1.  Before the payment of any dividend, the gross earnings of the credit union must be determined. From the gross earnings a regular reserve against losses must be set aside according to the following schedule:

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(a) Until the regular reserve equals 7.5 percent of the outstanding loans and risk assets, all credit unions with assets of $500,000 or less shall withhold 10 percent of the gross earnings. Thereafter, 5 percent of the gross income must be withheld until the regular reserve reaches 10 percent of the outstanding loans and risk assets.

(b) Whenever a credit union has assets of more than $500,000 and has been in operation for at least 4 years, it shall maintain its regular reserve as follows:

(1) Until the regular reserve equals 4 percent of the outstanding loans and risk assets, the credit union shall withhold 10 percent of its gross earnings.

(2) Thereafter, until the regular reserve equals 6 percent of its outstanding loan and risk assets, the credit union shall withhold 5 percent of its gross earnings.

(c) Whenever the regular reserve falls below the required levels, it must be replenished by regular contributions sufficient to maintain the regular reserve at the levels required by paragraphs (a) and (b).

2.  The regular reserve belongs to the credit union and must not be distributed except on liquidation of the credit union or in accordance with a plan approved by the Commissioner.