3. Purpose of Aijro,- ;,pn

              Both  the  S r-I ;1t nrV  J C3  u ',t uoncy  R.tst ryes are
                m-aintained to prc,-i( ;,. pital 1).-se to albsurb any
                unforeseen cont ir-,c i    hs ho.-xver, Zs re(qiuired by
                gener.lly  acceptT(l d ,cc(unring  principles,  any
                losses  Iealiz.(1  L\  the  Credit  Union  W.il1  be
                reflected in the   ;ta Lcient of operatofls in the
                period the loss ari;es.

      (c) Dividends--Dividends  on  :crmbers'  share  accounts  are
           accrued monthly and paid quarterly.    They are classi-
           fied as an expense in the statement of income inasmuch
           as thev are similar to the interest paid by other
           financial institutions on their savings accounts.

      (d) Membership--Membership in the Credit Union is limited to
            persons and their immediate families who are employees
            of the University of Kentucky and affiliated organiza-
            tions as approved by the Board of Directors of the
            Credit Union.

      (e) Allowance for Doubtful Loans--This allowance represents a
            valuation reserve available for loan charge-offs.     The
            change in the allowance for the year ended December 31,
            1982, is as follows:

            Balance, at beginning of year                    $5,200
            Provision charged to expense                      2,039
            Loans charged-off                                (2,039)

            Balance, at end of year                          $5,200



(2) Investment in Common Trust Fund

   This balance represents investment in the International Credit
      Union (lCU) government securities program, a common trust
      fund. The assets of the ICU government securities program
      consist of cash and United States Government and federal
      agency securities held by the Trustee, First Wisconsin
      National Bank of Milwaukee.


(3) Dividends on Members' Share Accounts and Interest Expense-

    The per annum dividend rate was 7% tor the year ended
      December 31,  1982.    Interest  was  accrued   on  All  Savers
      Certificates based upon the stated rate at the date the
      certificate was issued.   During the period the stated rates
      varied from 6.49% to 10.79%. Interest on IRA accounts was
      10% during the period.