Illinois Administrative Code › Title 38 - FINANCIAL INSTITUTIONS › Part 1075 - SAVINGS BANK ACT › Subpart O - CONVERSION OF MUTUAL SAVINGS BANK TO CAPITAL STOCK SAVINGS BANK › Section 1075.2170 - Sale of Control in Connection with the Conversion of a Mutual Savings Bank to Capital Stock Savings Bank - Undercapitalized Mutual Savings Bank

Current through Register Vol. 48, No. 28, July 12, 2024
a) A mutual savings
				bank not meeting an applicable capital requirement as of the end of the most
				recent period for which the savings bank has prepared audited financial
				statements, may seek approval to convert to stock form pursuant to a plan of
				conversion that provides for the sale of its capital stock directly to
				acquirors, who may be a person, company, depository institution, holding
				company, who will be in control of the savings bank upon the purchase of the
				capital stock. If in accordance with applicable laws and regulations, the
				conversion may result in the converting savings bank being merged into or
				consolidated with an existing or newly created depository
				institution.
b) The provisions of
				this Section shall govern a conversion authorized by subsection (a). All other
				Sections of this Subpart shall not apply to the conversion unless provided in
				the plan of conversion adopted by the board of directors of the converting
				savings bank or required by the Director.
c) A majority of the converting savings bank
				board of directors must adopt a plan of conversion that complies with this
				Section. The members of the association have no rights or approval or
				participation in a conversion under this Section or to the continuance of any
				legal or beneficial ownership interests in the converted savings bank, unless
				otherwise provided by the Director. The members shall have an interest in a
				liquidation account established pursuant to Section
				1075.1940
				of this Subpart if one is established pursuant to subsection (h).
d) In connection with approval under this
				Section, the Director may impose conditions and restrictions on the converting
				or resulting institution, the acquiror, and controlling parties, organization
				directors and officers of either, to prevent unsafe and unsound practices, to
				protect the deposit insurance fund and the public interest, and to prevent
				potential injury or detriment to the converting or resulting
				institution.
e) The Director may
				deny a savings bank's conversion if he or she determines that the converting or
				resulting institution, the acquiror, or controlling parties or organization
				directors or officers of either, have engaged in unsafe or unsound practices in
				connection with the conversion, or that the conversion is detrimental to or
				would cause potential injury to the converting or resulting institution,
				deposit insurance funds, or is contrary to the public interest.
f) For 3 years following the date of
				completion of a conversion under this Section, neither any controlling
				shareholder nor the resulting institution may acquire shares from minority
				shareholders without prior approval of the Director.
g) An application for conversion under this
				Section shall, at a minimum, include:
1) A
				plan of conversion adopted by a majority of the directors of the savings bank,
				which shall contain at a minimum the name and address of the savings bank; the
				names, addresses, dates and places of birth, and social security numbers of the
				proposed purchasers of conversion stock and their relationship to the savings
				bank; the title, per-unit par value, number, and per-unit and aggregate
				offering price of shares of conversion stock to be authorized and issued; the
				number and percentage of shares of conversion stock to be purchased by each
				investor, the aggregate number and percentage of shares of conversion stock to
				be purchased by organization directors, officers and their affiliates and
				associates; a description of the liquidation account, if required under
				subsection (h), or if otherwise established; and certified copies of all
				resolutions of the board of directors relating to the plan of
				conversion;
2) A copy of any
				agreements between the savings bank and the proposed conversion stock
				purchasers;
3) An opinion of
				qualified, independent counsel or an independent, certified public accountant
				regarding the tax consequences to the savings bank arising from the
				conversion;
4) A business plan,
				which shall contain a description of the proposed operating policies of the
				savings bank or the resulting savings bank following the conversion, including
				a statement as to how the conversion proceeds will be used, and a projection of
				the savings bank's results of operations for the 3 year period following
				completion of the conversion. The projections should show the continuing
				ability of the converted savings bank to meet applicable capital requirements.
				The savings bank shall specify the assumptions on which its projections are
				based;
5) An application under
				Section
				1075.1700
				of Subpart N of this Part;
6) The
				proposed charter and bylaws of the converted savings bank;
7) The proposed stock certificate
				form;
8) A description of all
				existing and proposed employment contracts, if applicable;
9) All findings required under the securities
				offering rules of this Subpart;
10)
				Applications for permission to organize a stock savings bank and for approval
				of a merger, if applicable, and FDIC insurance of accounts, if
				applicable;
11) Information to
				support the value of any non-cash assets to be contributed to the savings bank
				in connection with the conversion, if applicable. Appraisals submitted in this
				connection must be acceptable to the Director;
12) A description of the estimated expenses
				of the conversion to the savings bank;
13) The savings bank's most recent audited
				financial statements with an appropriate explanation to support the
				determination that the savings bank's current capital levels qualify it to
				undertake a supervisory conversion;
14) "Pro forma" financial statements to
				reflect the effects of the transaction. These pro forma financial statements
				should be supplemented to identify the converting or resulting capital levels
				and show the appropriate adjustments necessary to compute such capital
				levels;
15) A specific description
				of any of the features of the savings bank's application that do not conform to
				the requirements of this Subpart;
16) A specific description of and detailed
				justification for any waivers or supervisory forbearances that are requested as
				part of the conversion;
17) A
				statement of all other applications required pursuant to federal law for all
				transactions related to the savings bank's conversion, copies of all decisions,
				orders, opinions, and other similar dispositive documents issued by regulatory
				authorities relating to such applications, and, if requested, copies of such
				applications and related documents; and
18) Opinion of financial advisor:
A) The savings bank shall be required to
				retain a reputable financial advisor with expertise in valuing depository
				institutions to advise it as to the fairness or the consideration to be paid by
				the proposed acquiror. The financial advisor shall furnish a written opinion
				specifically informing the converting savings bank as to the fairness from a
				financial point of view to the converting savings bank of the proposed
				consideration.
B) The written
				opinion shall specifically disclose in reasonable detail:
i) the professional standards employed by the
				financial advisor in arriving at its conclusions; and
ii) the factual basis upon which the
				conclusions were reached.
C) The opinion shall specifically state
				whether the financial advisor, in arriving at his or her conclusions as to the
				fairness of the proposed consideration, has made efforts to determine whether,
				in his or her judgment, there is the reasonable significant probability that
				financially able purchasers of the character generally capable of securing
				regulatory approval other than the proposed acquiror, given an opportunity,
				might have made good faith offers to purchase control of the converting savings
				bank for a consideration materially greater than that proposed to be paid by
				the proposed acquiror, and has compared the consideration to be paid by the
				proposed acquiror with the consideration paid in the purchase of other savings
				banks or savings and loan associations of comparable size, market area, profit
				history, competitive conditions and projected future earnings.
D) If the financial advisor has made any such
				efforts or comparisons, the nature and scope of the efforts and comparisons
				shall be discussed in detail. The written opinion shall state whether and on
				what basis the financial advisor believes that the consideration to be paid by
				the proposed acquiror exceeds the aggregate amount of net proceeds which the
				converting savings bank could have realized if the capital stock to be sold to
				the proposed acquiror had been sold in a subscription offering followed by an
				underwritten public offering. The written opinion shall be delivered to the
				Director before any approval of the application for conversion will be granted
				by the Director.