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(a) Provided that there is no evidence that the loss resulted from fraud or criminal abuse on the part of the bank, its officers, directors, or principal

shareholders, a bank that has been accepted under this part may, in the manner described below, amortize on its Reports of Condition and Income:

(1) Any loss on any qualified agricultural loan reflected in a bank's annual financial statements for any period between and including 1984 and 1991; and (2) Any loss reflected in a bank's financial statements for any period between and including 1983 and 1991 resulting from a reappraisal or sale of agriculturally related other property.

(b) Amortization under this section shall be computed over a period not to exceed seven years on a quarterly straight-line basis commencing in the first quarter after the loss was or is charged off so as to be fully amortized not later than December 31, 1998. §35.4 Accounting for amortization.

(a) General rule. Any bank which is permitted to amortize losses in accordance with §35.3, above, may restate its capital and other relevant accounts and account for future authorized deferrals and amortizations in accordance with the instructions to the FFIEC Consolidated Reports of Condition and Income. Any resulting increase in the capital account shall be included in primary capital under §3.100 of this chapter.

(b) Relationship with the substitute lending limit. Unamortized losses on loans and other assets, which are capitalized under this rule for agricultural loan loss amortization, are not to be included in capital for the purpose of calculating the substitute lending limit under §32.8 of this chapter.

§35.5 Eligibility.

A proposal submitted in accord with §35.7 shall be accepted, subject to the conditions described in §35.6, if the Accepting Official finds that:

(a) The proposing bank is an agricultural bank;

(b) The proposing bank's current capital is in need of restoration, but the

bank remains an economically viable, fundamentally sound institution;

(c) There is no evidence that fraud or criminal abuse by the bank or its officers, directors or principal shareholders led to significant losses on qualified agricultural loans and agriculturally related other property; and

(d) The proposing bank has submitted a capital plan approved by the OCC or the Accepting Official that will restore its capital to an acceptable level. §35.6 Conditions on acceptance.

All acceptances of proposals shall be subject to the following conditions:

(a) The bank shall fully adhere to the approved capital plan and shall obtain the prior approval of the Accepting Official for any modifications to the plan;

(b) With respect to each asset subject to loss deferral under the program, the bank shall maintain accounting records adequate to document the amount and timing of the deferrals, repayments and amortizations;

(c) The financial condition of the bank shall not deteriorate to the point where it is no longer a viable, fundamentally sound institution;

(d) The bank agrees to make a reasonable effort, consistent with safe and sound banking practices, to maintain in its loan portfolio a percentage of agricultural loans, including agriculturally related other property, not lower than the percentage of such loans in its loan portfolio on January 1, 1986; and

(e) The bank agrees to provide the Accepting Official, upon request, with such information as the Accepting Official deems necessary to monitor the bank's amortization, its compliance with conditions, and its continued eligibility.

$35.7 Submission of proposals.

(a) A bank wishing to amortize losses on qualified agricultural loans or agriculturally related other property shall submit a proposal to the appropriate Accepting Official.

(b) The proposal shall contain the following information:

(1) Name and address of the bank;

(2) Information establishing that the bank is located in an area the economy of which is dependent on agriculture; such as a description of the bank's lo

cation, dominant lines of commerce in its service area, and any other information the bank believes will support the contention that it is located in such area;

(3) A copy of the bank's most recent Reports of Condition and Income;

(4) If the Reports of Condition and Income fail to show that at least 25 percent of the bank's total loans are qualified agricultural loans, the basis upon which the bank believes that it should be declared eligible to amortize losses;

(5) A capital plan demonstrating that the bank will achieve an acceptable capital level not later than the end of the bank's amortization period. The plan should provide for a realistic improvement in the bank's capital over the course of the bank's amortization period from earnings retention, capital injections, or other sources. It should also include specific information regarding dividend levels, compensation to directors, executive officers and individuals who have a controlling interest and their related interests, and payments for services or products furnished by affiliated companies;

(6) A list of the loans and agriculturally related other property upon which the bank proposes to defer loss, including for each such loan or property the following information:

(i) The name of the borrower, the amount of the loan that resulted in the loss, and the amount of the loss;

(ii) The date on which the loss was declared; and

(iii) The basis upon which the loss resulted from a qualified agricultural loan.

(7) A certification by the bank's chief executive officer that there is no evidence that the losses resulted from fraud or criminal abuse by the bank, its officers, directors, or principal shareholders;

(8) A copy of a resolution by the bank's Board of Directors authorizing submission of the proposal; and

(9) Such other information as the Accepting Official may require.

§35.8 Revocation of eligibility.

The failure to comply with any condition in an acceptance or the capital restoration plan is grounds for revocation of acceptance for loss amortization and for an administrative action against the bank under 12 U.S.C. 1818(b). Additionally, acceptance of a bank for loss amortization will not foreclose any administrative action against the bank that the OCC may deem appropriate.

PARTS 36-199—(RESERVED)

FINDING AIDS

A list of CFR titles, subtitles, chapters, subchapters and parts and an alphabetical list of agencies publishing in the CFR are included in the CFR Index and Finding Aids volume to the Code of Federal Regulations which is published separately and revised annually.

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I

II

III

IV

I

Table of CFR Titles and Chapters

(Revised as of December 10, 1993)

Title 1-General Provisions

Administrative Committee of the Federal Register (Parts 1-49)
Office of the Federal Register (Parts 50-299)

Administrative Conference of the United States (Parts 300-399)
Miscellaneous Agencies (Parts 400-500)

Title 2-(Reserved)

Title 3-The President

Executive Office of the President (Parts 100-199)

Title 4-Accounts

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Federal Claims Collection Standards (General Accounting Office-Department of Justice) (Parts 100-299)

Title 5-Administrative Personnel

I

II

III

Office of Personnel Management (Parts 1—1199)
Merit Systems Protection Board (Parts 1200—1299)
Office of Management and Budget (Parts 1300-1399)

IV

V

VI

VII

VIII

IX

XI

XIV

XV

XVI

Advisory Committee on Federal Pay (Parts 1400-1499)

The International Organizations Employees Loyalty Board (Parts 1500-1599)

Federal Retirement Thrift Investment Board (Parts 1600-1699) Advisory Commission on Intergovernmental Relations (Parts 1700-1799)

Office of Special Counsel (Parts 1800-1899)

Appalachian Regional Commission (Parts 1900—1999)

United States Soldiers' and Airmen's Home (Parts 2100-2199)
Federal Labor Relations Authority, General Counsel of the Fed-
eral Labor Relations Authority and Federal Service Impasses
Panel (Parts 2400-2499)

Office of Administration, Executive Office of the President
(Parts 2500-2599)

Office of Government Ethics (Parts 2600-2699)

XXII Federal Deposit Insurance Corporation (Part 3202)

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