
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2074]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
                 SUBCHAPTER II--FARM CREDIT ASSOCIATIONS
 
                 Part A--Production Credit Associations
 
Sec. 2074. Production credit association capitalization


(a) In general

    In accordance with section 2154a of this title, each production 
credit association shall provide, through its bylaws and subject to Farm 
Credit Administration regulations, for its capitalization and the manner 
in which its stock shall be issued, held, transferred, and retired and, 
except as provided in subsection (b) of this section, its earnings 
distributed.

(b) Application of earnings

    At the end of each fiscal year, each production credit association 
shall apply the amount of the earnings of the association for the fiscal 
year in excess of the operating expenses of the association (including 
provision for valuation reserves against loan assets in accordance with 
generally accepted accounting principles)--
        (1) first, to the restoration of the impairment (if any) of 
    capital; and
        (2) second, to the establishment and maintenance of the surplus 
    accounts, the minimum aggregate amount of which shall be prescribed 
    by the Farm Credit Bank.

(c) Patronage

    When the bylaws of an association so provide and subject to the 
general directions of the Farm Credit Administration, available net 
earnings at the end of any fiscal year may be distributed on a patronage 
basis in stock, participation certificates, or in cash. Any part of the 
earnings of the fiscal year in excess of the operating expenses for such 
year held in the surplus account may be allocated to patrons on a 
patronage basis.

(Pub. L. 92-181, title II, Sec. 2.3, as added Pub. L. 100-233, title IV, 
Sec. 401, Jan. 6, 1988, 101 Stat. 1632; amended Pub. L. 102-552, title 
V, Sec. 501, Oct. 28, 1992, 106 Stat. 4129.)


                            Prior Provisions

    A prior section 2074, Pub. L. 92-181, title II, Sec. 2.3, Dec. 10, 
1971, 85 Stat. 593; Pub. L. 96-592, title II, Sec. 203, Dec. 24, 1980, 
94 Stat. 3440; Pub. L. 99-205, title II, Sec. 205(e)(6), Dec. 23, 1985, 
99 Stat. 1704, related to loans, discounts, participation, and leasing, 
prior to the general amendment of this subchapter by Pub. L. 100-233, 
Sec. 401.


                               Amendments

    1992--Subsec. (b). Pub. L. 102-552 amended subsec. (b) generally. 
Prior to amendment, subsec. (b) read as follows: ``Each production 
credit association at the end of each fiscal year shall apply the amount 
of the earnings of the association for such year in excess of the 
operating expenses of the association (including provision for valuation 
reserves against loan assets in an amount equal to one-half of 1 percent 
of the loans outstanding at the end of the fiscal year to the extent 
that such earnings in such year in excess of other operating expenses 
permit, or in such greater amounts as are deemed necessary under 
generally accepted accounting principles, until such reserves equal or 
exceed 3\1/2\ percent of the loans outstanding at the end of the fiscal 
year, beyond which 3\1/2\ percent further additions to such reserves may 
be made, if deemed necessary under generally accepted accounting 
principles) first to the restoration of the impairment, if any, of 
capital, and second, to the establishment and maintenance of the surplus 
accounts, the minimum aggregate amount of which shall be prescribed by 
the Farm Credit Bank.''
