Arkansas Code
Subchapter 6 - Operation
§ 23-35-605. 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 rules prescribed under this chapter, sums in accordance with the following schedule:
(1) A credit union in operation for more than four (4) years and having assets of five hundred thousand dollars ($500,000) or more shall set aside:
(A) Ten percent (10%) of gross income until the regular reserve shall equal four percent (4%) of the total of outstanding loans and risk assets; then
(B) Five percent (5%) of gross income until the regular reserve shall equal six percent (6%) of the total of outstanding loans and risk assets;

(2) A credit union in operation less than four (4) years or having assets of less than five hundred thousand dollars ($500,000) shall set aside ten percent (10%) of gross income until the regular reserve shall equal seven and one-half percent (7½%) of the total of outstanding loans and risk assets; and
(3) Whenever the regular reserve falls below the stated percent 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 State Credit Union Supervisor may decrease the reserve requirement set forth in subsection (a) of this section when, in his or her opinion, a decrease is necessary or desirable. The supervisor may also require special reserves to protect the interests of members either by rule or for an individual credit union in any special case.
(c) The reserve fund shall belong to the credit union and shall be used to meet all losses from uncollectable loans and shall not be distributed except on liquidation of the credit union or in accordance with a plan approved or ordered by the supervisor.

Structure Arkansas Code