Investment Certificate and Withdrawable Share Reserve

Each association’s investment certificate and withdrawable share reserve shall consist of any one, or the sum of any two or more, of the following: Paid-up non-withdrawable capital, surplus, undivided profits, COL120106 11 GCAFINANCE & TAXATION CH. 113 ORGANIZATION loan reserve and federal insurance reserve, and also such other reserves as the commissioner may prescribe. The specified amount of the investment certificate and withdrawable share reserve for each association shall be the sum of the following:

(1)Five percent (5%) of the aggregate value of its outstanding investment certificates;

(2)Five percent (5%) of the aggregate value of its outstanding shares;

(3)Fifty Thousand Dollars ($50,000) in respect of each branch maintained by it. No association shall pay any dividends to stockholders or distribute any profits to stockholders if its investment certificate and withdrawable share reserve is less than, or by such payment or distribution would be reduced below, said specified amount. No association shall

(a)issue investment certificates except in lieu of investment certificates theretofore issued,

(b)receive additional funds upon investment certificates other than installment certificates (but this prohibition shall not prevent crediting on investment certificates, interest earned thereof),

(c)issue withdrawable shares except in lieu of withdrawable shares theretofore issued or in connection with loans, or

(d)receive additional funds on withdrawable shares other than installment shares (but this prohibition shall not prevent crediting on withdrawable shares, dividends or earnings thereon if the payment of such dividends is not otherwise prohibited under this section), if at the time of such proposed issue or receipt its investment certificate and withdrawable share reserve shall be less than said specified amount. For the purposes of this section, accrued interest on investment certificates and accrued dividends on shares, at the rate or rates of return determined for such investment certificates or shares (or if such rate or rates have not been determined for any period or part of a period, at the rate or rates of return most recently determined) shall be included in computing the value of outstanding shares and investment certificates, and shall be deducted in computing the amount of investment certificate and withdrawable share reserve. The provisions of this section shall not be applicable to any association unless it shall issue either shares or investment certificates. COL120106 11 GCAFINANCE & TAXATION CH. 113 ORGANIZATION