VALUATION RESERVES OF PRODUCTION CREDIT ASSOCIATIONS.

SEC. 501. VALUATION RESERVES OF PRODUCTION CREDIT ASSOCIATIONS. 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 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.”.