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                     UNIVERSITY OF KENTUCKY

                       CREDIT UNION, INC.


                        DECEMBER 31, 1982

(1) Accounting Policies-

   The financial statements have been prepared in contormity with
     accounting practices prescribed or permitted by the Depart-
     ment of Finance of the Commonwealth of Kentucky.    The prac-
     tices used do not differ materially from generally accepted
     accounting principles. Some of the more significant account-
     ing policies are as follows:

     (a) Loans to Members--Loans to members represent principal
           balances remaining unpaid. Loans are generally repaid
           by means of payroll deductions in equal installments
           which include interest. Interest on loans is computed
           on the unpaid principal balances at the stated simple
           interest rate.

      (b) Appropriated Undivided Earnings

            1. Statutory Reserve-

              A statutory reserve is maintained as prescribed and
                 permitted under provisions of the National Credit
                 Union Administration. The provisions in effect at
                 December 31, 1982, require a minimum reserve of 6%
                 of  the   outstanding  loans   and  risk   assets.
                 Provisions in effect in prior years required a
                 higher- level of funding.    The National Credit
                 Union Administration does not allow tor reductions
                 of  earnings   previously  appropriated.    As  of
                 December 31,   1982,   the   Credit    Union   had
                 appropriated $211,000 in excess of the statutory
                 minimum level.

            2. Contingency Reserve-

               The contingency reserve represents an appropriation
                 ot undivided earnings by action of the Board of
                 Directors and constitutes a general reserve for
                 any unforeseen contingencies.