Ohio Administrative Code|Rule 1301:9-2-04 | Charge-off of uncollectible loans and other losses and reserves.

                                                
(A) The purpose of the allowance for loan
		  losses is to represent the management's estimate of loan losses in a
		  credit union's loan portfolio. The allowance for loan losses will be
		  charged with the amount of uncollectible loans and loan-derived assets which
		  have been authorized for charge-off by the board of directors: likewise,
		  recoveries on loans previously charged-off will be credited to this
		  account.
(B) A record shall be maintained of all
		  loans charged-off. Said record shall contain the following information: account
		  number, name, original date, amount of original loan, security, balance at the
		  time of charge-off; and what, if any, recovery has been made on the security.
		  This record shall be kept current and made available to the examiners at each
		  examination.
(C) Loans should be charged-off when they
		  are deemed uncollectible. That practice should be applied consistently in all
		  interim financial reporting periods in accordance with GAAP. A credit
		  union's loan policy shall address when a loan is deemed
		  uncollectible.
(D) Interest should not be accrued on
		  loans which are doubtful of collection. For this purpose, loans on which
		  payments have not been received for six months or more, should be considered as
		  doubtful of collection.
(E) Each credit union shall establish and
		  maintain reserves and allowances as required by section 1733.31 of the Revised
		  Code, this rule, other reserves as required by GAAP, and administrative
		  guidelines issued by the superintendent.
(F) Pursuant to section 1733.31 of the
		  Revised Code, the superintendent has established the following as additional
		  nonrisk assets:
(1) Prepaid share
			 insurance; other prepaid insurance;
(2) Other prepaid and
			 deferred expenses;
(3) Accrued income on
			 nonrisk assets; and
(4) Deposits in corporate
			 credit unions with maturities of two years or less.
(G) Reserves for corporate credit
		  unions.
(1) At the end of each
			 dividend cycle and prior to paying a dividend (or, at the option of the
			 corporate credit union, on a monthly basis if dividends are paid more
			 frequently than monthly), sums shall be set aside in a corporate reserve in
			 accordance with the following schedule:
(a) When the credit union's corporate reserve and undivided
				earnings are less than two per cent of the assets at the end of the transfer
				period, the credit union shall set aside an amount equal to .0015 times the
				number of days in the transfer period divided by three hundred
				sixty-five.
(b) When the corporate reserve and undivided earnings are equal
				to or greater than two per cent of the assets but the corporate reserve is less
				than four per cent of the assets, the credit union shall set aside an amount
				equal to .0010 times the credit union's average daily assets for the
				transfer period times the number of days in the transfer period divided by
				three hundred sixty-five.
(2) Charges may be made
			 to the corporate reserve for loan losses and for investment losses accrued by
			 factors other than trading losses or market fluctuations. No other charges
			 shall be made except as may be authorized in writing by the superintendent.
			 Charges shall be made in accordance with GAAP.
(H) Repossessions/foreclosures.
After the sale of a repossessed security, the
		  allowance for loan losses is to be funded in an amount equal to the deficiency
		  balance until the loan is charged-off.