New Jersey § 17:12b-128

§ 17:12b-128.

(a) A general reserve account shall mean a reserve account established and maintained

for the purpose of absorbing losses. Each State association shall establish such a general reserve account. (b) A bad debt reserve account shall mean a reserve account established for the purpose

of absorbing losses due to bad debts, which may be established by each State association

in addition to the general reserve account defined in subsection (a) of this section,

but the establishment of such bad debt reserve account shall not prohibit a State

association from charging losses due to bad debts to the general reserve account or

any other available reserve account or the undivided profits account. (c) “Federal insurance reserve account” shall mean a reserve account established and

maintained by an insured association in accordance with the requirements of the Federal

Savings and Loan Insurance Corporation. Any insured association may maintain such reserve account separately or may designate

its general reserve account or the bad debt reserve account, or both, as its Federal

insurance reserve account. (d) At the end of each accounting period and before the declaration of any dividends,

each State association shall transfer to the general reserve account an amount equal

to 5% of the State association's net income for such accounting period, less any amounts

transferred for such period to the bad debt reserve account; provided, however, that

the provisions of this subsection shall not apply to any insured association, as defined

in section 5 of this act. 1 (e) Any State association may at any time, in the discretion of its board, transfer

additional amounts beyond those required by the provisions of this section, to any

of the reserve accounts hereinbefore mentioned, provided, that any amount transferred

to the general reserve account in excess of the minimum amount set forth in this section

may be used for the purposes of meeting the requirements of paragraph (d) of this

section in subsequent accounting periods within 5 calendar years from the year such

excess amount was transferred to the State association's reserve accounts; provided,

however, if the State association is an insured association, as defined in section

5 of this act, the time within which such excess amounts may be used to meet the requirements

of subsection (d) of this section shall be the time permitted for such purposes under

the regulations promulgated by the Federal Savings and Loan Insurance Corporation. (f) Additions to any of the reserve accounts hereinbefore mentioned, whether required

or discretionary, may be made by transfer from the net income of the period for which

such transfer is made, from the undivided profits account or from any other unapportioned

profits. (g) No transfer to the general reserve account, required by subsection (d) of this

section, shall be required to be made so long as either: (1) the amount held in all reserve accounts of the State association plus the undivided

profits account, equals or exceeds an amount equal to 6% of the State association's

capital; or (2) the State association is an insured association, as defined in section 5 of this

act, and has complied with the reserve requirements promulgated by the Federal Savings

and Loan Insurance Corporation for such accounting period. (h) The board of a State association may, in its discretion, authorize transfers,

in whole or in part, from the bad debt reserve account to the general reserve account

or to the Federal insurance reserve account and in addition the board may from time

to time, in its discretion, authorize the transfer of all or a part of the general

reserve account to the Federal insurance reserve account and, provided further, that

when the amount held in the general reserve account exceeds 6% of the State association's

capital because of a decline in capital, the board of the State association, with

the approval of the commissioner, may authorize the transfer of amounts in excess

of 6% of capital to the undivided profits account. 1

N.J.S.A. § 17:12B-5.