Sec. 2.3. PRODUCTION CREDIT ASSOCIATION CAPITALIZATION
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## SEC. 2.3 PRODUCTION CREDIT ASSOCIATION CAPITALIZATION **[**[12 U.S.C. 2074](/us/usc/t12/s2074)**]** ###
(a)In General In accordance with section 4.3A, 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), 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.
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Sec. 2.3
PRODUCTION CREDIT ASSOCIATION CAPITALIZATION
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