.4.