PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4129

like authority, whether directly or indirectly as an agent of
a Farm Credit Bank, except with the approval of—

"(i) in a case affecting only the charter of one or more
associations—

"(I) a majority of the shareholders (present and
voting or voting by proxy) of each of the associations
that would have like lending authority (whether
directly or indirectly as an agent of a Farm Credit
Bank) in any of that territory if the charter action
were taken; and

"(II) a majority of the board of directors of the
Farm Credit Bank with which the affected associations
are affiliated; or

"(ii) in a case affecting the charter of one or more
banks—

"(I) a majority of the shareholders (present and
voting or voting by proxy) of the affiliated associations
of each of the banks that would have like lending
authority in any of that territory if the charter action
were taken;

"(II) a majority of the shareholders (present and
voting or voting by proxy) of each of the banks that
would have like lending authority in any of that terri-
tory if the charter action were taken; and

"(III) a majority vote of the boards of directors
of each of the banks that would have like lending
authority in any of that territory if the charter action
were taken.

"(C) Subparagraph (B) shall apply only in those geographic
areas where, due to the failure of a Federal intermediate credit
bank to merge in accordance with section 410(a) of the Agricul-
tural Credit Act of 1987 (12 U.S.C. 2011 note), the Federal
intermediate credit bank or its successor is chartered to provide
short- and intermediate-term credit, and a neighboring Farm
Credit Bank that is not the successor to the Federal intermedi-
ate credit bank is chartered to provide long-term credit, in
the same geographic territory.".

TITLE V—MISCELLANEOUS

SEC. 601. VALUATION RESERVES OF PRODUCTION CREDIT ASSOCIA-
TIONS.

Subsection (b) of section 2.3 (12 U.S.C. 2074(b)) is amended
to read as follows:

"(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 valu-
ation 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.".