General Laws of Massachusetts - Chapter 170 Co-operative Banks - Section 22 Minimum reserves

Section 22. Every such corporation shall establish and at all times maintain as a minimum reserve to meet withdrawals of shares and accounts and applications for loans on shares and accounts and payments of taxes received from mortgagors an amount equal to not less than six and one-half per cent of its share liability, plus amounts equal to its liabilities upon club accounts and upon payments received by it from mortgagors for the purpose of payment of taxes of mortgaged real estate. Such reserve shall consist of any or all of the following: — (a) cash on hand, (b) balances payable on demand or certificates of deposit due from any trust company, national banking association or banking company, (c) bonds and other direct obligations of the United States or such obligations as are unconditionally guaranteed as to the payment of principal and interest by the United States, (d) bonds and notes of this commonwealth or any political subdivision thereof, (e) any federal agency obligations which have unexpired terms of five years or less, (f) deposits in and stocks of the Federal Home Loan Bank, (g) federal funds, defined to include a transaction involving the transfer of deposits of co-operative banks among member banks of the Federal Reserve System, which are immediately available funds, (h) investments in shares of the Co-operative Bank Investment Fund established by chapter four hundred and eighty-two of the acts of nineteen hundred and eighty-four, (i) shares or certificates in the Assets Management Fund for Savings Institutions, so-called or in any other open-end or closed-end management type investment company or investment trust registered pursuant to the provisions of 15 USC, section 80a-1 et seq.; provided, however, that the investments made by said fund are limited solely to those investments which qualify as “liquid assets” or “short term liquid assets” under section 523.10(g) and (h) of the regulations of the Federal Home Loan Bank System issued pursuant to 12 USC 1464, et seq.; and provided, further, that no more than twenty per cent of said reserve may be invested in such shares or certificates. If at any time the reserve of any such corporation falls below the minimum amount herein required, such corporation shall not, except to the extent approved by the commissioner, make any real estate loans, other than additional loans and reloans upon property already mortgaged to such corporation, until such minimum reserve shall have been fully restored.

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Last modified: September 11, 2015