South Carolina Code of Regulations
Chapter 15 - STATE BOARD OF FINANCIAL INSTITUTIONS CONSUMER FINANCE DIVISION
Article 1 - BANKING, COMMERCIAL PAPER AND FINANCE
Section 15-12 - Reserve Accounts, Savings and Loan

Every State chartered building and loan or savings and loan association in the State shall set up a reserve account which shall be used solely for the purpose of absorbing losses. A copy of the resolution of the Board of Directors establishing this account shall be filed with the Chief Examiner of the Board of Bank Control.

At the close of each fiscal year on or after July 1, 1959, this account shall be credited with an amount equal to at least 10% of the net income of the association for the year, or by the amount which the total of all reserves and undivided profits shall be less than 15% of all outstanding shares on that closing date, if that amount be less than 10% of net income. Provided, however, that any account already established pursuant to the regulations of the Federal Savings and Loan Insurance Corporation and any additions (of at least 5% of net income to that reserve) to that reserve as required by the said corporation shall satisfy the requirements of this regulation. (Be it further provided that where additions required by the FSLIC to said account are less than 5% of net income every association shall credit the lesser of 5% of net income as herein defined or the balance of net income after deduction of dividends to either said account or a special reserve account to absorb losses as designated by the Board of Directors.)

Net income means gross income from all sources after deduction of operation expenses, including interest on notes payable and losses of every kind charged to income, rather than to reserves and undivided profits, but before deduction of dividends to shareholders.