Sec. 36a-441a. Loan and lease losses account. Net worth requirement.
Sec. 36a-441a. Loan and lease losses account. Net worth requirement. (a) A
Connecticut credit union shall establish and maintain an allowance for loan and lease
losses account in an amount that represents the estimated losses on loans and leases.
The allowance for loan and lease losses account requirement shall be computed and
adjusted, through the provision for loan and lease losses account, prior to the declaration
or payment of dividends.
(b) A Connecticut credit union shall contribute from its earnings, as net worth, the
greater of (1) such amounts as may be required by 12 CFR Part 702, as from time to
time amended, or (2) amounts in accordance with the following schedule: (A) In the
case of a Connecticut credit union in existence for more than four years and having
assets of two million dollars or more, ten per cent of its gross income until its net worth
equals four per cent of total assets, then five per cent of gross income until its net worth
equals six per cent of total assets; and (B) in the case of a Connecticut credit union in
existence for four years or less or a Connecticut credit union having assets of less than
two million dollars, ten per cent of its gross income until its net worth equals seven and
one-half per cent of total assets, then five per cent of its gross income until its net worth
equals ten per cent of total assets.
(c) The commissioner may increase the net worth requirement of any Connecticut
credit union set forth in subsection (b) of this section when the commissioner deems it
necessary to protect the safety and soundness of such Connecticut credit union.
(d) Whenever the net worth falls below the applicable percentages of total assets
specified in subsection (b) of this section, the Connecticut credit union shall make regular
contributions in such amounts as specified in subsection (b) of this section as may be
needed to maintain such net worth. Such contributions shall be made prior to the declaration or payment of dividends.
(e) As used in this section, the term "net worth" means the retained earnings balance
of the Connecticut credit union at the end of each dividend period, excluding the allowance for loan and lease losses account and, in the case of a Connecticut credit union
designated by the National Credit Union Administration as a low-income credit union
under 12 CFR 701.34, as from time to time amended, net worth includes any secondary
capital account that is uninsured and subordinate to all other claims, including claims
of creditors, shareholders and the National Credit Union Share Insurance Fund. Retained
earnings shall consist of undivided earnings, as determined under generally accepted
accounting principles, regular reserves and other appropriations designated by the commissioner or the National Credit Union Administration, or its successor agency, or by the
governing board of the Connecticut credit union with the approval of the commissioner.
(P.A. 02-73, S. 43; P.A. 03-84, S. 50.)
History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner" in Subsecs. (c) and (e), effective June
3, 2003.