ORS 722.142¹
General reserve account for losses and net worth requirements
  • rules

(1) A savings association shall establish and maintain a general reserve account for losses and other net worth accounts adequate to assure solvency of the association.

(2)(a) Each savings association shall accumulate and maintain as a net worth account a general reserve for the sole purpose of absorbing losses. At the annual closing date following the anniversary of its certificate of authority and each annual closing date thereafter, the general reserve shall have a minimum balance not less than an amount fixed by rule.

(b) The Director of the Department of Consumer and Business Services by rule shall fix the required minimum amount of general reserve accounts of associations. The rule shall provide a uniform schedule of minimum levels to be reached during the first 20 or more years of an association’s operation for the purpose of achieving an orderly accumulation of the general reserve account.

(3) The director may permit an association to cure a deficiency in its general reserve account by requiring the board of directors of the association to earmark earned surplus, voluntarily pledged savings accounts of a mutual association, capital certificates of a mutual association, or capital surplus or stated capital, including preferred stocks, of a stock association, and capital notes and debentures subordinated to saving accounts, as part of its general reserve account in the amounts needed to cure the deficiency. Amounts so earmarked shall be held for the same purpose as the general reserve to the extent the earmarked amounts are needed to maintain the required reserve account level. An association shall not pay dividends or interest from the reserve account or other funds earmarked for the purpose of meeting the reserve account requirement.

(4) Every savings association shall build up and maintain its net worth so that at the close of business on any annual closing date its net worth accounts shall equal not less than the dollar amount determined in accordance with the rules to be adequate to assure solvency of the association. The rules shall provide for an adjustment of the net worth requirement during the first years of an association’s operation in accordance with subsection (2)(b) of this section. Notwithstanding other provisions of this section, the director may consider an association to be in compliance with this section if applicable federal net worth and reserve requirements for federally insured associations are satisfied. If an association fails to establish or maintain the general reserve or the net worth requirements of this section, the director may in accordance with ORS 722.464 (Cease and desist orders) require the association to take appropriate corrective action.

(5) An association may establish reserve accounts, in addition to the general reserve, as its board of directors may authorize, and make transfers to and charge such reserve accounts.

(6) Losses as they are determined, not charged to other reserve accounts, shall be charged to the general reserve until the general reserve account is exhausted. After exhaustion of the general reserve, any remaining losses not charged to other reserve accounts shall be charged as determined:

(a) In the case of a stock association, to earned surplus, then capital surplus and then stated capital; or

(b) In the case of a mutual association, to earned surplus and then the expense fund, if any.

(7) Any insurance reserve required by an insurer of the savings accounts of an association shall be considered part of the general reserve for the purpose of subsection (2) of this section. [1975 c.582 §71; 1981 c.472 §10]

1 Legislative Counsel Committee, CHAPTER 722—Savings Associations, https://­www.­oregonlegislature.­gov/­bills_laws/­Archive/­2007ors722.­pdf (2007) (last ac­cessed Feb. 12, 2009).
2 OregonLaws.org contains the con­tents of Volume 21 of the ORS, inserted along­side the per­tin­ent statutes. See the preface to the ORS An­no­ta­tions for more information.
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent. Currency Information