
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: 12USC2132]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
                 SUBCHAPTER III--BANKS FOR COOPERATIVES
 
                     Part A--Banks for Cooperatives
 
Sec. 2132. Earnings and reserves; application of savings


(a) Application of savings

    At the end of each fiscal year, the net savings shall, under 
regulations prescribed by the Farm Credit Administration, continue to be 
applied on a cooperative basis with provision for sound, adequate 
capitalization to meet the changing financing needs of eligible 
cooperative borrowers and prudent corporate fiscal management, to the 
end that current year's patrons carry their fair share of the 
capitalization, ultimate expenses, and reserves related to the year's 
operations and the remaining net savings shall be distributed as 
patronage refunds as provided in subsections (b) and (c) of this 
section. Such regulations may provide for application of net savings to 
the restoration or maintenance of an allocated surplus account, 
reasonable additions to unallocated surplus, or to unallocated reserves 
after payment of operating expenses, and provide for allocations to 
patrons not qualified under title 26, or payment of such per centum of 
patronage refunds in cash, as the board may determine.

(b) Patronage refunds

    The net savings of each district bank for cooperatives, after the 
earnings for the fiscal year have been applied in accordance with 
subsection (a) of this section shall be paid in stock, participation 
certificates, or cash, or in any of them, as determined by its board, as 
patronage refunds to borrowers to whom such refunds are payable who are 
borrowers of the fiscal year for which such patronage refunds are 
distributed. Except as provided in subsection (c) below, all patronage 
refunds shall be paid in proportion that the amount of interest and 
service fees on the loans to each borrower during the year bears to the 
interest and service fees on the loans of all borrowers during the year 
or on such other proportionate patronage basis as may be approved by the 
board of directors.

(c) Savings of Central Bank for Cooperatives

    The net savings of the Central Bank for Cooperatives after the 
earnings for the fiscal year have been applied in accordance with 
subsection (a) of this section shall be paid in stock or cash, or both, 
as determined by the board, as patronage refunds to the district banks 
on the basis of interests held by the Central Bank in loans made by the 
district banks and upon any direct loans made by the Central Bank to 
cooperative associations, or on such other proportionate patronage basis 
as may be approved by the board of directors. In cases of direct loans, 
such refund shall be paid to the district bank or banks which issued 
their stock to the borrower incident to such loans, and the district 
bank or banks shall issue a like amount of patronage refunds to the 
borrower.

(d) Loss carryover

    In the event of a net loss in any fiscal year after providing for 
all operating expenses (including reasonable valuation reserves and 
losses in excess of any applicable reserves), such loss may be carried 
forward or carried back, if appropriate, or otherwise shall be absorbed 
by charges to unallocated reserve or surplus accounts established after 
December 10, 1971; charges to allocated contingency reserve account; 
charges to allocated surplus accounts; charges to other contingency 
reserve and surplus accounts; the impairment of voting stock; or the 
impairment of all other stock.

(e) Charge of unrecognized costs or expenses to reserve, surplus, or 
        patronage allocations

    Notwithstanding any other provisions of this section any costs or 
expenses attributable to a prior year or years but not recognized in 
determining the net savings for such year or years may be charged to 
reserves or surplus of the bank or to patronage allocations for such 
years, as may be determined by the board of directors.

(f) Payment of patronage refunds in cash

    A bank for cooperatives may pay in cash such portion of its 
patronage refunds as will permit its taxable income to be determined 
without taking into account savings applied as allocated surplus, 
allocated contingency reserves, and patronage refunds under subsection 
(a) of this section.

(Pub. L. 92-181, title III, Sec. 3.11, Dec. 10, 1971, 85 Stat. 606; Pub. 
L. 96-592, title III, Sec. 308, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 
99-205, title II, Sec. 205(e)(7), (8), Dec. 23, 1985, 99 Stat. 1705; 
Pub. L. 100-233, title VIII, Secs. 802(r), 805(n), Jan. 6, 1988, 101 
Stat. 1712, 1716.)


                               Amendments

    1988--Subsec. (a). Pub. L. 100-233, Secs. 802(r)(1), 805(n)(1), (5), 
redesignated subsec. (b) as (a), substituted ``(b) and (c)'' for ``(c) 
and (d)'', struck out ``as may be approved by the Farm Credit 
Administration'' after ``payment of operating expenses'', and struck out 
at end ``If during the fiscal year but not at the end thereof a bank 
shall have had outstanding capital stock held by the United States, 
provision will be made for payment of franchise taxes required in 
section 2151 of this title.''
    Subsec. (b). Pub. L. 100-233, Secs. 802(r)(2), 805(n)(2), (5), 
redesignated subsec. (c) as (b) and substituted ``(a) of this section'' 
for ``(b) of this section, whichever is applicable,'', ``(c) below'' for 
``(d) below'', and ``may be approved by the board of directors'' for 
``the Farm Credit Administration may approve''. Former subsec. (b) 
redesignated (a).
    Subsec. (c). Pub. L. 100-233, Secs. 802(r)(3), 805(n)(3), (5), 
redesignated subsec. (d) as (c) and substituted ``(a) of this section'' 
for ``(b) of this section whichever is applicable,'' and ``may be 
approved by the board of directors'' for ``the Farm Credit 
Administration may approve''. Former subsec. (c) redesignated (b).
    Subsecs. (d), (e). Pub. L. 100-233, Sec. 805(n)(5), redesignated 
subsecs. (e) and (f) as (d) and (e), respectively. Former subsec. (d) 
redesignated (c).
    Subsecs. (f), (g). Pub. L. 100-233, Sec. 805(n)(4), (5), 
redesignated subsec. (g) as (f), substituted ``A bank for cooperatives'' 
for ``For any year that a bank for cooperatives is subject to Federal 
income tax, it'', and struck out ``or (b)'' after ``subsection (a)''. 
Former subsec. (f) redesignated (e).
    1985--Subsec. (a). Pub. L. 99-205, Sec. 205(e)(7), struck out 
subsec. (a) which provided for application of savings when bank for 
cooperatives has outstanding stock held by the Governor.
    Subsec. (b). Pub. L. 99-205, Sec. 205(e)(8)(A), substituted ``At the 
end of each fiscal year, the net'' for ``Whenever at the end of any 
fiscal year a bank for cooperatives shall have no outstanding capital 
stock held by the Governor of the Farm Credit Administration, the net''.
    Subsecs. (c), (d). Pub. L. 99-205, Sec. 205(e)(8)(B), substituted 
``subsection (b) of this section'' for ``subsection (a) or (b) of this 
section''.
    1980--Subsec. (b). Pub. L. 96-592, Sec. 308(1), struck out 
provisions relating to 25 per centum requirement for net savings.
    Subsec. (c). Pub. L. 96-592, Sec. 308(2), inserted applicability to 
participation certificates and to borrowers to whom refunds are payable.


                    Effective Date of 1985 Amendment

    Amendment by Pub. L. 99-205 effective thirty days after Dec. 23, 
1985, see section 401 of Pub. L. 99-205, set out as a note under section 
2001 of this title.
