The question came up recently on how to treat timberland on the call report - and by extension, whether or not it is reportable as a small business or small farm loan.

Is timberland considered vacent land and coded 1.a and therefore not a small business or small farm loan?

Is timber considered a really slow growing crop, coded 1.b, and considered a small farm loan?

Our controller, who is the final say on call codes at our bank, even threw out non-farm non-residental, which would make it a small business loan for CRA.

How does/would your bank treat it?

If they are holding the land to harvest and replant timber:

Schedule RC-C, Line 3

3 Loans to finance agricultural production and other loans to farmers. On the FFIEC 041, report in column B and, on the FFIEC 031, report in columns A and B, as appropriate, loans for the purpose of financing agricultural production. Include such loans whether secured (other than those that meet the definition of a “loan secured by real estate”) or unsecured and whether made to farm and ranch owners and operators (including tenants) or to nonfarmers. All other loans to farmers, other than those excluded below, should also be reported in this item.

Include as loans to finance agricultural production and other loans to farmers:

(2) Loans and advances made for the purpose of financing fisheries and forestries, including loans to commercial fishermen.

If the loan is to finance the actual forestry production, it goes in 3.

If the loan is for other purposes but secured by forestry land and those trees are sold (it is not land just sitting there but used for forestry), I would put as secured by farmland.

If it is wooded land just sitting there - trees are not harvested - and being used as collateral for a loan, I would put it in 1a.

I was assuming in my scenario that the timberland would be securing the loan, so, even if the loan was to finance the forestry, you would not be able to code it as a 3 because it would have to have one of the real estate call codes. Am I correct?

As far as the land "just sitting there" vs. being used for forestry, there's a window of several decades as to when trees could be cut. I think I will propose that the standard be that if the land is zoned as timberland and the trees could be cut for timber right now, then we'll call code it 1.b. But if the land is "wooded" (more like scrub pine or juniper than douglas fir or ponderose pine) and couldn't be logged, then we'll call it bare land and code it 1.a.

Yes, the real estate code supercedes the other codes. If secured by timerland, it is real estate secured. The other code is for financing of activities with other collateral.