Page images
PDF
EPUB

$ 615.5101 Lost, stolen, destroyed, mu 8 615.5103 Loss from payment of spu. tilated or defaced consolidated obli

rious debenture. gations and coupons of the Farm Credit banks.

Each of the 12 Federal intermediate

credit banks agreed, by resolution (a) Basis of relief. The statutes of the adopted by its board of directors in 1963, United States, now or hereafter in force, to share in any loss resulting from the and the regulations of the Treasury De payment of counterfeit, forged, or unaupartment, now or hereafter in force, gov thorized debentures. The agreement proerning relief on account of the loss, theft. vides that such loss shall be shared by all destruction, mutilation or defacement of of the banks in the same ratio as their U.S. securities, and the regulation of the respective participations in debentures Treasury Department, now or hereafter issued during the 12 months preceding in force, governing the payment of muti

the date of payment of such counterfeit, lated or defaced coupons of U.S. securi

forged, or unauthorized debentures. ties, insofar as such statutes and regula § 615.5104 Bonds and debentures as tions may be applicable, and as modified illustrations. to relate to the consolidated obligations

Illustrations of Farm Credit bonds, deof the Farm Credit banks and coupons bentures and other securities may appear of such obligations shall govern the in information and educational materials granting of relief on account of lost, if printed in black and white, but not in stolen, destroyed, mutilated or defaced color, and must be less than 34 actual consolidated obligations of the Farm size or more than 112 times the actual Credit banks and mutilated or defaced size of the original security. Motion piccoupons of such obligations.

ture and microfilms and slides of such (b) Claims and proof of loss. Claims securities are permitted in black and shall be presented, and proof shall be

white or color for projection on a screen made, by applicants for relief on account or for use in telecasting. of the loss, theft, destruction, mutilation

Subpart D-Other Funding or defacement of consolidated obligations of the Farm Credit banks and the mutila

8 615.5110 Authority to issue. tion or defacement of coupons of such Any Farm Credit Bank may issue obligations, in accordance with the stat Farm Credit Investment Bonds directly utes of the United States, now or here

to members and employees of the banks, after in force, and the regulations of

the production credit associations and the Treasury Department, now or here

the Federal land bank associations withafter in force, with respect to securities

in limitations set forth in $ 615,5120. The of the United States, and coupons of such

bonds are subject to the limitation con

tained in the Federal Reserve Board's securities.

Regulation Q which establishes the $ 615.5102 Restrictive endorsements of amount, the rate, the maturity and the bearer securities.

early redemption penalty for consumerWhen consolidated obligations of the

type deposits under $100,000. Farm Credit banks are being presented

[39 FR 12355, Apr. 5, 1974] to Federal Reserve banks or branches, or § 615.5120 Purchase eligibility requireto the Treasurer of the United States, by

ment. or through banks (including Farm Credit

(a) Limitations. Eligibility to purchase banks) for redemption, such obligations

Farm Credit Investment Bonds shall be may be restrictively endorsed. The re

limited to members and employees of the strictive endorsement shall be placed Farm Credit banks and associations exthereon in substantially the same manner cept any bank officers, directors and emand with the same effects as prescribed ployees who are involved in setting the in U.S. Treasury Department regulations, term or rate, and employees of the Farm now or hereafter in force, governing like Credit Administration except officials transactions in U.S. bonds; and consoli precluded by regulation. A member of a dated obligations of the Farm Credit Farm Credit association or of a bank for banks so endorsed shall be prepared for cooperatives need not be an active borshipment and shipped in the manner pre rower to be eligible. A member of any scribed in such regulations for United Farm Credit institution may purchase States bonds. (See 31 CFR 328.1–328.6) investment bonds from any of the insti

tutions in the district which offer the (4) If a member is a natural person, a purchase program. Patrons, members, second natural person, member or nonemployees, or stockholders of other fi member, may be named as co-owner or nancing institutions discounting loans beneficiary. Co-ownership may not inwith the Federal Intermediate Credit volve a fiduciary or private organization. Bank or of any legal entity which is a (5) In the co-ownership form the conborrower from any Farm Credit institu nective “or” shall serve the same purtion as such are ineligible as they are pose as “joint tenants with right of surnot members of a Farm Credit institu vivorship.” tion. Stock or participation certificates

[39 FR 12355, Apr. 5, 1974) shall not be sold merely to qualify a party for the purchase of Farm Credit

$ 615.5130 Procedures. Investment Bonds. For purposes of this Procedures relating to issuance, pricsection “member" means a stockholder ing, payment of interest, redemption, or participation certificate holder who replacement of lost or stolen bonds and acquired stock or participation certifi other matters shall be promulgated cates to obtain a loan, to purchase stock under the authority of this regulation as for investment, or to qualify for other operating instructions to banks and services of the association or bank, A associations. person who assumes a loan is not a member unless he becomes a stockhloder or

Subpart E-Investments participation certificate holder in con

$ 615.5140 Investment eligibility. nection with that loan. Employee means & regular full-time employee of a Farm

In order to provide the System with Credit bank or association or the Farm

investment instruments to support its Credit Administration.

financial operations, to manage its liquid(b) Form and ownership. Farm Credit

ity portfolios and to invest its excess Investment Bonds are issued only in reg

funds, the following obligations are istered form. The registration used must

approved. express the actual ownership of and in

(a) Consolidated obligations of the terest in the bond and will be considered

Federal land banks, Federal intermediate by the issuing institution as conclusive

credit banks and banks for cooperatives.

(b) Direct and full faith and credit of such ownership and interest. No designation of an attorney, agent or other obligations of the U.S. Government. representative to request or receive pay

(c) Federal Home Loan Bank notes ment on behalf of the owner or co-own

and bonds. er, nor any restriction on the right of

(d) Federal Home Loan Mortgage the owner or co-owner to receive pay

Corporation obligations. ment of the bond or interest, except as

(e) Federal National Mortgage Assoprovided in this section, may be made

ciation short-term notes, debentures and in the registration or otherwise. Regis

participation certificates. trations requested in applications for

(f) Government National Mortgage purchase shall be clear, accurate, com

Association direct or fully guaranteed plete and conform with one of the reg

obligations. istration provisions set forth in this

(g) Obligations issued by the Farmers section, and include the appropriate tax

Home Administration. payer identifying number. The follow (h) Tennessee Valley Authority notes ing provisions shall apply for registration

and bonds. of Farm Credit Investment Bonds:

(i) Export-Import Bank obligations. (1) In all cases the member's name

(j) U.S. Postal Service obligations. (whether a natural person, fiduciary, or

(k) Merchant Marine Bonds. legal entity) or employee's name must

(1) Negotiable certificates of deposit. appear as owner of the Bond.

(m) Bankers acceptances. (2) A Bond may be registered in the

(n) Full faith and credit obligations name of a fiduciary only if the fiduciary

of a state, municipality, political subis in fact the member.

division, or public agency or instru(3) A member or employee may not

mentality thereof, when approved by the use a form of registration (such as a

bank on a case basis within the followgift to a minor, irrevocable trust, etc.) ing limitations: Investments in bonds, which would divest himself of ownership. except revenue obligations, that have However, a minor may be named as co been rated A or better (or the equivaowner or beneficiary.

lent) by a recognized rating service, that

production credit association if the (3) The borrower has ceased opersamount of such paper added to the aggre tions, regardless of whether its charter gate liabilities of the association exceeds has been surrendered. 10 times the paid-in and unimpaired (4) In the judgment of the bank, the capital and surplus of the association. Indebtedness of the borrower to the bank

is uncollectable. Subpart 1—Prescription, Subscription

(37 FR 11434, June 7, 1972, as amended at and Retirement of Stock

38 FR 27839, Oct. 9, 1973) 8 615.5250 Responsibility.

§ 615.5270 Purchase of class B stock of (a) The board of directors of each

the Federal intermediate credit bank Farm Credit institution shall prescribe in

by production credit associations. its bylaws the classes of stock and par

(a) When the earnings of the bank ticipation certificates to be issued to and are inadequate to meet its capital needs, subscribed by borrowers and others and

and when feasible to do so with due rehow they stali be transferred, converted gard for the circumstances of the assoor retired consistent with the law.

ciations, the bank board may, by resolu(b) The Governor shall prescribe the

tion, authorize the bank, with the prior Initial amourt of authorized capital stock

approval of the Farm Credit Adminisfor a newly chartered production credit

tration, to require production credit as. association,

sociations to subscribe for such addi.

tional capital as may be needed by the § 615.5260 Retirement of capital stock bank. The amount determined shall be

and allocated equities of banks for allotted, to the nearest full share, among cooperatives.

the associations so that the total of all (a) In case of liquidation or disso stock owned, including the additional lution of a present or former borrower,

amount to be subscribed for, will be as the bank may, but shall not be required

nearly as practicable in the same pro

portion to the total amount of Class B to, retire and cancel at book value, not

stock already owned and to be subscribed exceeding part, all or a part of the capi

for by all associations of the district as tal stock or any allocated equity in the

each association's average indebtedness bank owned by or allocated to such bor to the bank during the immediately prerower. Before any such retirement shall ceding 3 fiscal years is of the average be made, the banks shall have reasonable indebtedness of all associations to the assurance that the liquidation or dissolu bank during such period. The "average tion is or soon will be completed and the indebtedness" may be computed on the business of the borrower is not being con

basis of either average daily balance, or tinued under circumstances in which it average of beginning and ending monthly would be appropriate and feasible for

balances of such indebtedness for the 3any successor to acquire and hold the

year period. Each association shall subinvestment interests of the present or

scribe for stock in the bank so allotted former borrowers in the bank. Retire

to it. Such subscriptions shall be subject ments under this provision shall be au

to call and payment therefor shall be

made at such times and in such amounts, thorized in accordance with bank board policy.

all as may be determined by the bank.

(b) When making such allotments the (b) Where the debt of a borrower to

bank may transfer, retire or reissue outthe bank is in default, such bank may, standing class B stock among the associbut shall not be required to, retire and ations as may be necessary to establish cancel all or part of any stock or allo the proportion indicated in the preceding cated equities of the bank on which the paragraph. Stock that is retired or transbank has a lien as collateral for the debt, ferred for this purpose shall first be the at the book value thereof, not exceeding stock purchased by the association to par value, in total or partial liquidation the extent it is available unless otherof the debt, under any of the following wise approved by the Farm Credit Adconditions.

ministration. The bank shall pay the as(1) The borrower has been declared sociation for all stock so retired or transbankrupt.

ferred and shall collect therefor from (2) The borrower has had a substan any association to which such stock is tial part of its property placed in the transferred or reissued, at the fair book hands of a receiver.

value thereof not to exceed par.

(c) The rate of interest on such obligations shall not exceed the limitations set forth in § 614.4310 of this chapter when such notes are offered as collateral for a direct loan from the bank.

(d) The total amount which an association may invest in such obligations at any one time shall not exceed 15 percent of the balance of loans outstanding at the close of the association's preceding fiscal year.

(e) All notes in which an association invests shall be endorsed with full recourse against the cooperative or dealer. The association shall contact each notemaker who meets the association's credit standards to encourage him to become & borrower. Subpart F-Minimum Investment

Requirement $ 615.5180 Association investment port.

folios. The Federal land banks and the Federal intermediate credit banks shall review annually as of June 30 or December 31 the investment portfolio and investment objectives of each association. Associations shall own such securities selected from approved investments in $ 615.5140 as the supervising bank shall require. The banks shall assist the associations in the management of their investment portfolios. (38 FR 27838, Oct. 9, 1973)

Subpart G-Deposit of Fund's $ 615.5190 General.

All institutions of the Farm Credit System may deposit securities and current funds with and receive interest from any member bank of the Federal Reserve System, or any savings institution insured by the Federal Savings and Loan Insurance Corporation. Associations may deposit funds with their supervising bank, any commercial bank insured by the Federal Deposit Insurance Corporation, or any savings institution insured by the Federal Savings and Loan Insurance Corporation. (38 FR 27838, Oct. 9, 1973)

Subpart H-Net Worth Objective $615.5200 General.

Each bank and association board shall establish a net worth objective to serve as & guide for the accumulation and maintenance of a net worth position adequate to reasonably assure the continued financial solvency of each institution and

the continuity of its credit service to farmers and cooperatives, but avoiding the accumulation of net worth in excess of those needs. Each supervising bank board shall also establish an association net worth objective program as a guide for the associations in its district. $ 615.5210 Annual budgets and projec

tions. Each bank board shall approve for each bank an operating and financial budget for each fiscal year. Each budget shall contain sufficient background informatian to indicate the principal assumptions and considerations involved in its formulation, detailed pro forma balance sheets, income and expense statements, bank and association programs to achieve net worth objectives and explanation of significant changes from the previous years. Bank boards also shall approve for each bank long range financial and operating projectons. Approved budgets and longer range projections shall be submitted for review as required from time to time by the Farm Credit Administration.

Subpart --Debt to Capita! Ratios & 615.5220 Ratio requirements.

No issue of long-term notes, bonds, debentures, or other similar obligations by a bank or banks, shall be approved if it, together with the amount of other bonds, debentures, long-term notes, or other similar obligations issued and outstanding, exceeds 20 times the capital and surplus of all the banks which will be primarily liable on the proposed issue unless a lesser ratio is fixed by the Farm Credit Administration. The term "capital, legal reserves and surplus" as used in this section includes capital stock, participation certificates, legal reserves, allocated reserves, surplus and unallocated contingency reserves. $ 615.5230 Special exception.

A bank may, with approval of the Farm Credit Administration, exceed this ratio for temporary periods if the 20 to 1 ratio for all similar banks will not be exceeded. When such exceptions occur, other like banks of the System shall be advised regarding the basis on which approval was given. & 615.5240 Production credit associa

tions. No loan shall be made to or any paper purchased from or discounted for any

production credit association if the (3) The borrower has ceased operaamount of such paper added to the aggre tions, regardless of whether its charter gate liabilities of the association exceeds has been surrendered. 10 times the paid-in and unimpaired (4) In the judgment of the bank, the capital and surplus of the association. indebtedness of the borrower to the bank

is uncollectable. Subpari -Prescription, Subscription

[37 FR 11434, June 7, 1972, as amended at and Retirement of Stock

38 FR 27839, Oct. 9, 1973) $ 615.5250 Responsibility.

8 615.5270 Purchase of class B stock of (a) The board of directors of each

the Federal intermediate credit bank Farm Credit institution shall prescribe in

by production credit associations. its bylaws the classes of stock and par

(a) When the earnings of the bank ticipation certificates to be issued to and are inadequate to meet its capital needs, subscribed by borrowers and others and and when feasible to do so with due tehow they shall be transferred, converted gard for the circumstances of the assoor retired consistent with the law.

ciations, the bank board may, by resolu(b) The Governor shall prescribe the

tion, authorize the bank, with the prior Initial amourt of authorized capital stock

approval of the Farm Credit Adminisfor a newly chartered production credit

tration, to require production credit asassociation.

sociations to subscribe for such addi

tional capital as may be needed by the $ 615.5260 Retirement of capital stock bank. The amount determined shall be

and allocated equities of banks for allotted, to the nearest full share, among cooperatives.

the associations so that the total of all (a) In case of liquidation or disso

stock owned, including the additiona)

amount to be subscribed for, will be as lution of a present or former borrower,

nearly as practicable in the same prothe bank may, but shall not be required to, retire and cancel at book value, not

portion to the total amount of Class B

stock already owned and to be subscribed exceeding part, all or a part of the capi

for by all associations of the district as tal stock or any allocated equity in the

each association's average indebtedness bank owned by or allocated to such bor

to the bank during the immediately prerower. Before any such retirement shall

ceding 3 fiscal years is of the average be made, the banks shall have reasonable indebtedness of all associations to the assurance that the liquidation or dissolu bank during such period. The "average tion is or soon will be completed and the indebtedness" may be computed on the business of the borrower is not being con basis of either average daily balance, or tinued under circumstances in which it average of beginning and ending monthly would be appropriate and feasible for

balances of such indebtedness for the 3any successor to acquire and hold the year period. Each association shall subinvestment interests of the present or

scribe for stock in the bank so allotted former borrowers in the bank. Retire

to it. Such subscriptions shall be subject ments under this provision shall be au

to call and payment therefor shall be

made at such times and in such amounts, thorized in accordance with bank board

all as may be determined by the bank. policy.

(b) When making such allotments the (b) Where the debt of a borrower to

bank may transfer, retire or reissue outthe bank is in default, such bank may, standing class B stock among the associbut shall not be required to, retire and ations as may be necessary to establish cancel all or part of any stock or allo the proportion indicated in the preceding cated equities of the bank on which the paragraph. Stock that is retired or transbank has a lien as collateral for the debt, ferred for this purpose shall first be the at the book value thereof, not exceeding stock purchased by the association to par value, in total or partial liquidation the extent it is available unless otherof the debt, under any of the following wise approved by the Farm Credit Adconditions.

ministration. The bank shall pay the as(1) The borrower has been declared sociation for all stock so retired or transbankrupt.

ferred and shall collect therefor from (2) The borrower has had a substan any association to which such stock is tial part of its property placed in the transferred or reissued, at the fair book hands of a receiver.

value thereof not to exceed par.

« PreviousContinue »