§ 513 — Reserves

(a) General rule.--Each credit union shall establish and maintain a regular reserve account to the same extent and in the same manner as required of a Federal credit union.

(b) Computation of reserve and net worth requirements.--For the purpose of establishing the reserves required by this section and for the provision and maintenance of adequate equity or net worth, a credit union shall compute its reserve and net worth requirements consistent with section 216 of the Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1790d) and the National Credit Union Administration rules and regulations set forth in 12 CFR Pt. 702 (relating to prompt corrective action).

(c) Allowance for loan loss.--Each credit union, in addition to maintaining a regular reserve, shall establish an allowance for loan loss. The allowance for loan loss reserve shall be funded in the manner and used for the purposes as designated from time to time by the department. The board of directors shall decide the loans which are to be charged off against the allowance for loan loss, except that the department may, at the time of examination of a credit union, recommend for charge-off such loans which in its opinion are unsound, which loans shall be charged against the allowance for loan loss account within 60 days of the receipt of such recommendation from the department. Any amount received from the repayment of a loan after it has been charged off against the allowance for loan loss account shall be credited back to the account.

(d) Allowance for investment loss.--(Deleted by amendment).

Legislative History

(Dec. 12, 1994, P.L.1067, No.146, eff. 60 days; Dec. 9, 2002, P.L.1572, No.207, eff. 60 days)